Business Economics MCQ with Answers: FYBCOM Sem 1 Mumbai University

Business Economics MCQ with Answers

FYBCOM Business Economics semester 1 MCQ questions with answers of Mumbai university. I am sure this is enough for your preparation.

Change in total revenue per unit change in output sold is the____.

  1. marginal revenue
  2. incremental revenue
  3. marginal cost
  4. total revenue

The_____concept is used to measure only the effect related to the unitary change in output.

  1. incremental
  2. marginal
  3. both A and B
  4. none of these

The_____concept measures the effects of alternative managerial decisions or courses of action on revenues, cost, and profit.

  1. incremental
  2. marginal
  3. both A and B
  4. none of these

The incremental profit is positive and thus the total profit increases if the incremental revenue is greater than the incremental cost.

  1. the incremental revenue is less than the incremental cost
  2. the incremental revenue is equal to the incremental cost
  3. the incremental revenue is greater than the incremental cost
  4. the incremental cost is greater than the incremental revenue

Change in total cost due to change in total output is____.

  1. marginal revenue
  2. incremental revenue
  3. marginal cost
  4. incremental cost

Marginal analysis help to make decisions regarding____.

  1. change in production level
  2. change in input level
  3. allocation of scarce resources
  4. all of these

Market demand involves all of the elements except____.

  1. producer
  2. price
  3. customer
  4. environment

Which among the following factors influence market demand___?

  1. buyer’s income
  2. buyers’ expectation
  3. number of buyers
  4. all of these

Which among the following factors influence market supply____?

  1. resources price
  2. production technology
  3. number of sellers in the market
  4. all of these 

Equilibrium price exists when_____.

  1. quantity demanded equals to quantity supplied
  2. demand and supply curves intersect
  3. the market is in equilibrium
  4. all of these

At the equilibrium price,___.

  1. buyer is allowed to change the price
  2. seller is allowed to change the price
  3. neither A nor B
  4. both A and B

A shift in the supply curve is due to all of the following factors, except_____.

  1. price
  2. cost of production
  3. government policy
  4. state of technology

An increase in the supply of a commodity causes_____in the equilibrium price.

  1. increase
  2. decrease
  3. no change
  4. only a

The decreases in supply mean the same quantity supplied at a higher price or less quantity supplied at the same price____.

  1. same quantity supplied at a higher price
  2. less quantity supplied at the same price
  3. both A and B
  4. only A

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The decrease in demand causes_____in equilibrium price.

  1. decrease
  2. increase
  3. no change

A scatter diagram shows the_____.

  1. level of one variable over time
  2. change in one variable over time
  3. relationship between two variables
  4. evaluation of a variable

On a graph, a high correlation between the variable measured along the x-axis and the variable measured along the y-axis______.

  1. mean that changes in the variable measured along the x-axis must cause changes in the variable measured along the y-axis
  2. means that changes in the variable measured along the y-axis must cause changes in the variable measured along the x-axis
  3. means that changes in either variable must cause changes in the other variable.
  4. does NOT mean that change in the variable measured along the x-axis must cause a change in the variable measured along the y-axis.

In the equation Y= 13 x + 38 where Y is a function of X

  1. Y is the independent variable
  2. 38 is a variable
  3. the slope of the line is 38
  4. none of these

The Y-intercept of Y = 3x + 8 is  is____

  1. 3/8
  2. 3
  3. 8
  4. -8/3

The demand curve is upward sloping for____.

  1. normal goods
  2. inferior goods
  3. Giffen goods
  4. none of these

Movement along the demand curve occurs due to change in____.

  1. own price of the commodity
  2. determinants of the demand, other than own price of the commodity
  3. both a and b
  4. None of the above

An increase in the price of electricity will cause the demand for the electric appliance to_____.

  1. rise
  2. fall
  3. remain constant
  4. none of these

The shift in demand curve means____.

  1. fall in demand due to rise in the own price of the commodity
  2. the rise in demand due to a fall in own price of the commodity
  3. change in demand due to factors other than own price of the commodity
  4. none of these

In case of contraction of demand, we move____.

  1. from lower point to upper point on the same demand curve
  2. to right on another demand curve
  3. from upper point to lower point on the same demand curve
  4. to left on another demand curve

Law of demand is violated when_____.

  1. the income effect is negative
  2. the substitution effect is negative
  3. the negative income effect is greater than the substitution effect
  4. the negative income effect is less than the substitution effect

In the case of Ed = ∞, the demand curve is____.

  1. parallel to x-axis
  2. a straight line
  3. parallel to y-axis
  4. none of these

The elasticity is greater than unity for____.

  1. necessaries
  2. luxurious
  3. complementary goods
  4. comforts

When the slope of the demand curve is zero, the elasticity of demand is____.

  1. 0
  2. 1
  3. none of these

When total expenditure increased in response to decreasing in the price of the commodity, the elasticity of demand is____.

  1. greater than unity
  2. less than unity
  3. unity
  4. infinity

When the percentage change in demand is more than the percentage change in price, demand is___.

  1. inelastic
  2. elastic
  3. perfectly inelastic
  4. perfectly elastic

Which of the following is not true for forecasting?

  1. a forecast is rarely perfect
  2. the underlying casual system will remain the same in the future
  3. forecast for a group of items is accurate than individual item
  4. short-range forecasts are less accurate than long-range forecasts

A linear trend equation has the form_____

  1. F = a – bt
  2. F = a + bt
  3. F = 2a – bt
  4. F = 2a + bt

Decomposing a time series refers to breaking down past data into the components of____.

  1. trends, cycles, seasonal and random variations
  2. strategy, tactical, and operational variations
  3. constant and variations
  4. long-term, short-term, and medium-term variations

With regard to the regression-based forecast, the standard error of the estimate gives a measure of____.

  1. the time required to derive the forecast equation
  2. the variability around the regression line
  3. the maximum error of the forecast
  4. the time period for which the forecast is valid

A regression model is used to forecast the sales based on advertising dollars spent.

The regression line is y= 500 + 35 X and the coefficient of determination is 0.90. Which is the best statement about the forecast model?

  1. for every $35 is spent on advertising sales increased by $1.
  2. even if no money is spent on advertising, the company realizes $35 of sales.
  3. the coefficient of correlation between sales and advertising is 0.81.
  4. the correlation between sales and advertising is positive.

Forecast____.

  1. become more accurate with longer time horizons
  2. are rarely perfect
  3. are more accurate for individual items than for groups of items
  4. all of the above

One purpose of short-range forecasts is to determine_____.

  1. production planning
  2. inventory budgets
  3. research and development plan
  4. job assignment

In time series, which of the following cannot be predicted?

  1. large increase in demand
  2. technological trends
  3. seasonal fluctuations
  4. random fluctuations

A qualitative forecast_____.

  1. predict the quality of new product
  2. predict the direction, but not the magnitude, of changes in variables
  3. is a forecast that is classified on a numerical scale from one (poor quality) to 10 (perfect quality
  4. is a forecast that is based on the economic trick method

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The first step in the time-series analysis is to______.

  1. perform preliminary regression calculations
  2. calculate a moving average
  3. plot the data on a graph
  4. identify relevant correlated variables

Time-series analysis is based on assumption that_____.

  1. the random error term is normally distributed
  2. there are dependable correlations between the variable to be forecast and other independent variables
  3. past patterns in the variable to be forecast will continue unchanged into the future
  4. the data do not exhibit a trend

If regression analysis is used to estimate a linear relationship between the natural logarithm of the variable to be forecast and time, then the slope estimate is equal to____.

  1. the linear trend
  2. the natural logarithm of one plus the rate of growth
  3. the natural logarithm of the rate of growth
  4. the natural logarithm of the square root of the rate of growth

Normally, isoquant slope_____.

  1. upwards from left to right
  2. downwards from left to right
  3. upwards from right to left
  4. backwords from left to right

Which of the following is an assumption associated with the definition of a production function?

  1. technology remains constant
  2. both inputs and outputs are major in the monetary unit
  3. the function shows the maximum level of output possible with a given combination of inputs
  4. all units of the inputs are homogeneous

Which of the following statement best describe the general form of production function?

  1. it is the purely technological relationship between quantities of input and quantities of output
  2. it represents the technology of an organization, sector of an economy
  3. prices of input or of the output do not enter into the production function
  4. it is a flow concept describing the transformation of inputs into output per unit of the time
  1. i, ii and iv
  2. i and ii
  3. i and iv
  4. all of the above

The law of diminishing returns_____.

  1. is reflected in the negativity slope portion of the marginal product curve
  2. is the result of specialization and division of labour
  3. applies in both the short run and long run
  4. all of the above are correct

Stage II of production begins at the point____.

  1. of inflection of total product curve
  2. where an average and the marginal product is equal
  3. that total product is at maximum
  4. none of these

An isoquant that is_______.

  1. further from the origin represent the greater output
  2. flatter represents the trade-off between input that are poor substitutes
  3. negative sloped represents input combination associated with Stage I of production
  4. all of the above are correct

An isoquant line will be shifted further away from the origin____.

  1. if the price of both inputs increase
  2. if total cost increases
  3. if there is an advancement in technology
  4. all of the correct

The combination of inputs is optimal_____.

  1. at points of tendency between isoquants and isocosts
  2. if the marginal revenue product is equal to the marginal resource cost for all inputs.
  3. if the marginal rate of technical substitution between every pair of inputs is equal to the ratio of the prices of those inputs
  4. all of the above are correct

If isoquants are plotted on the graph with the capital measured on the vertical axis and the labour on the horizontal axis, then an increase in the wage rate will cause the isocost line___.

  1. to become steeper and the optimal quantity of labour will decrease
  2. to become steeper and the optimal quantity of labour will increase
  3. to become flatter and the optimal quantity of labor will decrease
  4. to become flatter and the optimal quantity of  labour will increase

When isoquants get, progressively further apart there is_____.

  1. increase in return to scale
  2. decreasing returns to scale
  3. constant returns to scale

A line that connects all the points where the marginal rate of technical substitution is equal to the ratio of input prices is called the____.

  1. input demand curve
  2. total product curve
  3. expansion path
  4. isocost line

Which of the following statement describes increasing returns to scale?

  1. doubling the inputs used leads to double the output
  2. increasing the inputs by 50% leads to a 25% increase in output
  3. increasing inputs by 1/4 lead to an increase in output of 1/3
  4. none of the above

The law of diminishing returns assumes that______.

  1. there is at least one fixed input
  2. all input are changed by the same percentage
  3. additional inputs are added in smaller and smaller increments
  4. all inputs are held constant

The expansion path shows____.

  1. how input prices change as the firm’s output level changes
  2. how the marginal products change as the firm’s output eve changes
  3. how the profit-maximizing input choices change as the firm’s output level changes
  4. how the cost-minimizing input choices change as the firm’s output level changes 

Economics of scale exists when_____.

  1. fixed cost decreases as output increases
  2. long-run average cost decreases as output increases
  3. long-run marginal cost is greater than the long-run average cost
  4. all of the above

The short-run is_____

  1. less than a year
  2. three years
  3. however long it takes to produce the planned output
  4. a time period in which at least one input is fixed

Accounting profit = total revenue minus____.

  1. total explicit cost
  2. total implicit cost
  3. total cost
  4. average cost

When AR is less than AC, the firm_____.

  1. on supernormal profit
  2. incur loss
  3. reaches break-even point
  4. minimize losses

On a break-even graph, the total fixed costs are______.

  1. the point where the sales line intersects the cost line (Y)
  2. the point where the sales line crosses the total cost line
  3. the point where the total cost line intersects the cost line (Y)
  4. the point where the total cost line intersects the volume line (X)

Which of the following are characteristic of BEP?

  1. there is no loss and no profit of the form
  2. the revenue is equal to the total cost
  3. the contribution is equal to the fixed cost
  4. all of the above

Which of the following are limitations of break-even analysis?

  1. static concept
  2. capital employed is taken into account
  3. limitation of the non-linear behaviour of cost
  4. limitation of the presence of perfect competition

What will be the impact of BEP if its cost is increased?

  1. decrease
  2. no change
  3. increased
  4. none of the above

Profit is maximum when____.

  1. TC and TR curves are parallel
  2. MC and MR curves are parallel
  3. TC and TR curves cross each other
  4. MC and MR curves cross each other

Which among the following increases and decreases with the volume of output?

  1. fixed cost
  2. variable cost
  3. total cost
  4. money cost

Which of the following cannot be changed in the short period?

  1. fixed cost
  2. production cost
  3. total cost
  4. variable cost

Wages is_____of the production.

  1. fixed cost
  2. variable cost
  3. opportunity cost
  4. marginal cost

If all the units of the product are sold at the same price, average revenue will be____marginal revenue.

  1. equal to
  2. more than
  3. lesser than
  4. more or lesser than

If total units of the commodity are multiplied by the cost per unit of the commodity, we shall get____.

  1. marginal revenue
  2. average revenue
  3. total revenue
  4. profit

If the law of diminishing return is in operation, average cost____.

  1. decreases
  2. increases
  3. remain constant
  4. decreases slowly

Average fixed cost_____.

  1. never become zero
  2. never touches x-axis
  3. the curve never touches the y-axis
  4. all of the above

Which among the following is/are the short-run cost?

  1. average cost
  2. marginal cost
  3. total cost
  4. all of the above

Variable cost per unit_____.

  1. remains fixed
  2. fluctuate with the volume of production
  3. varies with the volume of sales
  4. all of the above

If a form is producing the level of output at which short-run average cost equals long-run average cost, then____.

  1. the form has chosen the profit-maximizing level of output
  2. with a fixed amount of capital, the short-run average cost is greater than the long-run average cost at all other levels of output.
  3. the form has chosen the cost-minimizing combination of inputs to produced this level of output
  4. both B and C

Fixed cost per unit increases when_____.

  1. production volume decreases
    production volume increases
  2. variable cost per unit decreases
  3. none of the above

Opportunity cost helps in______.

  1. ascertainment of cost
  2. controlling cost
  3. making managerial decision
  4. all of the above

A machine produces only one product. What will be its opportunity cost?

  1. infinite
  2. low
  3. high
  4. none of the above

Which of the following does not affect the current production?

  1. sunk cost
  2. incremental cost
  3. opportunity cost
  4. none of the above

Which of the following do not involve payment of cast as they are not actually incurred?

  1. explicit costs
  2. implicit costs
  3. marginal costs
  4. incremental costs

The costs that have been originally incurred to acquire the assets are called_____.

  1. historical costs
  2. replacement costs
  3. explicit cost
  4. implicit cost

The costs that are to be paid currently if the asset were to be replaced are called______.

  1. historical costs
  2. replacement costs
  3. explicit costs
  4. implicit costs

If the prices do not change over a period of time, then____.

  1. replacement costs and historical costs are not equal
  2. replacement costs and historical costs remain the same
  3. replacement costs greater than historical costs
  4. replacement costs less than historical costs

Historical valuation cannot provide a valid basis for taking managerial decisions when one of the following in the economy is significant.

  1. interest rate
  2. inflation rate
  3. credit rate
  4. discount rate

The costs which can be traced or identified directly with a particular unit, department, or a process of production are called______.

  1. historical costs
  2. direct costs
  3. separable costs
  4. replacement cost

Common cost is also called______.

  1. joint costs
  2. direct costs
  3. economic costs
  4. implicit costs

Traceability of costs gains importance when multiple products incurring one of the following differs considerably in the production or marketing process.

  1. separable costs
  2. common costs 
  3. economics costs
  4. direct costs

Which of the following are recorded as expenses in the books of accounting records?

  1. economic costs
  2. accounting costs
  3. join costs
  4. fixed costs

Costs-output relationship or cost function does not facilitate___.

  1. expense control
  2. merit rating
  3. profit production
  4. new product promotion

The total variable cost______proportionally with production.

  1. increase
  2. decrease
  3. saturates
  4. diminishes

Average cost per unit_____as the volume or production increases.

  1. increases
  2. decreases
  3. saturate
  4. diminishes

Which of the following means the condition that produces the best result where in the firm maximizes the profits per unit at minimum average cost?

  1. minimum
  2. optimum
  3. economy
  4. diseconomy

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