60+ Economics of Business and Finance Solved MCQs

1.

Business economics is the application of ------- to business management

A. commerce
B. management
C. economics
D. finance
Answer» C. economics
2.

Risks that cannot be insured is called -----

A. uncertainty
B. injury
C. capital
D. none of the above
Answer» A. uncertainty
3.

Market in which securities are issued for the first time is ---------

A. secondary market
B. primary market
C. tertiary market
D. money market
Answer» A. secondary market
4.

Market in which prices of shares are going up is called-------

A. bull market
B. bear market
C. stock market
D. capital market
Answer» A. bull market
5.

Market in which prices of shares are going down is called-------

A. bull market
B. bear market
C. stock market
D. capital market
Answer» B. bear market
6.

For substitutes, cross elasticity is --------

A. positive
B. negative
C. zero
D. infinity
Answer» A. positive
7.

For complementary goods, cross elasticity is --------

A. positive
B. negative
C. zero
D. infinity
Answer» A. positive
8.

Entry preventing price is called --------

A. limit price
B. full cost price
C. penetration price
D. psychological price
Answer» C. penetration price
9.

Long run theory of production is known as ----

A. law of variable proportion
B. law of diminishing returns
C. law of returns to scale
D. none of the above
Answer» A. law of variable proportion
10.

An example of cartel is-------

A. opec
B. oecd
C. saarc
D. eu
Answer» C. saarc
11.

Other things remaining the same, the quantity of a product demanded increases with ------------ in price

A. increase
B. decrease
C. variation
D. none of the above
Answer» A. increase
12.

For necessary goods, the income elasticity of demand

A. more than 1
B. less than 1
C. zero
D. none
Answer» A. more than 1
13.

Relation between price of a commodity and demand for another commodity is measured by

A. price elasticity
B. income elasticity
C. cross elasticity
D. elasticity of substitution
Answer» C. cross elasticity
14.

When Q = f (P), the elasticity coefficient is measured by

A. Δq/Δp / p/q
B. Δp/Δq * q/p
C. Δq/Δp * p/q
D. Δp/Δq / q/p
Answer» C. Δq/Δp * p/q
15.

Income elasticity of demand for inferior goods is

A. negative
B. positive
C. zero
D. unity
Answer» A. negative
16.

In the case of luxury goods, the income elasticity of demand will be

A. less than unity
B. unity
C. more than unity
D. all the above
Answer» A. less than unity
17.

Income elasticity is positive, but less than unity in the case of

A. necessity
B. luxury
C. inferior
D. substitutes
Answer» C. inferior
18.

The price is kept artificially low in

A. price skimmimg
B. limit pricing
C. full cost pricing
D. psychological pricing
Answer» C. full cost pricing
19.

In drawing an individual demand curve for a commodity, all but which of the following are kept constant

A. individual’s money income
B. the prices of the related commodity
C. price of the commodity under consideration
D. tastes of the consumer
Answer» A. individual’s money income
20.

A fall in the price of the commodity holding everything else constant results in

A. increase in demand
B. decrease in demand
C. increase in quantity demanded
D. decrease in quantity demanded
Answer» D. decrease in quantity demanded
21.

When an individual’s income falls, when everything else remains the same, his demand for inferior goods

A. increases
B. decreases
C. remains unchanged
D. cannot say
Answer» A. increases
22.

When the price of the substitute commodity of X falls, the demand for X

A. rises
B. falls
C. remains unchanged
D. all of the above is possible
Answer» A. rises
23.

When both the price of a substitute and the price of complement of X rises, the demand for X

A. rises
B. falls
C. remains unchanged
D. all of the above is possible
Answer» B. falls
24.

Most rare type of price discrimination is

A. first degree
B. second degree
C. third degree
D. fourth degree
Answer» D. fourth degree
25.

The price which is initially low is called --------

A. limit price
B. full cost price
C. penetration price
D. psychological price
Answer» C. penetration price
26.

A fall in the price of the commodity whose demand curve is a rectangular hyperbola causes total expenditure on the commodity

A. increases
B. decreases
C. remains unchanged
D. none of the above
Answer» D. none of the above
27.

If the quantity demanded remains unchanged as the price of the commodity falls, the coefficient of price elasticity of demand is

A. greater than
B. one equal to one
C. smaller than one
D. zero
Answer» D. zero
28.

An increase in the price of the commodity when demand is inelastic causes the total expenditure of consumers of the commodity to

A. increase
B. decrease
C. remains unchanged
D. any of the above
Answer» D. any of the above
29.

A negative income elasticity of demand for a commodity indicates that as income falls, the amount of the commodity purchased

A. rises
B. falls
C. remains unchanged
D. none of the above
Answer» A. rises
30.

Most common form of price discrimination is

A. first degree price discrimination
B. second degree price discrimination
C. third degree price discrimination
D. fourth degree price discrimination
Answer» A. first degree price discrimination
31.

If the income elasticity of demand is greater than one, then the commodity is

A. necessity
B. luxury
C. inferior
D. non-related commodity
Answer» A. necessity
32.

If the income elasticity of demand for a commodity is found to be 0.4, then the commodity concerned is

A. luxury
B. necessity
C. giffen’s goods
D. independent good
Answer» C. giffen’s goods
33.

A fall in income of the consumer, other things being equal, causes

A. increase in demand
B. decrease in demand
C. increase in quantity demanded
D. decease in quantity demanded
Answer» D. decease in quantity demanded
34.

Which of the following Elasticities measure movement along a curve, rather than a shift in the curve

A. price elasticity of demand
B. income elasticity of demand
C. cross elasticity of demand
D. none of the above
Answer» D. none of the above
35.

Cross elasticity of demand in the case of substitutes

A. zero
B. negative
C. positive
D. infinity
Answer» C. positive
36.

A movement down the given demand curve shows

A. increase in demand
B. decrease in demand
C. extension in demand
D. contraction in demand
Answer» D. contraction in demand
37.

Which of the following results in an increase in an increase in demand

A. fall in prices of substitutes
B. increase in price of complementary goods
C. fall in consumer’s income
D. none of the above
Answer» B. increase in price of complementary goods
38.

When total product is maximum, marginal product is

A. maximum
B. positive
C. zero
D. negative
Answer» C. zero
39.

Who popularized the degrees of price discrimination

A. alfred marshall
B. pigou
C. keynes
D. jevons
Answer» B. pigou
40.

As a result of a fall in the price total expenditure on the commodity decreases, the coefficient of elasticity will be

A. equal to one
B. greater than one
C. less than one
D. cannot sa
Answer» A. equal to one
41.

If a small change in price leads to infinitely large change in quantity demanded, then the demand is

A. perfectly elastic
B. perfectly inelastic
C. elastic
D. inelastic
Answer» C. elastic
42.

When demand curve is rectangular hyperbola, the value of price elasticity of demand will be

A. zero
B. one
C. greater than one
D. infinity
Answer» B. one
43.

Consumers are denied of any consumer surplus in ------- degree of price discrimination

A. first
B. second
C. third
D. fourth degree price discrimination
Answer» A. first
44.

On a linear demand curve, the coefficient of price elasticity is unity, then the value of MR will be

A. positive
B. zero
C. negative
D. one
Answer» B. zero
45.

Business economics lie at the borderline between economics and ------

A. political science
B. commerce
C. management
D. statistics
Answer» A. political science
46.

Planning for future is also called

A. logistic planning
B. capital planning
C. forward planning
D. none of the above
Answer» A. logistic planning
47.

Economics is concerned with allocation of --------- resources

A. abundant
B. unlimited
C. scarce
D. redundant
Answer» C. scarce
48.

The cost of next best alternative is called ---------

A. opportunity cost
B. marginal cost
C. total cost
D. sink cost
Answer» C. total cost
49.

The most important objective of the producer is -----

A. maximum sales
B. maximum profit
C. maximum revenue
D. maximum cost
Answer» A. maximum sales
50.

Who is the author Principles of Economics

A. adam smith
B. alfred marshall
C. j m keynes
D. friedman
Answer» A. adam smith
51.

Production function shows -------- relation between input and output

A. technical
B. functional
C. all of the above
D. none of the above
Answer» B. functional
52.

Value of money --------- when there is inflation

A. increase
B. stagnant
C. decrease
D. zero
Answer» A. increase
53.

The operating period in which at least one factor of production is fixed is called

A. short run
B. long run
C. medium run
D. none of the above
Answer» A. short run
54.

The operating period in which all factors of production are variable is called

A. short run
B. long run
C. medium run
D. none of the above
Answer» B. long run
55.

Uninsured risk are called

A. uncertainty
B. choice
C. inter temporal choice
D. optimum risk
Answer» A. uncertainty
56.

An example of negative externality is

A. output
B. sales
C. pollution
D. profit
Answer» C. pollution
57.

Computation of present value is called

A. discounting
B. compounding
C. adding up
D. forecasting
Answer» C. adding up
58.

Computation of future value of money is called

A. discounting
B. compounding
C. adding up
D. forecasting
Answer» D. forecasting
59.

In financial sense, investment is

A. net addition to capital stock
B. savings
C. allocation of monetary resources on assets
D. increased output
Answer» A. net addition to capital stock
60.

The assets known as gilt edged securities

A. debenture
B. government securities
C. bonds
D. gold
Answer» C. bonds
61.

The privilege of issuing company to call back bonds is known as

A. call
B. hedging
C. speculation
D. arbitrage
Answer» A. call
62.

------ is also called after market

A. primary market
B. secondary market
C. tertiary market
D. money market
Answer» A. primary market
63.

Which of the following is a non-negotiable instrument?

A. treasury bills
B. shares
C. debentures
D. bank deposit
Answer» D. bank deposit
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