Business Economics Mock Test - 4

Question 1

In the long run under which competition a firm may earn super normal profits?

Accepted Answer

Monopoly

Answer

Monopolistic competition

Answer

Perfect competition

Answer

Oligopoly

Question 2

In Law of negative returns (Third stage of Law of variable proportions)

Accepted Answer

Total Product declines, MP is negative

Answer

Total Product declines, MP is positive

Answer

Total Product declines, MP is Zero

Answer

Total Product in constant, MP is constant

Question 3

Supply of a good and its price have

Accepted Answer

Positive relationship

Answer

Negative relationship

Answer

Inverse relationship

Answer

No relationship

Question 4

If firm ’s average cost curve is falling then marginal curve must be:

Accepted Answer

Below average cost curve

Answer

Falling

Answer

Rising

Answer

None of the above

Question 5

An expansion in the supply of a good is caused by a:

Accepted Answer

Rise in the price of good

Answer

Fall in the prices of other goods

Answer

Fall in the prices of factors of production

Answer

All of the above

Question 6

Which of the following has the lowest price elasticity of supply?

Accepted Answer

Perishable goods

Answer

Luxury

Answer

Necessities

Answer

Salt

Question 7

In Economics, the central economic problem means:

Accepted Answer

Output is restricted to the limited availability of resources

Answer

Consumers do not have as much money as they would wish

Answer

There will always be certain level of unemployment

Answer

Resources are not always allocated in an optimum way

Question 8

The law of scarcity

Accepted Answer

Implies that all consumer wants will never be completely satisfied.

Answer

Does not apply to rich, developed countries

Answer

Does not apply to poor, under developed countries

Answer

Implies only to socialist economies.

Question 9

For the prices- taking firm :

Accepted Answer

Marginal revenue is equal to price

Answer

Marginal revenue is less than price

Answer

Marginal revenue is greater than price

Answer

The relationship between marginal revenue and price is indeterminate

Question 10

A monopolist is able to maximize his profits when:

Accepted Answer

His marginal cost is equal to marginal revenue

Answer

His output is maximum

Answer

He charges high price

Answer

His average cost is minimum

Question 11

In Imperfect competition:

Accepted Answer

Excess capacity always exists

Answer

Excess capacity never exists

Answer

Excess capacity may or may not exist

Answer

None of the above

Question 12

Product differentiation is the most important feature of:

Accepted Answer

Monopolistic Competition

Answer

Monopoly

Answer

Oligopoly

Answer

Perfect Competition

Question 13

Relationship between AR, MR and Price elasticity of demand is

Accepted Answer

MR = AR × [e-1/e]

Answer

MR = AR + [e-1/e]

Answer

AR = MR × [e-1/e]

Answer

MR = AR × [e/e – 1]

Question 14

In a perfectly competitive firm, MC curve above AVC is the _____ Curve of the firm

Accepted Answer

Supply

Answer

Average cost

Answer

Marginal revenue

Answer

Demand

Question 15

Questions like what should be the level of national inc om e, what should be the wage rate fall within the scope of:

Accepted Answer

Normative Science

Answer

Positive Science

Answer

Both (a) and (b)

Answer

None of the above

Question 16

Which of the following is not one of the features of capitalist economy?

Accepted Answer

No profit, No Loss motive

Answer

Right of private property

Answer

Freedom of choice by the consumers

Answer

Competition

Question 17

Which is not the assumption of Indifference curve Analysis?

Accepted Answer

The consumer is not capable of ranking all combinations

Answer

The consumer is rational and possesses full information about all the aspects of economic environment

Answer

If consumer prefers combination A to B, and B to C, then he must prefer combination A to C

Answer

If combination A has more commodities than combination B, then A must be preferred to B.

Question 18

The horizontal demand curve parallel to x-axis implies that the elasticity of demand is

Accepted Answer

Infinite

Answer

Zero

Answer

Equal to one

Answer

Greater than zero but less than infinity

Question 19

When is TP maximum

Accepted Answer

When MP becomes Zero

Answer

When AP becomes Zero

Answer

At the intersec ting point of AP and M P

Answer

When MP is highest

Question 20

Variable cost includes the cost of

Accepted Answer

Material bought

Answer

Buying land and building

Answer

Hire charges of machinery

Answer

Insurance premium

Question 21

Which of the following is correct?

Accepted Answer

Marginal cost is always equal to the average cost at its minimum point.

Answer

Marginal cost is always less than the average cost.

Answer

Marginal cost is always more than the average cost.

Answer

Marginal cost is always equal to the average cost

Question 22

When average cost curve is rising then, marginal cost

Accepted Answer

Must be above the average cost curve

Answer

Must be decreasing

Answer

Must be constant

Answer

Must be equal to average cost

Question 23

A firm has variable cost of Rs. 1,000 at 5 units of output. If fixed cost are Rs. 400, what will be the average total cost at 5 units of output?

Accepted Answer

280

Answer

380

Answer

60

Answer

400

Question 24

The vertical difference between TVC and TC is equal to:

Accepted Answer

TFC

Answer

MC

Answer

AVC

Answer

None of the above

Question 25

The consumer is in equilibrium when:

Accepted Answer

When marginal utility is equal to price of the good

Answer

When marginal utility is constant

Answer

When marginal utility is greater than price of the good

Answer

When marginal utility is less than price of the good

Question 26

Capital is a :

Accepted Answer

Stock concept

Answer

Flow Concept

Answer

Both (a) and (b)

Answer

None of the above

Question 27

Which is not the function of an entrepreneur?

Accepted Answer

Mobilisation of savings

Answer

Initiating a business enterprise and resource co-ordination

Answer

Risk bearing or uncertainty bearing

Answer

Innovation

Question 28

A higher indifference curve shows:

Accepted Answer

A higher level of satisfaction

Answer

A higher level of production

Answer

A higher level of income

Answer

None of the above

Question 29

In case of an inferior good the income elasticity of demand is:

Accepted Answer

Negative

Answer

Zero

Answer

Positive

Answer

None of the above

Question 30

When quantity demanded changes by larger percentage than does price, elasticity is termed as:

Accepted Answer

Elastic

Answer

Inelastic

Answer

Perfectly Elastic

Answer

Perfec tly Inelastic

Business Economics Mock Test - 4 Free Online Test 2026

Full Mock Test & Solutions: Business Economics Mock Test - 4 (60 Questions)

In the long run under which competition a firm may earn super normal profits?

In Law of negative returns (Third stage of Law of variable proportions)

Supply of a good and its price have

If firm ’s average cost curve is falling then marginal curve must be:

An expansion in the supply of a good is caused by a:

Which of the following has the lowest price elasticity of supply?

In Economics, the central economic problem means:

The law of scarcity

For the prices- taking firm :

A monopolist is able to maximize his profits when:

In Imperfect competition:

Product differentiation is the most important feature of:

Relationship between AR, MR and Price elasticity of demand is

In a perfectly competitive firm, MC curve above AVC is the _____ Curve of the firm

Questions like what should be the level of national inc om e, what should be the wage rate fall within the scope of:

Which of the following is not one of the features of capitalist economy?

Which is not the assumption of Indifference curve Analysis?

The horizontal demand curve parallel to x-axis implies that the elasticity of demand is

When is TP maximum

Variable cost includes the cost of

Which of the following is correct?

When average cost curve is rising then, marginal cost

A firm has variable cost of Rs. 1,000 at 5 units of output. If fixed cost are Rs. 400, what will be the average total cost at 5 units of output?

The vertical difference between TVC and TC is equal to:

The consumer is in equilibrium when:

Capital is a :

Which is not the function of an entrepreneur?

A higher indifference curve shows:

In case of an inferior good the income elasticity of demand is:

When quantity demanded changes by larger percentage than does price, elasticity is termed as:

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