Tag: introduction to managerial economics

Questions Related to introduction to managerial economics

In the two-sector model, households provide factor services to the firms and receive income in the form of ____________.

business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

  1. rent

  2. wages

  3. interest and profits

  4. all of the above

Show answer
Correct Option: D
Explanation:

In a two sector economy, the household sector renders factor services and is in return rewarded with factor payments by the firms in the form of rent, wages, interest and profits.

In an open economy, ___________ plays an important role.

business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

  1. government

  2. foreign trade

  3. firms

  4. households

Show answer
Correct Option: B
Explanation:

A country that undertakes trade with other countries is termed as an open economy. The open economy is characterised with four sectors, namely, firms, households, government and the foreign sector.

________________________ is the total amount of goods and services demanded in the economy.

business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

  1. Aggregate demand

  2. Demand

  3. Individual demand

  4. None of the above

Show answer
Correct Option: A
Explanation:

Aggregate demand refers to the demand for the final output in the economy, which all the buyers in the economy desire to purchase, backed by sufficient purchasing power at the general price level and the employment level in the economy. 

According to the Keynesian theory of income determination, income and output in the short run depends on aggregate demand.

business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

  1. True

  2. False

Show answer
Correct Option: A

In a two-sector economy model factor income of the households is equal to factor payments by firms.

business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

In a two sector economy, the household sector renders factor services and in return receive factor payments from the firms, which includes rent, wages, interest and profits which is regarded as the factor income by the household sector. Thus, factor incomes equal factor payments in a two sector economy.

An open economy is an economy that engages in international trade in goods and services.

business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

  1. True

  2. False

Show answer
Correct Option: A
Explanation:

A country that undertakes trade with other countries, i.e, imports and exports goods and services, is termed as an open economy. The open economy is characterised with four sectors, namely, firms, households, government and the foreign sector.


At the point of equilibrium of firm (under perfect competition) _____________.

business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

  1. MC curve must be rising

  2. MC curve must be falling

  3. MR cure must be rising

  4. None of the above

Show answer
Correct Option: A
Explanation:

A firm is said to be in equilibrium when it maximizes its profit. It is the point when it has no tendency either to increase or contract its output. ... So in order to be in equilibrium, the firm will attempt to maximize the difference between total revenue and total costs.When MC is falling, the cost of producing an additional unit of output tends to decrease. Under perfect competition, when price is constant, the difference between the total revenue and total variable cost tends to increase.

In binomial approach of option pricing model, fourth step is to create ________________.

business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

  1. equalize domain of payoff

  2. equalize ending price

  3. riskless investment

  4. high risky investment

Show answer
Correct Option: C
Explanation:

Binomial option pricing model is a risk-neutral model used to value path-dependent options. Under the binomial model, current value of an option equals the present value of the probability-weighted future payoffs from the options.

Consider the following statements related to certain concepts of economic management which keep frequency appearing in the news -
1. Falling share of industry in the GDP is known as de-industrilisation.
2. Falling saving rate is called as dissaving.
3. Disgorgement is a form of money laundering.
4. Demerger is creating more companies out of one company.
Select the correct ones from the list given above, using the code given below:

business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

  1. 1 and 2

  2. 2 and 3

  3. 1,2 and 3

  4. 1,2 and 4

Show answer
Correct Option: C
Explanation:

Repayment of 'illegal gains' to those who got affected by it is called disgorgement. The process of de-industrialisation was seen in case of all developed economies when the share of services sector started growing (and industry's share started falling)- it was recently used in case of India. Dissaving was seen in wake of the recession-hit western economies after 2007. Generally, those companies demerge which were created by mergers in past.

What is GDP?

business economics and quantitative methods introduction to managerial economics theories of employment and income concept of international trade macro economic analysis

  1. Gross Daily Production

  2. Gross Domestic Production

  3. Gross Domestic Power

  4. Gross Development Production

Show answer
Correct Option: B
Explanation:

Gross Domestic Production. Gross domestic product (GDP) is the market value of all officially recognized final goods and services produced within a country in a given period of time. GDP per capita is often considered an indicator of a country's standard of living.