1 $Which of the following best defines Business Economics ?$

A.

It is a branch of physics applied to money.

B.

It is the integration of economic theory with business practice for decision making.

C.

It is the study of how governments tax businesses.

D.

It is the study of the stock market exclusively.

2 $Business Economics is primarily__in nature.$

A.

Political

B.

Macroeconomic

C.

Historical

D.

Microeconomic

3 $The concept of Opportunity Cost refers to:$

A.

The cost of the next best alternative foregone.

B.

The accounting cost of a product.

C.

The cost of the next best alternative accepted.

D.

The total revenue generated minus expenses.

4 $According to the Law of Demand, assuming ceteris paribus, there is an__relationship between price and quantity demanded.$

A.

Unrelated

B.

Proportional

C.

Inverse

D.

Direct

5 $Which of the following assumptions is represented by the phrase "Ceteris Paribus" ?$

A.

Demand always equals supply

B.

Consumers are irrational

C.

Prices fluctuate freely

D.

All other things being equal/constant

6 $Which of the following is NOT a determinant of demand?$

A.

Cost of production

B.

Tastes and preferences

C.

Price of related goods

D.

Income of the consumer

7 $If goods X and Y are substitutes, an increase in the price of X will likely lead to:$

A.

An increase in the demand for Y

B.

A decrease in the demand for Y

C.

No change in the demand for Y

D.

A decrease in the supply of Y

8 $For Complementary Goods (e.g., Car and Petrol), the cross-elasticity of demand is:$

A.

Negative

B.

Infinite

C.

Zero

D.

Positive

9 $A Giffen Good is a special type of inferior good where:$

A.

Demand decreases as price decreases.

B.

Demand is perfectly elastic.

C.

Demand increases as income increases.

D.

The law of supply does not apply.

10 $Which of the following best describes the Law of Supply ?$

A.

B.

C.

D.

11 $A Movement along the demand curve is caused by:$

A.

A change in technology.

B.

A change in the price of the good itself.

C.

A change in the price of substitutes.

D.

A change in consumer income.

12 $A Shift in the supply curve to the right indicates:$

A.

Decrease in supply

B.

Contraction of supply

C.

Increase in supply

D.

Expansion of supply

13 $Which factor would cause a Leftward Shift in the supply curve?$

A.

Increase in the number of sellers

B.

Decrease in the price of raw materials

C.

Improvement in technology

D.

Increase in taxes on the product

14 $Market Equilibrium occurs when:$

A.

Quantity Supplied > Quantity Demanded

B.

Quantity Demanded = Quantity Supplied

C.

Quantity Demanded > Quantity Supplied

D.

Price is zero

15 $If the market price is above the equilibrium price, there will be:$

A.

Equilibrium

B.

No trade

C.

Excess Demand (Shortage)

D.

Excess Supply (Surplus)

16 $If demand increases while supply remains constant, the equilibrium price will:$

A.

Become zero

B.

Increase

C.

Remain unchanged

D.

Decrease

17 $The Price Elasticity of Demand (PED) measures:$

A.

The responsiveness of quantity demanded to a change in income.

B.

The responsiveness of quantity supplied to a change in price.

C.

The responsiveness of quantity demanded to a change in the good's own price.

D.

The slope of the supply curve.

18 $The mathematical formula for Price Elasticity of Demand is:$

A.

B.

C.

D.

19 $If the Price Elasticity of Demand is, demand is considered:$

A.

Inelastic

B.

Elastic

C.

Unitary Elastic

D.

Perfectly Inelastic

20 $A vertical demand curve represents:$

A.

Perfectly Elastic Demand ()

B.

Perfectly Inelastic Demand ()

C.

Unitary Elastic Demand ()

D.

Relatively Elastic Demand

21 $Which of the following goods is likely to have Inelastic Demand ?$

A.

Salt (Necessity)

B.

Luxury cars

C.

Vacation packages

D.

Specific brand of chocolate

22 $If a good has many close substitutes, its demand is likely to be:$

A.

Perfectly Inelastic

B.

Inelastic

C.

Highly Elastic

D.

Unitary Elastic

23 $According to the Total Outlay (Revenue) Method, if Price falls and Total Expenditure rises, demand is:$

A.

Inelastic ()

B.

Unitary ()

C.

Elastic ()

D.

Perfectly Inelastic

24 $Which graph represents Unitary Elastic Demand throughout?$

A.

A straight line with positive slope

B.

A vertical line

C.

A horizontal line

D.

A rectangular hyperbola

25 $Veblen goods (Snob appeal goods) are an exception to the law of demand because:$

A.

Government regulates their prices.

B.

They are bought for their status symbol at high prices.

C.

They are inferior goods.

D.

They have zero opportunity cost.

26 $If income increases and the demand for a good decreases, the good is:$

A.

An Inferior Good

B.

A Normal Good

C.

A Luxury Good

D.

A Necessity

27 $The slope of a normal demand curve is:$

A.

Positive

B.

Negative

C.

Zero

D.

Undefined

28 $What happens to the supply curve if there is a technological advancement in production?$

A.

It shifts to the right.

B.

It becomes vertical.

C.

It shifts to the left.

D.

It creates a movement upward along the curve.

29 $A Price Floor set above the equilibrium price results in:$

A.

A Shortage

B.

A Surplus

C.

Market Clearing

D.

Excess Demand

30 $A Price Ceiling set below the equilibrium price results in:$

A.

Reduced Demand

B.

A Shortage

C.

A Surplus

D.

Higher Profits

31 $Income Elasticity of Demand is calculated as:$

A.

without percentages

B.

C.

of consumer

D.

of substitute

32 $If the Cross Elasticity of Demand between two goods is Positive, the goods are:$

A.

Substitutes

B.

Unrelated

C.

Inferior

D.

Complements

33 $The quantity supplied of a good is a function of:$

A.

B.

C.

D.

34 $An Expansion of supply is represented diagrammatically by:$

A.

A rightward shift of the supply curve.

B.

An upward movement along the same supply curve.

C.

A downward movement along the same supply curve.

D.

A leftward shift of the supply curve.

35 $In the Short Run, demand is generally:$

A.

Unrelated to time.

B.

More elastic than in the long run.

C.

Perfectly elastic.

D.

Less elastic than in the long run.

36 $Which of the following is a characteristic of Normative Economics ?$

A.

It deals with facts and cause-effect relationships.

B.

It uses statistical data to prove theories.

C.

It involves value judgments and opinions ("what ought to be").

D.

It describes "what is".

37 $If a 10% increase in price leads to a 5% decrease in quantity demanded, the demand is:$

A.

Inelastic

B.

Elastic

C.

Unitary

D.

Perfectly Elastic

38 $The Point Method of measuring elasticity is used when:$

A.

Changes in price and quantity are very large.

B.

Total revenue remains constant.

C.

We want to measure elasticity over a range.

D.

Changes in price and quantity are infinitesimally small.

39 $The Arc Elasticity formula uses:$

A.

The slope of the curve only.

B.

The average of initial and final prices and quantities.

C.

The final price and quantity only.

D.

The initial price and quantity only.

40 $A good that absorbs a very small proportion of a consumer's budget (e.g., matchbox) tends to have:$

A.

Unitary Demand

B.

Highly Elastic Demand

C.

Inelastic Demand

D.

Positive Slope Demand

41 $Which economic problem deals with the selection of goods to be produced?$

A.

What to produce?

B.

When to produce?

C.

How to produce?

D.

For whom to produce?

42 $If the demand curve is and, what is the quantity demanded?$

A.

80

B.

100

C.

90

D.

20

43 $At the equilibrium point, the forces of supply and demand are:$

A.

Balanced

B.

Controlled by government

C.

Non-existent

D.

Opposing but unequal

44 $The Substitution Effect of a price change implies that:$

A.

Consumers buy less of all goods.

B.

Supply increases.

C.

Consumers feel richer when prices fall.

D.

Consumers buy more of the relatively cheaper good.

45 $The Income Effect of a price fall implies that:$

A.

The good becomes inferior.

B.

Real income (purchasing power) of the consumer increases.

C.

The consumer works harder.

D.

Nominal income of the consumer increases.

46 $Which of the following creates a Contraction of Demand ?$

A.

Decrease in income

B.

Increase in price of the good

C.

Adverse change in taste

D.

Decrease in price of the good

47 $If both Supply and Demand increase simultaneously by the exact same proportion, the equilibrium price will:$

A.

Decrease

B.

Remain the same

C.

Fluctuate wildly

D.

Increase

48 $Demand for durable goods (like refrigerators) is generally more__than non-durable goods.$

A.

Stable

B.

Inelastic

C.

Rigid

D.

Elastic

49 $The concept of elasticity is useful for business managers in:$

A.

Increasing production costs.

B.

Ignoring competitors.

C.

Setting prices to maximize revenue.

D.

Avoiding taxes.

50 $A horizontal supply curve represents:$

A.

Perfectly Inelastic Supply

B.

Unitary Supply

C.

Zero Supply

D.

Perfectly Elastic Supply

Unit 1 - Practice Quiz