Medi-Caps University
Mid-Sem (I) Examination Question Paper
Faculty & Program: Faculty of Management Studies/BBA
Department: Department of Management Studies
Course Name: Business Economics-I
Course Code: MS3EG01
Session: Aug-Dec 2016
Semester: Odd
Duration of Test: 2 Hrs.
Maximum Marks: 40
Q.1
i.
ii.
iii.
iv.
v.
vi.
vii.
A demand curve can shift because of changing
a) incomes b) prices of related goods c) tastes d) all of these
An increase in consumer income will increase demand for a _______ but decrease demand for a
_________
a) substitute good, inferior good b) normal good, inferior good c) inferior good, normal good
d) normal good, complementary good
When we know the quantity of a product that buyers wish to purchase at each possible price, we
know
a) Demand b) Supply c) Excess demand d) Excess supply
Economics is the study of
a) how society manages its unlimited resources. b) how to reduce our wants until we are
satisfied. c) how society manages its scarce resources d) how to fully satisfy our unlimited
wants
The law of demand states that an increase in the price of a good
a) increases the supply of that good. b) decreases the quantity demanded for that good along its
demand curve c) decreases the demand for that good. d) increases the quantity supplied of that
good along its supply curve.
A utility function that describes how much of one market basket is preferred to another is
called
a) an ordinal utility function b) a cardinal utility function c) a utility-maximizing function d) a
definitive utility function
According to the law of diminishing marginal utility
a) Utility is at a maximum with the first unit b) Increasing units of consumption increase the
marginal utility c) Marginal product will fall as more units are consumed d) Total utility will
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rise at a falling rate as more units are consumed
viii. The rate at which a consumer is ABLE to substitute one good for another is determined by the
a) consumer's income b) indifference map c) ratio of the prices of the goods d) marginal
ix.
x.
Q.2
rate of substitution
Economics assumes
a) rational behaviour b) ideal behaviour c) irrational behaviour d) social behaviour
A university decides to raise tuition fees to increase the total revenue it receives from students.
This strategy will work if the demand for education at that university is
a) Inelastic b) Elastic c) Perfectly elastic d) Unit elastic
i.
Discuss in brief the fundamental nature of economics.
ii.
Profit maximisation is theoretically the most sound but practically unattainable objective of
business firms. Do you agree with this statement? Comment.
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Q.3
Write Short notes on (Any Two)
a) Income and substitution effect b) Consumer equlilibrium c) Marris hypothesis of
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Maximisation of Growth rate.
Q.4
i.
ii.
Why the demand slopes downward to the right?
Explain the different types of elasticity with suitable diagram.
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