Economics · Commerce Accountancy

Microeconomics and Pricing

1,413 Questions

Microeconomics and pricing analyze market structures, consumer utility, marginal cost, and strategic pricing models like predatory pricing. These foundational economic concepts are regularly featured in civil services and state administrative examinations. Solve these practice questions to understand market equilibrium, demand elasticity, and competitive firm behavior.

Market equilibrium pricingIncome elasticity of demandMarginal cost conceptsUtility functions analysisPredatory pricing strategiesOligopoly market structures

Microeconomics and Pricing Questions

Multiple choice

In exponential smoothening method, which one of the following is true?
  1. 0 $\leq$ $\alpha$ $\leq$ 1 and high value of $\alpha$ is used for stable demand
  2. 0 $\leq$ $\alpha$ $\leq$ 1 and high value of $\alpha$ is used for unstable demand
  3. $\alpha$ $\geq$ 1 and high value of $\alpha$ is used for stable demand
  4. $\alpha$ $\leq$ 0 and high value of $\alpha$ is used for unstable demand
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

High value of ‘$\alpha$’ shows more weightage is given to immediate forecast. Less value of ‘$\alpha$’ shows less weightage is given to immediate forecast or almost equal weightage is given. So high value of ‘$\alpha$’ is chosen when nature of demand is not reliable or unstable.

Multiple choice

A moving average system is used for forecasting weekly demand. F1(t) and F2(t) are sequences of forecasts with parameters m1 and m2, respectively, where m1 and m2(m1 > m2) denotes the numbers of weeks over which the moving averages are taken. The actual demands shows a step increase from d1 to d2 at a certain time. Subsequently,

  1. neither F1(t) nor F2(t) will catch up with the value d2

  2. both sequences F1(t) and F2(t) will reach d2 in the same period

  3. F1(t) will attain the value d2 before F2(t)

  4. F2(t) will attain the value d2 before F1(t)
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Multiple choice

A stockist wishes to optimize the number of perishable items he needs to stock in any month in his store. The demand distribution for this perishable item is given in the table:

The stockist pays Rs. 70 for each item and he sells each at Rs. 90. If the stock is left unsold in any month, he can sell the item at Rs. 50 each. There is no penalty for unfulfilled demand. To maximize the expected profit, the optimal stock level is

  1. 5 units

  2. 4 units

  3. 3 units

  4. 2 units
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Multiple choice statistics time series moving average and variation simple moving average

For 10 observations on price (x) and supply (y), the following data was obtained: $\sum x = 130, \sum y = 220, \sum x^2 = 2288, \sum y^2 = 5506$ and $\sum xy = 3467$. 
What is the line of regression of y on x?

  1. $y = 0.91 x + 8.74$
  2. $y = 1.02x + 8.74$
  3. $y = 1.02 x - 7.02$
  4. $y = 0.91 x - 7.02$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Line of regression of $y$ on $x$ is : $y - \overline{y} = b_{yx} (x - \overline{x})$ where $\overline{y}$ and $\overline{x}$ are mean values.
$\therefore \overline{y}=22, \overline{x}=13$ as $n=10$

Also, $b_{yx}=r\dfrac{\sigma_y}{\sigma_x}$

$\therefore r= \dfrac{n\sum-(\sum x)(\sum y)}{\sqrt{[n\sum x^2-(\sum x)^2][n\sum y^2-(\sum y)^2]}}=0.962$

$\sigma_y=8.2$ and $\sigma_x=7.73$

$\therefore b_{yx}=1.02$

$\therefore y=1.02x+8.74$ is the required line of regression.
Multiple choice economics fundamental concepts and terminologies savings, investment, wealth, welfare and business cycle fundamental duties and directive principles fundamental duties and directive principles of state policy

When we say that the Demand for a commodity depends upon the money income of the Consumer, we are referring to -

  1. Income Effect

  2. Substitution Effect

  3. Demonstration Effect

  4. Utility Effect
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

The income effect describes how a change in a consumer's real income, due to a change in the price of a commodity, affects the quantity demanded.

Multiple choice business organisation and correspondence classification of busniess activities business as an activity meaning and types of trade trade and aids to trade

_______ helps in bring about stable and uniform prices indifferent markets as traders are able to equalize the supply of goods at different places according to demand.

  1. Transport

  2. Warehousing

  3. Banking

  4. Insurance
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Transportation is a major contributor to the economy and a competitive force in business. It is the activity that physically connects the business to its supply chain partners, such as suppliers and customers, and is a major influence on the customer's satisfaction with the company.

Multiple choice business mathematics and statistics applications of calculus revenue functions from marginal revenue functions minimization of cost function and maximization of revenue function and profit function integral calculus – ii

The demand function if $p = 60 + 2D - 10D^2$, the rate of charge in price with respect to demand is ______

  1. $\dfrac{60}{D} + 2 - 10D$
  2. $2 - 20D$
  3. $2 - 40D$

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The rate of change of price with respect to demand is the derivative dp/dD. Differentiating p = 60 + 2D - 10D² term by term gives dp/dD = 0 + 2 - 20D = 2 - 20D. Option A incorrectly divides 60 by D, and Option C has an incorrect coefficient.

Multiple choice business mathematics and statistics applications of calculus revenue functions from marginal revenue functions minimization of cost function and maximization of revenue function and profit function integral calculus – ii

Find the elasticity of supply when price $5$ units. Supply function is given by $q = 25 - 4p +p^2$

  1. $1$
  2. $2$
  3. $0$

  4. Cannot be determined
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation
$q=25-4p+p^{2}$
Elasticity of supply $=\cfrac{\cfrac{dq}{q}}{\cfrac{dp}{p}}=\cfrac{(-4+2p)\times p}{(25-4p+p^{2})}$
When $p=5$ units
Elasticity of supply $=\cfrac{(-4+10)\times 5}{(25-20+25)}=1$
Multiple choice business mathematics and statistics applications of calculus revenue functions from marginal revenue functions minimization of cost function and maximization of revenue function and profit function integral calculus – ii

Find the elasticity of supply for supply function $x = 2p^2+5$, when $p=3$.

  1. $\dfrac{23}{36}$
  2. $\dfrac{36}{23}$
  3. $\dfrac{63}{32}$

  4. None of these
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Elasticity of supply$\Rightarrow\cfrac{\cfrac{+dx}{x}}{\cfrac{dp}{p}}$$\Rightarrow\cfrac{(4p)p}{2p^{2}+5}$
Elasticity of supply when $p=3\Rightarrow\cfrac{36}{23}$
Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

Which of the following is NOT a characteristic of perfect competition?

  1. Free entry and exit of the firms

  2. The demand curve of firm is horizontal

  3. The marginal revenue curve is horizontal

  4. An individual firm can influence the price
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

In perfect competition, firms are price takers, meaning they have no power to influence the market price. Options A, B, and C are all standard characteristics of perfect competition.

Multiple choice elements of accounts origin of transactions - source documents and preparation of vouchers business transactions and source document source documents voucher and transactions

When marginal is negative, it must be true that _______________.

  1. The average is negative

  2. The average is decreasing

  3. The total is negative

  4. The total is decreasing
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Marginal value is the change in total value. If the marginal value is negative, it means the total value is decreasing with each additional unit.

Multiple choice social science index number value and price important index numbers price rise/inflation

If customers perceive that price of product is greater than value then customer _______.

  1. Would get product free of cost

  2. Would get discount

  3. Would buy that product

  4. Would not buy the product
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

If customers after bergain find out the offered price of a product is more than what it is originally, that means the customer needs to give a higher price for their satisfaction. In such a case, the opportunity cost of the product is more than expected. o customers will prefer not buy such products.

Multiple choice social science index number value and price important index numbers price rise/inflation

Set price limit from which no more demand is accepted is termed as _______.

  1. Cost ceiling

  2. Cost floor

  3. Price ceiling

  4. Price floor
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A price ceiling is a government-imposed price control or limit on how high a price is charged for a product. Governments intend price ceilings to protect consumers from conditions that could make commodities prohibitively expensive. Such conditions can occur during periods of high inflation or in monopolistic markets.