Economics · Commerce Accountancy

Microeconomics and Pricing

1,364 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 economics circular flow of income and methods of calculating national income some macroeconomic identities national income accounting national income aggregates

National product at market prices is higher than national product at factor cost by the amount of ____________.

  1. subsidy

  2. indirect taxes + subsidies

  3. indirect taxes

  4. indirect taxes - subsidies
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

National product at market price includes indirect taxes and excludes subsidies compared to factor cost. Thus, Market Price = Factor Cost + Indirect Taxes - Subsidies.

Multiple choice organisation of commerce and management channels of distribution elements of marketing mix middlemen physical distribution and channels

Intensive distribution methods are usually adopted in the case of ______.

  1. luxury goods

  2. convenience goods

  3. inferior goods

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Intensive distribution aims to stock products in as many outlets as possible. This is typical for convenience goods, which consumers expect to find easily without much effort.

Multiple choice mathematical modelling proof by contradiction similar triangles

A simple market model is an example of

  1. Static physical model

  2. Dynamic physical model

  3. Static mathematical model

  4. Dynamic mathematical model
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In $simple-market-model$  generally there is a balance between supply and demand. Both factors depend on price. Demand for the commodity will be low when the price is high and it will increase as the price drops. If we take the simplistic linear case the relationship between demand (𝑄) and price (𝑃) might be represented by the straight line.


Therefore,  $simple-market-model$  is a $static-mathematical-model$ as it doesn't vary with time.

Multiple choice business organisation and correspondence middlemen 1 - wholesaler characteristics, necessity, services and survival of a wholesaler the characteristics of wholesalers wholesalers characteristics of wholesale trade kinds of mercantile agents or agent middlemen

Wholesalers increase the cost of marketing and price of the products goes up. State whether this is an argument which favors elimination of wholesalers.

  1. True

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

Elimination of Wholesalers:

1. Wholesalers are middlemen between the manufacturers and the retailers. They increase the cost of marketing and price of the products goes up. The consumers have to pay higher price. By eliminating wholesalers, prices of the products will decrease and the consumer shall benefit. The manufacturers will be earning more profit on account of lesser prices of the products.

2. Wholesalers are unnecessary links between manufacturers and retailers. Their presence in the distribution channel obstructs the smooth and quick delivery of goods from the manufacturers to the ultimate consumers. If they are eliminated, the unrestricted supply of goods takes place from the manufacturers to the retailers and the consumers.

3. During the slack seasons and scarcity in business activities demand, the wholesalers resort to hoarding and stocking of goods and sell them at exorbitant prices charging excessive profits.

4. In certain regions, the wholesaler is the sole distributor of the product. He occupies the monopolistic position and exploits both the retailers and the consumers by charging higher prices if the wholesalers are eliminated it would be in the best interest of both the retailers and the consumers.

5. Big and established retailers such as large departmental stores can afford to make their own purchases directly from the manufacturers without approaching the wholesaler. The wholesalers are easily eliminated.

Multiple choice economics laws of returns - returns to a factor and returns to scale production and costs production function producer behaviour and supply total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function land land,labour, capital and entrepreneur how does production take place?

In the long run there is enough time for the firm to cover its losses and earn normal profits. This is because in the long run, all inputs are __________.

  1. identical

  2. homogenous

  3. variable

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

In the long run, firms have sufficient time to adjust all factors of production, meaning all inputs become variable. This flexibility allows firms to optimize their scale of operations.

Multiple choice economics laws of returns - returns to a factor and returns to scale production and costs production function producer behaviour and supply total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function land land,labour, capital and entrepreneur how does production take place?

____ refers to that period in which supply of a commodity can be increased or decreased depending upon changed condition of demand. 

  1. Very short period

  2. Short period

  3. Long period

  4. Very long period
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The long period provides sufficient time for firms to adjust their production capacity in response to changes in market demand, making supply more elastic.

Multiple choice economics laws of returns - returns to a factor and returns to scale production and costs production function producer behaviour and supply total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function land land,labour, capital and entrepreneur how does production take place?

The "law of diminishing returns" applies to _________.

  1. the short run, but not the long run

  2. the long run, but not the short run

  3. both the short run and the long run

  4. neither the short run nor the long run
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

For the law of diminishing return to operate at least one factor needs to be fixed, as only then can factor proportions be changed, this happens in the short run. In the long run all factors are variable and thus it is not possible for the law of diminishing returns to operate.

Multiple choice economics laws of returns - returns to a factor and returns to scale production and costs production function producer behaviour and supply total product, average product and marginal product production and law of variable proportions production return to scale and cobb douglas function land land,labour, capital and entrepreneur how does production take place?

Law of Returns to Scale indicates the responsiveness of total product when all inputs ________________.

  1. Remain same

  2. Are changed drastically

  3. Are changed marginally

  4. Are changed proportionately
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

Returns to Scale examines the relationship between output and inputs when all inputs are changed in the same proportion. It describes the long-run production function.

Multiple choice business mathematics and statistics applications of calculus marginal income and marginal cost to find the maximum profit if marginal revenue and marginal cost function are given: integral calculus – ii

The demand function of a monopolist is given by $p=1500-2x-x^2$. Find the marginal revenue when $x=10$.

  1. $1170$
  2. $1160$
  3. $1150$

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

$\Rightarrow$  We have, $p=1500-2x-x^2$

$\Rightarrow$  Revenue Function   $R=p\times x$
$\therefore$       $R=1500x-2x^2-x^3$.
$\Rightarrow$   Marginal revenue = $\dfrac{d}{dx}R$

$\Rightarrow$   Marginal revenue = $\dfrac{d}{dx}(1500x-2x^2-x^3)$ 

$\Rightarrow$   Marginal revenue = $1500-4x-3x^2$
$\Rightarrow$   Now, substitute $x=10$.
$\Rightarrow$   Marginal revenue = $1500-2(100)-3(100)^2=1160$
$\therefore$   Marginal revenue is $1160$.

Multiple choice business mathematics and statistics applications of calculus marginal income and marginal cost to find the maximum profit if marginal revenue and marginal cost function are given: integral calculus – ii

If the demanding Law is given by $q = \dfrac{20}{p+1}$, find the elasticity of demand with respect to price at the point when $p = 3.$

  1. $\dfrac43$
  2. $-\dfrac34$
  3. $\dfrac23$
  4. $-\dfrac32$
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation
Elasticity of demand $=\cfrac{\cfrac{dq}{q}}{\cfrac{dp}{p}}=-\cfrac{p}{(p+1)}$
When $p=3$
Elasticity of demand $=-\cfrac{3}{4}$
Multiple choice business organisation introduction to financial markets concept of financial market meaning and definition of financial market concepts and functions of financial markets

Answer the following question.
Primary and secondary markets _______.

  1. Compete with each other

  2. Complement each other

  3. Function independently

  4. Control each other
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Primary market deals with the issue of new securities. That is, through the primary market a company raises capital directly from the borrowers. That is, once the securities are issued in primary market, they are then traded in the secondary market. It is in this sense that both the markets complement each other

Multiple choice elements of business large scale retail trade forms of large scale retail stores types of retail organisation types of retailing

The ________  may raise costs in super markets.

  1. lack of personal attention

  2. requirement of huge capital

  3. high overhead expenses

  4. mishandling of goods by customers
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation

One of the most basic reasons companies raise prices on their products and services is to adjust to increased business costs. A product reseller, for instance, might raise prices simply because its supplier raised prices on materials or finished goods.

Multiple choice elements of business large scale retail trade forms of large scale retail stores types of retail organisation types of retailing

Why are the prices of goods lower in super markets than in other retail stores?

  1. Because of bulk purchasing.

  2. Low profit margins.

  3. Both A and B

  4. None of the above
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A super market is a large retailing business unit selling wide variety of consumer goods on the basis of low margin appeal, wide variety and assortment, self-service and heavy emphasis on merchandising appeal.

The prices of the products are generally lower than other types of retail stores because of bulk purchasing, lower operational cost, and low profit margins.

Multiple choice social science prices and cost of living value and price utility, value and price price rise/inflation

Demand price is identical with __________.

  1. AR

  2. MR

  3. TR

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

Average revenue refers to the revenue per unit of output sold. It is obtained by dividing the total revenue by the number of units. AR is equal to per unit sale receipts and price is always per unit. Since sellers receive revenue according to the price, price and AR are one and the same thing.

TR= Quantity * Price

AR= TR/ Quantity

AR= (Quantity * price)/ quantity

AR= Price