Institute of Chartered Financial Analysts of India (ICFAI) University 2007 Certification Finance Economics (CFA520): - Question Paper

(1 mark)
(a) Advertising outlay incurred for the product
(b) Freedom of entry and exit
(c) Product differentiation
(d) Downward sloping demand curve
(e) Small size of the market.
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33. If a monopolist faces an upward shift in marginal cost curve, then
(1 mark)
(a) The price increases and output reduces
(b) Both the price and output will increase
(c) The price reduces and output increases
(d) Both the price and output will reduce
(e) Both the price and output will remain constant.
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34. Which of the subsequent is not a common characteristic of perfect competition and monopolistic
competition?
(1 mark)
(a) Large number of sellers
(b) Free entry
(c) Homogeneous product
(d) Large number of buyers
(e) Free exit.
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35. Best Cereals Inc. (BCI) produces and markets Tasties, a popular ready-to-eat breakfast cereal. The
demand and supply functions of Tasties are as follows:
QD = 150 – 3P
QS = 50 +10P
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If excise tax of Rs.3 is imposed on Tasties, the proportion of tax that will be borne by the consumers is
(2 marks)
(a) 88%
(b) 77%
(c) 63%
(d) 56%
(e) 44%.
36. The total cost function and demand function of a good are estimated to be TC = 100 – 5Q + 2Q2 and Q
= 100 – P respectively. If the current output is five units, the avg. profit is
(2 marks)
(a) Rs. 50
(b) Rs. 60
(c) Rs. 65
(d) Rs. 70
(e) Rs.120.
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37. For a firm, the avg. cost function is estimated as
AC = + 20 + 4Q.
What is total variable cost for the firm at an output of 15 units?
(2 marks)
(a) Rs. 100
(b) Rs. 750
(c) Rs.1,200
(d) Rs.1,300
(e) Rs.2,100.
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38. In a perfectly competitive market, the marginal revenue curve
(1 mark)
(a) Slopes downward
(b) Slopes upward
(c) Is vertical
(d) Is horizontal
(e) Is absent.
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39. The subsequent data is taken from National Income Accounts of a country:

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