MASTER MINDS COMMERCEINSTITUTEPVT LTD …

MASTER MINDS COMMERCE INSTITUTE PVT.LTD. WWW.MASTERMINDSINDIA.COM | 9885125025 / 26

SUGGESTED ANSWERS FOR- JULY 2021ATTEMPT OF CA FOUNDATIONSURJECT:RUSINESS ECONOMICS & RUSINESS COMMERCIAL KNOWLEDGE

PARTI:BUSINESS ECONOMICS

1. FUNDAMENTALS OF ECONOMICS:Nil

2.THEORY OF DEMAND

1) Suppose the demand for automobiledecreases due to increase in pnee of petrol.Both the goods are.a) Normal b) Substitutec) Perishable d) Complementary

2) Goods which are inferior, with no closesubstitutes easily available and which occupya substantial place in consumer’s budget arecalled goods.a) Giffen b) Speculativec) Conspicuous d) Prestige

3) By ‘Change in demand’ represents which ofthe following?a) Shift of the demand curve to the right or left.b) Movement upward and downwards on thesame demand curve. /Qc) Change in budget line with change ^income.

d) Shift in the indifference curve.

4) A group of people decrease or altstop consumption of a common proto which of the following effect?a) Veblen effectb) Demonstration effectsc) Bandwagon effect d) Snob feffect

ther odue OcsV

o

8) The demand for a generic good like soap isthe demand for Lux soap is .

a) Inelastic, elastic b) Elastic, inelasticc) Inelastic, inelastic d) Elastic, elastic

9) The quantity demanded of coffee increasesby 2% when the price of tea increases by8%, the cross-elasticity of demand betweentwo products are ?a) -0.30 b) +0.30 c) +0.25 d) -0.25

10) The price of a commodity decreases from ?200to ?120 per unit. If the price elasticity of demandfor this commodity is 2 and the original quantitydemanded is 60 units, calculate the new

uantity demanded.

8 units b) 100 units120 unis d) 108 units

'o;4.THEORY OF SUPPLY:NIL

.THEORY OF CONSUMER BEHAVIOR

l4^arshall defined the concept of consumer0 surplus as the

a) Area covered in between the averagerevenue and marginal revenue curves.b) Difference between the maximum amounta person is willing to pay for a good and theamount he actually pays.c) Area inside the budget line.d) Difference between the minimum amounta person is willing to pay for a good and itsmarket price.

5) Highly priced goods are consumed by statusseeking rich people to satisfy their need forconspicuous consumption. This is calleda) Veblen effectb) Demonstration effectc) snob effect d) Bandwagon effect

3.ELASTICITY OF DEMAND

6) For which of the following product elasticity ofdemand is highly elastic?a) Salt b) Jewelleryc) Life saving medicines d) water

7) Assume that Wheat have (-) 0.4 as incomeelasticity. By this, we can say:a) Wheat is a normal goodb) Wheat is an inferior goodc) Wheat is a superior goodd) Wheat is a luxurious good

Read the following table and answer questionno. (45-46):

Quantity Consumed Total Utility0 01 3002 5003 6504 7505 8306 8907 9308 960

12) What is marginal utility when consumptionincreases from 4 units to 5 units?a) 130 b) 80 c) 160 d) 100

CA FOUNDATION | BUSINESS ECONOMICS AND B.C.K | JULY 2021 2

Downloaded From www.castudynotes.com


MASTER MINDS COMMERCE INSTITUTE PVT.LTD. WWW.MASTERMINDSINDIA.COM 9885125025 / 26

9.MARKET13) What is marginal utility when consumptionincreases from 7 units to 8 units?a) 60 b) 100 c) 40 d) 30

14) Indifference Curve analysis is based onwhich approach?a) Nominal b) Cardinalc) Marginal d) Ordinal

15) The Indifference curve for two perfectcomplementary goods isa) Z-shaped b) L-shapedc) U-shaped d) Straight line

6.PRODUCTION

23) Which of the following is the price at whichthe quantity demanded of a commodity isequal to the quantity supplied of thecommodity and there is no unsold stock or nounsupplied demand.a) Selling price b) Market clearing pricec) Asking price d) Future price

24) Which of the following is not an element of amarket?a) Knowledge about market conditionsb) No bargaining for a pricec) A product or service d) Buyers and seller

16) Which one of the following is not a necessaryfunction of an entrepreneur?a) Risk and uncertainty bearing.b) Initiating a business enterprise.c) Innovations.d) Supervision of day to day production activities.

17) Which of the following is not a passive factorof production?a) Land b) Buildingc) Labour d) Machine

7.PRODUCTION ANALYSIS:NIL

8.THEORY OF COST18) ‘Zero economic profit’ emerges due to whi

of the following condition?a) Average revenue is more than av<total costb) Marginal revenue is just equal to k#£rag^ @total cost (vTc) Marginal revenue is just equal<^CKiriarcostd) Average revenue is just equaMo averagetotal cost.

19) The difference between TFC and TC is equalto:a) Zero b) TVC c) MC d) AFC

o

eo

25) On the basis of nature of transactions,market can be classified asa) Wholesale market and retail marketb) Future market and spot marketc) Regulated market and unregulated market

Money market and Future market

26)M$ie equilibrium quantity increases but theA)phange in equilibrium price is uncertain, when

a) BotJ? demand and supply decreasebV^abiand increases and supply decreasescrBoth demand and supply increase

^Demand decreases and supply increases

2£)j^arginal revenue will be positive where price0 elasticity of demand is

a) Zero b) More than onec) Less than one d) Equal to one

28) A seller realizes1 25,000/- after selling 15units and he realizes ? 35,000/- after selling25 units, what is the marginal revenue here?a) ? 2,500/- b) ? 100/-c)1 1,000/- d) ? 3,500/-

29) The is the market where thecommodities are bought and sold in bulk orlarge quantities. Transactions generally takeplace between trades,

a) Wholesale market b) Regulated marketc) Local market d) Retail market

Use table below to answer questions 20- 22.

Output 0 1 2 3 4 5 6

Totalcost (?) 360 495 615 720 810 915 1035

20) The average fixed cost of 3 units of output isa) 1180 b) 1225 c) 1120 d) 1134

21) The marginal cost of the fifth unit of output isa) 1174 b) 1225 c) 1675 d) 1105

22) Diminishing marginal returns starts to occurbetween Units.a) 4 and 5 b) 3 and 4c) 5 and 6 d) 1 and 2

10.PRICE AND OUTPUT DETERMINATION INDIFERENT MARKETS

30) Which of the following is an example ofmonopolistic competition?a) DeBeers and Diamondsb) Hotels and pubsc) Microsoft and Window d) Dell and Lenovo

31) Which of the following is not a feature of themonopoly market?a) Large seller of the productb) No close - substitutesc) Market powerd) Single seller of the product





32) Who propounded the price rigidity underkinked demand curve model of oligopoly?a) Adam Smith b) Karl Marxc) Keynes d) Paul A. Sweezy

33) A firm, to attain the equilibrium position underperfect competition has to satisfy which ofthe following conditions?a) MR > MC b) MR = MCc) MR curve should cut MC curve from belowd) MC curve should cut MR curve from below

34) Which one of the following it not acharacteristic of Oligopoly?a) Strategic interdependenceb) Large number of firms selling closesubstitutesc) Importance of selling costd) Group behaviour

35) A group of firm that explicitly agree (collude)to coordinate their activities is called a/an

a) Oligopsonyc) Monopsony

b) Duopolyd) Cartel

36) Electricity companies sell electricity as acheaper rate for power consumption in ruralareas than for industrial consumptions. Thisis an example ofa) Product discriminationb) Perfect competitionc) Price discriminationd) Price taker

37) Non-price competition is observed intype of following market?a) Monopolyb) Monopolistic Competitionc) Duopoly d) Oligop

11.BUSINESS CYCIES

38) Which phase of business cycle ischaracterised by increase in national output,employment, aggregate demand, capital andconsumer expenditure sales, profits etc.,?a) Depression b) Contractionc) Trough d) Expansion

0

ch o

csVo

41) Which of the following is not a feature ofbusiness cycle?a) Business cycles are contagious and areinternational in character.b) Business cycles have uniformcharacteristics and causes.c) Business cycles have serious consequenceson the well-being of the society.d) Business cycles generally originate in freemarket economies.

42) Variables that change before the real outputchanges are called asa) Trade cycle b) Business cyclec) Leading indicators d) Lagging indicators

43) In which of the following phase of a businesscycle, actual demand stagnates?a) Expansion b) Peakc) Contraction d) Recovery

44) In a typical business cycle, in which phasepply exceeds demand’,xpansion b) Peak

'Qp) Contraction d) RecoveryThe-Vrhythmic fluctuations in aggregateeqod/imic activity that an economy

riences over a period of time is called,

usiness cycle b) RecessionContraction phase d) Recovery

Variables that change after real outputchanges are known asa) Leading indicators b) Cyclical indicatorsc) Lagging indicators d) Coincident indicators

47) Internal cause of Business cycles isa) Fluctuations in investmentsb) Natural factors c) Technology shocksd) Population growth

48) Which business cycle phases arc known asTurning Points?a) Trough and Depressionb) Peak and Troughc) Expansion and Contractiond) Peak and Boom

12.NATURE OF SCOPE OF BUSINESS ECONOMICS

39) Coincident economic indicators are alsocalled asa) Leading Indicatorsb) Concurrent Indicatorsc) Headed Indicatorsd) Capacity Indicators

40) According to whom “Business “fluctuationsare the outcome of some psychologicalstates of mind of business community”.a) Marshall b) A C. Pigouc) J.K. Hicks d) Schumpeter

49) The famous book abbreviated as “The Wealthof Naitons”, which is also considered as the firstmodern work of Economics, was written bya) Frederic Engels b) Karl Marxc) David Ricardo d) Adam Smith

50) The economic system in which productionand distribution of goods are aimed atmaximizing the welfare of the community asa whole is known as:a) Capitalism b) Socialismc) Mixed economyd) Communist Economy




MASTER MINDS COMMERCE INSTITUTE PVT.LTD.51) Study of the behaviour of different individuals

and organizations within an economic systemis called?a) Industrial Economicsb) Macro Economicsc) Micro Economics d) Welfare Economics

WWW.MASTERMINDSINDIA.COM | 9885125025 / 26

59) The central economic problem of aneconomy arises due to:a) Scarcity of resources relative to the wantsb) Co-existences of private and public sectorc) Govt, interference in economic activitiesd) Federal structure of Constitution

52) Which one of the following is not the scope ofbusiness economics?a) Cost standards b) Cost analysisc) Demand analysisd) Inventory management

53) Which of the following statement is correct?a) Mixed economy is not always a ‘goldenpath’ between capitalism and socialism.b) Socialistic economy is not always a‘golden path’ between mixed and capitalism.

c) Capitalistic economy is not always a‘golden path’ between mixed and socialism.d) Mixed economy is always a ‘golden path’between capitalism and socialism.

54) The concept of Socialist economy waspropounded bya) Karl Marx and Adam Smithb) Frederic Engels and Adam Smithc) Frederic Engelsd) Karl Marx and Frederic Engels

55) Business economics is pragmatic in itsapproach because?a) It tackles practical problem which the firifaces in real world. A^b) It tackles practical problem which the^%ifaces due to WTO policies.c) It tackles practical problem which tfaces due to lack of directors. (Z7d) Business economics is abstracts^jndpurely theoretical

13.DEMAND FORCflSTING60) Of the following, who developed the Delphi

technique of demand forecasting?a) Olaf Helmerc) Michael Porter

b) David Richardsond) J.M. Keynes

Q

60

0

cso

56) The ‘Central Economics Problem’ does notdeal with which of the following economicproblems?a) What to produce? b) How to produce?c) For whom to produce?d) Where to produce?

57) Business Economics is essentially acomponent of Applied Economics as it includesapplication of selected quantitative techniques.Which technique is not included in it?a) Regression analysisb) Capital budgetingc) Economic analysisd) Linear programming

PART 2:BUSINESS COMMERCIAL KNOWLEDGE

1. INTRODUCTION TO BUSINESS AND BCK

61) Which of the following is not a feature ofiyate Company?There are no restrictions on transfer of

hares.) Minimum number of directors are 2

c) /Ftjivate companies are exempted fromcj^fituting various committees of Board of

ctorsIt can start business upon incorporation.

n Business and Commercial knowledge(BCK) vocabulary, ‘strategy’ is originallybelongs to which discipline?a) Animal psychology b) Militaryc) Biology d) Economics

63) Human activities distinguishable by presenceof the livelihood motives are known as:a) Economic activitiesb) Non-economic activitiesc) Emotional activitiesd) Sentimental activities

64) A company created for a future project and hasno significant accounting transaction is called.a) Shell companyb) Commercial Companyc) One Person Companyd) Dormant Company

65) Which of the following is not a feature ofLimited Liability Partnership?a) Incorporation is mandatoryb) It is a legal entityc) Limited liabilityd) Autonomy of being one’s own boss

58) Which of the following is not a study of Macro- economics?a) Consumer behaviourb) National Incomec) General price leveld) Level of employment

66) Which one of the following is an organicobjective of business?a) Fitness of human resourcesb) Economic value addedc) Sanitationd) Water and soil quality




MASTER MINDS COMMERCE INSTITUTE PVT.LTD.67) Under which act a HUF enjoys a separate

entity status?a) Partnership Act b) Companies Actc) Income Tax Act d) GST Act


c) Neutralizes the opportunities by minimizingthe impact of weaknessesd) Capitalizes on the weaknesses throughthe use of threats.

2.BUSINESS ENVIRONMENT 3. COMMON BUSINESS TERMINOLOGIES

68) An organization is planning to create a JointVenture to cope up with environmentaluncertainty. This is an example of thefollowing type of organizational response toits environment.a) Administrative Responseb) Collective Responsec) Competitive Responsed) Micro Environmental Response

69) Which of the following capability a companyrequire to survive in long term?a) Frequent change in work forceb) The ability to changec) Vision to acquire profitd) Expansion in territory of business

70) While scanning environment, eventswhich of the following?a) Group of similar eventsb) Current concerns on eventsc) Demand made by interested groupsd) Observed and tracked

71) A strategic response where businessesvery passive in their behaviour is called aa) Least resistanceb) Proceed with cautionc) Dynamic response d) Strategic a

75) Dividing consumer into groups based ondifferent consumer characteristics, to deliverspecially designed advertisements that meetthese characteristics as closely as possible,is known as.a) Mass Marketing b) Market Targetingc) Market Segmentation d) Marketing Plan

76) The simultaneous purchase and sale of twoidentical commodities or instruments arecalled asa) Amortize b) Annuityc) Arbitrage d) Asset

77) price of a security at the beginning of the

72) The event of conducting ComGames in India is an example oft,element of Macro Environment:a) Political-Legal Environmentb) Socio-Cultural Environmentc) Technological Environmentd) Global Environment

are

0

0

o/TWealtfk>No

ing days is called./Q& ) Basket trading b) Base price

Svc) Bid^ d) Book value) W/hS)is Hedge?

is a statistical measurement of change ineconomy.

It is a Strategy that is used to minimize theC^risk of a particular investment and maximize

the returns of an investment.c) It is a trading platform.d) It is a security which has a solid record ofdividend payments.

79) Which of the following code consists of blacksquares arranged in a square grid on a whitebackground, which can be read by animaging device such as a camera until theimage can be appropriately interpreted?a) Universal Product Codeb) One Dimensional BarCodec) Black and White Coded) Quick Response Code

73) What are the three classes of organization’sinternal responses that business can opt?a) Automatic Response, ComprehensiveResponse and Collective responseb) Administrative Response, ComprehensiveResponse and Collective Responsec) Administrative Response, CompetitiveResponse and Collective Responsed) Automatic Response, CompetitiveResponse and Collective Response

74) An effective organizational strategy includeswhich of the following activities?a) Capitalizes on the opportunities throughthe use of threatsb) Neutralizes the threats by minimizing theimpact of weaknesses

80) Amount which are owned to a company thatneed not to be paid back is calleda) Assets b) Bad debtsc) Bears d) Current Assets

4. BUSINESS ORGANISATIONS81) ‘Hunger to win customers for life’ is the

mission of which of the following company?a) Adani Ports and Special Economic ZonesLimited b) Asian Paintsc) Bharti Airtel Limited d) Cipla Limited

82) Which of the following Company have itsheadquarters in California. U.S. ?a) Walman b) Intel Corporationc) American Express d) Microsoft




MASTER MINDS COMMERCE INSTITUTE PVT.LTD.83) Which company was founded by 7 Engineers

from Pune in 1981?a) Wipro b) Infosys c) ITC d) L & T


a) A merchandiser b) A freight forwardc) A financial consultantd) A business incubator

84) Management consultants advise businessleads in which of the following area?a) Improve efficiency b) Increase salesc) reduce human resourcesd) Increase cost of inputs

85) Financial analysis are also called amongwhich of the following?a) Management consultantsb) Mutual fund analysisc) Financial guru d) Security analysis

86) “Caring for Life” is the slogan of whichpharmaceutical company of India?a) Cipla Ltd.b) Dr. Reddy’s Laboratories ltd.c) Ranbaxy Ltd. d) Glaxo (I) Ltd

93) Which authority regulates and develops theIndian capital market and protects theinterest of investors in the capital market?a) National Stock Exchange (NSE)b) SEBI c) RBId) Bombay Stock Exchange (BSE)

6.GOVERNMENT POLICIES FOB BUSINESSGROWTH

94) Which of the following is one of the mostsignificant macro policy indicator that impactbusiness?a) Trade policy b) International tradec) Tax rates d) Rural policy

87) Which of the following is not a subsidiary ofNTPC Limited?a) Kanti Bijlee Utpadan Nigam Limitedb) Bharatiya Rail Bijlee Company Limitedc) Patratu Vidyut Utpadan Nigam Limitedd) Powerlink Transmission Limited

5. ORflGANISATIONS FACILITATING BUSINESS

88) Who from the following helps a buddinbusiness to quickly launch a product andit in the first lane of commercial success?^a) Business incubator b) Freight forwa$&>c) Business accelerator d) Merchandiser

89) The Competition Commission of Lnoja w^soestablished on AA/ 6?a) 14th August, 2003 b) 14th SeptAer, 2^‘c) 14th October, 2003 d) 14th Nove(t§fer, 20

90) MRTP Act, 1969 stands repealed with theenforcement of the following Act:a) Foreign Exchange Regulation Act, 1973b) Foreign Exchange Management Act, 1999c) Competition Act, 2002d) IRDAI Act, 1999

91) Which of the following Institution has a portfolioof Natural Resource Management Programmesinvolving diverse fields like WatershedDevelopment, Tribal Development etc., throughdedicated funds set up for the purpose?a) SEBI b) RBI c) SBI d) NABARD

92) A company who organizes shipments for thebusiness firms to gel goods from themanufacturer to final point of distributions iscalled as:

. /0

o

95) Type of privatization, where Government]$&ps hold of responsibility and private

^enterprise handles fully or partly the delivery/Oof product and services through contract' f̂ranchise, grant, etc., is known as:

aj/Qjyestment b) Disinvestment^Displacement d) Delegation

96)1/) which of the following sector, FDI isrohibited in India?

0 a) Retail b) Nidhi Companyc) Pharmaceutical d) Electronics

97) Fils prefer to park then funds to fuel whichtype of market?a) Stock b) Bullishc) Money d) Commodity

98) Which policies are meant for specificsegments of society, it can be in the area ofpublic distribution to people below povertyline, justice for women etc.?a) Financial b) Distributivec) Facilitating d) Economic

99) Which of the following is an example offacilitating policy?a) Companies Act 2013 b) Income Tax Policyc) Monetary Policyd) Micro-Small-Medium enterprises

100) Which of the following is not a source ofinfusion of foreign funds m India?a) Listing of a company in NSE through IPOb) Non-Resident Indiansc) Foreign Institutional Investorsd) Overseas Citizens of India

Copyrights Reserved To MASTERMINDS COMMERCE INSTITUTE PVT.LTD.





KEY

BUSINESS ECONOMICS

1. D 2. A 3. A 4. D 5. A 6. B 7. B8. D 9. C 10. D 11. B 12. B 13. D 14. D

15. B 16. D 17. C 18. D 19. B 20. C 21. D22. A 23. B 24. B 25. B 26. C 27. B 28. C29. A 30. B 31. A 32. D 33. D 34. B 35. D36. C 37. B 38. D 39. B 40. B 41. B 42. C43. B 44. C 45. A 46. C 47. A 48. B 49. D50. B 51. C 52. A 53. A 54. D 55. A 56. D57. C 58. A 59. A 60. A

BCK/£)

61. A 62. B 63. A 64. 65. D 66. A 67. C68. B 69. B 70. D 71. 72. D 73. C 74. B

75. C 76. C 77. B 78. B 79. D 80. B 81. C82. B 83. B 84. A 85. 86. A 87. D 88. C89. C 90. C 91. D 92. A0 93. B 94. C 95. D96. B 97. B 98. B 99. 100. A

o

v THE END/^y

_aAGfjpRESEBVEDCOPYRIGttTp RESERVED TO MASTERMINDS COMMERCEINSTITUTE PVT. LTD., GUNTUR. UNAUTHORISED COPYING

OF ANY PORTION OF THIS MATERIAL BY USINGPHOTOCOPYING OR ANY OTHER MEANS OR UNAUTHORISEDUSAGE OF THIS MATERIAL IS A PUNISHABLE OFFENSE (MAY

ATTRACT IMPRISONMENT OR PENALTY OR BOTHI




MASTER MINDS COMMERCEINSTITUTEPVT LTD …

Documents

Transcript of MASTER MINDS COMMERCEINSTITUTEPVT LTD …