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INDEX BUSINESS ECONOMICS BUSINESS ECONOMICS 01 1 NATURE & SCOPE OF BUSINESS ECONOMICS To 44 45 2 THEO...
INDEX BUSINESS ECONOMICS BUSINESS ECONOMICS 01 1 NATURE & SCOPE OF BUSINESS ECONOMICS To 44 45 2 THEORY OF DEMAND AND SUPPLY To 123 124 3 THEORY OF PRODUCTION AND COST To 184 185 4 PRICE DETERMINATION IN DIFFERENT MARKETS To 263 264 5 BUSINESS CYCLES To 288 289 6 DETERMINATION OF NATIONAL INCOME To 352 353 7 PUBLIC FINANCE To 405 406 8 MONEY MARKET To 447 448 9 INTERNATIONAL TRADE To 482 483 10 INDIAN ECONOMY To 500 CA FOUNDATION BUSINESS ECONOMICS 1 NATURE AND SCOPE OF BUSINESS ECONOMICS UNIT 1 Introduction 1. The term ‘Economics’ owes its origin to the Greek word. (a) Aikonomia (b) Wikonomia (c) Oikonomia (d) None of the above 2. Economics in terms of Dynamic Growth and development defined by [Nov. 2020] (a) Adam Smith (b) Robbins (c) Alfred Marshall (d) Paul A Samuelson 3. Adam Smith published his masterpiece “An enquiry into the nature and causes of wealth of nations” in the year (a) 1776 (b) 1786 (c) 1789 (d) 1790 4. Which book of economics is known as first book of modern economics ? [Nov. 2019] (a) An Inquiry into nation (b) An inquiry into wealth of nation (c) An inquiry into wealth (d) Wealth of nation 5. Oikonomia means (a) Industry (b) Management of household (c) Services (d) None of these 6. The book “Wealth of Nations” was written by ___________ [Jan. 2021] (a) Alfred Marshall (b) Jom Robinson (c) Adam Smith (d) Robert Malthus 1 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 7. Economists regard decision making as important because : (a) The resources required to satisfy our unlimited wants and needs are finite or scarce. (b) It is crucial to understand how we can best allocate our scarce resources to satisfy society’s unlimited wants and needs. (c) Resources have alternative uses. (d) All of the above. 8. _________ are responsible for all economic problems [Nov. 2020] (a) Alternative resources (b) Unlimited wants (c) Scarcity of resources (d) Others 9. ‘Economics is the science of choice making’. It implies: [CA CPT Dec. 2012] (a) No choice is to be made (b) Choice to be made between alternative uses (c) Choice to be made between means and ends (d) None of the above 10. The famous book abbreviated as “The Wealth of Nations”, which is also considered as the first modern work of Economics, was written by _________ [July 2021] (a) Frederic Engels (b) Karl Marx (c) David Ricardo (d) Adam Smith 11. The concept of socialist economy was propounded by Karl Marx and Frederic Engels in their work. The Communist Manifesto was published in the year. (a) 1947 (b) 1848 (c) 1949 (d) 1950 12. Which one is the feature of Marshall’s definition? [CA CPT June 2010] (a) Limited ends (b) Scarce means (c) Study of wealth as well as study of man (d) Study of allocation of resources 13. According to Robbins, ‘means’ are: [CA CPT Nov. 2007] (a) Scarce (b) Unlimited (c) Undefined (d) All of these 2 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 14. Scarcity definition of Economics is given by (a) Alfred Marshall (b) Samuelson (c) Robinson (d) Adam Smith 15. The definition “Science which deals with wealth of Nation” was given by: (a) Alfred Marshall (b) A C Pigou (c) Adam Smith (d) J B Say 16. Economics is the study of: [CA CPT June 2008] (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 unlimited wants 17. In Economics, we use “scarcity the term of mean: [Nov. 2019] (a) Absolute scarcity and lack of resources in less developed countries. (b) Relative scarcity i.e. scarcity in relation to the wants of the society. (c) Scarcity during times of business failure and natural calamities. (d) Scarcity caused on account of excessive consumption by the rich. 18. In Economics, we use the term scarcity to mean: (a) Absolute scarcity and lack of resources in less developed countries. (b) Relative scarcity i.e. scarcity in relation to the wants of the society. (c) Scarcity during times of business failure and natural calamities. (d) Scarcity caused on account of excessive consumption by the rich. 19. An economy exists because of two basic facts i.e. _________ [Jan. 2021] (a) Human wants are limited and resources are unlimited (b) Human wants are unlimited and resources are unlimited (c) Human wants are unlimited and resources are scare (d) Human wants are limited and resources are abundant 20. What implication(s) does resource scarcity have for the satisfaction of wants? (a) Not all wants can be satisfied. (b) We will never be faced with the need to make choices. (c) We must develop ways to decrease our individual wants. (d) The discovery of new natural resources is necessary to increase our ability to satisfy wants. 3 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 21. Adam Smith defined Economics in terms of: (a) The Science of welfare (b) The Science of scarcity (c) The Science of wealth (d) The Science of wealth and welfare 22. Who defines Economics in terms of Dynamic Growth and Development? [CA CPT Dec. 2008] (a) Robbins (b) Paul A Samuelson (c) Adam Smith. (d) None of these 23. Which of the following is not a basic problem of an economy? (a) Whether to produce more of consumer goods or capital goods (b) Whether to lay emphasis on labour-intensive techniques or on capital intensive techniques (c) Whether to produce for rich people or for poor people (d) Whether to accept foreign direct investment in the economy 24. In every economic system, scarcity imposes limitations on (a) Households, business firms, governments and the nation as a whole. (b) Households and business firms, but not the governments. (c) Local and state governments, but not the federal government. (d) Households and governments, but not business firms. (e) Business firms, governments, and the nation as a whole. 25. Economic goods are considered scarce resources because they (a) Cannot be increased in quantity. (b) Do not exist in adequate quantity to satisfy the requirements of the society. (c) Are of primary importance in satisfying social requirements. (d) Are limited to man made goods. 26. ‘Economics is the study of mankind in the ordinary business of life’ was given by: [CA CPT Nov. 2006] (a) Adam Smith (b) Lord Robbins (c) Alfred Marshall (d) Samuelson 4 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 27. Consider the following and decide which, if any, economy is without scarcity: (a) The pre-independent Indian economy, where most people were farmers. (b) Amythical economy where every-body is a billionaire. (c) Any economy where income is distributed equally among its people. (d) None of the above. 28. Human wants are _________ in response to satisfy their wants? [CA CPT Nov. 2018] (a) Unlimited (b) Limited (c) Scarce (d) Multiple 29. There is need of economic study because- (a) The resources are limited (b) The wants are unlimited (c) The resources are unlimited (d) Both (a) and (b) 30. The benefit of economic study is- (a) It ensure that all problems will be appropriately tackled (b) It helps in identifying problems (c) It enable to examine a problem in its right perspective (d) It gives exact solutions to ever problem 31. Economic goods are considered as scarce resources because ___________. [CA CPT May 2019] (a) Inadequate quantity to satisfy the needs of the society (b) Not possible to increase in quantity (c) Limited hands to make goods (d) Primary importance in satisfying social requirements 32. The meaning of time element in Economics is: [CA CPT June 2015] (a) Calendar time (b) Clock time (c) Operational time in which supply adjusts with the market demand (d) None of the above 33. All wants of an individual are not of: [CA CPT June 2015] (a) Equal importance (b) Immediate importance (c) Fixed importance (d) All of the above 5 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS Meaning of Business Economics 34. ___________ refers to the process of selecting an appropriate alternative that will provide the most efficient means of attaining a desired end, from two or more alterative courses of action. (a) Decision making (b) Strategy (c) Problem Solving (d) Effectiveness 35. Which of the following is not within the scope of Business Economics? [Nov. 2019] (a) Capital Budgeting (b) Risk Analysis (c) Business Cycles (d) Accounting Standards 36. Business Economics is (a) Abstract and applies the tools of Microeconomics, (b) Involves practical application of economic theory in business decision making. (c) Incorporates tools from multiple disciplines. (d) (b) and (c) above. 37. Business Economics is also known as? [CA CPT Nov. 2018] (a) Applied Economics (b) Managerial Economics (c) Micro Economics (d) All of the above 38. The question of choice arises because our productive resources ________ (a) Are limited (b) Can be employed in alternatives (c) Both (a) & (b) (d) None of the above 39. The management of a business unit generally needs to make _________. (a) Strategic Decesion (b) Tactical Decision. (c) Operational Decision (d) All of the above 40. Concept of Business Economics was given by: [CA CPT May 2018] (a) Joel Dean (b) Alfred Marshall (c) Adam Smith (d) L. Robbins 6 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 41. Which one of the following is incorrect about Business Economics? (a) It is applied economics that fills the gap between economic theory and business practice. (b) Business Economics integrates economic theory with business practice. (c) Business Economics is also referred to as Managerial Economics. (d) Business Economics is more concerned with Macro Economics. 42. The managerial economics ___________ (a) Is Applied Economics that fills the gap between economic theory and business practice (b) Is just a theory concept (c) Trains managers how to behave in recession (d) Provides the tools which explain various concepts Definitions of Business Economics 43. _______ defined Business Economics in terms of the use of economics analysis in the formulation of business policies. (a) Joel Dean (b) Karl Marks (c) Adam Smith (d) Schumpeter 44. Business Economics is essentially a component of __________as it includes application of selected quantitative techniques. (a) Pure Economics (b) Applies Economics (c) Statistical Economics (d) None of the above 45. Which of the following is not included in Economics? (a) Family Structure (b) Managerial Economics (c) Micro Economics (d) Macro Economics 46. The heart of Business Economics is [CA CPT Nov. 2018] (a) Micro Economic Theory of the behaviour of consumers and firms in competitive markets. (b) Macro-Economic Theory of the national income (c) Income Economic analysis analyze to analyse the industry (d) All of the above 7 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS Micro and Macro Economics 47. Which one of the following is not a subject matter of Micro-Economics? (a) Behaviour of Firms. (b) External Value of Currency (c) Factor Pricing (d) Location of Industry 48. Micro economics does not study [CA CPT Dec. 2015] (a) Consumer behaviour (b) Factor pricing (c) General price level (d) Firms equilibrium 49. Micro Economics is also known as _______. [Nov. 2020] (a) Public Economics (b) Income Theory (c) Demand Theory (d) Price Theory 50. Micro Economics is the study of: [CA CPT June 2016] (a) Individual parts of the economy (b) The economy as a whole (c) Choice making (d) Development of the economy 51. Micro economics is also known as ________: [Jan. 2021] (a) Public Economics (b) Price Theory (c) Income Theory (d) Demand Theory 52. Economics is classified into ___________. [June 2023] (a) Normative & positive (b) Micro & Macro (c) Internal & External (d) None of the above 53. Mrs. Reshma, a CEO of a company had decided to expand the business by introducing a new product into market. She hires a consultant to guide her for deciding the pricing of the new product, study the consumer behaviour and the staff requirements. Approach of consultant will be towards __________ [Dec. 2021] (a) Applied Economics (b) Econometrics (c) Macro Economics (a) Micro Economics 54. The branch of economic theory that deals with the problem of allocation of resources is (a) Micro-Economic theory. (b) Macro-Economic theory (c) Econometrics. (d) None of the above. 8 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 55. Which of the following is not the subject matter of micro economics? [June 2023] (a) Consumer Behaviour (b) Foreign Exchange Rate (c) Behaviour of Firms (d) Location of Industry 56. Micro economics theories deal with __________. [Dec. 2021] (a) Productions and Cost analysis (b) Government Policies (c) Total Consumption (d) Social and political environment 57. Which of the following is used for allocation of resources? [Nov. 2019] (a) Micro-Economics (b) Marco-Economics (c) Econometrics (d) Descriptive Economics 58. Which of the following is not the subject matter of Business Economics? (a) Should our firm be in this business? (b) How much should be produced and at price should be kept? (c) How will the product be placed in the market? (d) How should we decrease unemployment in the economy? 59. The branch of economic theory that deals with the problem of allocation of resources is: [CA CPT Nov. 2006] (a) Micro Economics (b) Macro Economics (c) Econometrics (d) None of these 60. Which of the following is not a subject matter of micro economics? [June 2022] (a) Behaviour of firms (b) Location of industry (c) Consumer behaviour (d) Foreign exchange rate 61. Micro Economics Covers: (a) National Income and National Output (b) External Value of Currency (c) Overall level of Savings and Investment (d) Location of Industry 9 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 62. Which of the following is not an example of Micro-Economics? [Dec. 2021] (a) The effect of increase in general price on living standards (b) The effect of increase in steel import of a country on steel prices (c) The effect of increase in wages on Automobile Industry (d) The effect of increase in real estate prices on the location of industry 63. The study of behaviour of different individuals, organisations with in an economic system is known as [Nov. 2020] (a) Micro economics (b) Macro economics (c) Welfare economics (d) None 64. A study of how increase in the corporate income tax rate will affect the natural unemployment rate is an example of: [CA CPT Feb. 2007] (a) Micro Economics (b) Descriptive Economics (c) Macro Economics (d) Normative Economics 65. __________ examines how the individual units (Consumers or firms) make decisions as to how to efficiently allocate their scare resources. (a) Macro Economics (b) Micro Economics (c) Mathematical Economics (d) Consumer Economics 66. Which of the following falls under micro economics? [CA CPT May 2007] (a) National Income (b) General price level (c) Factor pricing (d) National saving and investment 67. Which of these is a part of micro economics? [CA CPT June 2011] (a) Factor pricing (b) National Income (c) Balance of payment (d) None of the above 68. Which of the issue is not considered by micro economics? [Dec. 2021] (a) Production and cost analysis (b) Demand analysis and forecasting (c) Accounting standards (d) Resource allocation Scope d Micro economics 10 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 69. Micro economics is also known as _________. [CA CPT June. 2010] (a) Public economics (b) Price theory (c) Income theory (d) Demand theory 70. Micro Economics is concerned with: [CA CPT Dec. 2010] (a) Consumer Behaviour (b) Product pricing (c) Factor Pricing (f) All of the above 71. Macro-economic is also called _________ economics. [Jan. 2021] (a) Applied (b) Aggregate (c) Micro (d) Experimental 72. Macro Economics is also called _________ economics. (a) Applied (b) Aggregate (c) Experimental (d) None of the above 73. Study of the behaviour of different individuals and organizations within an economic system is called? [July 2021] (a) Industrial Economics (b) Macro Economics (c) Micro Economics (d) Welfare Economics 74. Which of the following does not suggest a macro approach for India? (a) Determining the GNP of India. (b) Finding the causes of failure of ABC Ltd. (c) Identifying the causes of inflation in India. (d) Analyse the causes of failure of industry in providing large scale employment 75. Macro Economics is the study of _________. (a) All aspects of scarcity. (b) The national economy and the global economy as a whole. (c) Big businesses. (d) The decisions of individual businesses and people. 76. A study of how increases in the corporate income tax rate will affect the national unemployment rate is an example of (a) Macro-Economics (b) Descriptive Economics (c) Micro-economics (d) Normative economics 11 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 77. Which of these is an example of macro economics: [CA CPT June 2011] (a) Problem of unemployment in India (b) Rising price level in the country (c) Increase in disparities of income (d) All of the above 78. Analysis of impact of Covid-19 on the Indian economy is a subject matter of _________. (a) Macro economics (b) Micro economics (c) Economics of slicing (d) Normative economics 79. Macro economics include [CA CPT May 2019] (a) Product pricing (b) Consumer behaviour (c) External value of money (d) Location of industry 80. Which of the following is not a subject matter of Micro-economies? (a) The price of mangoes. (b) The cost of producing a fire truck for the fire department of Delhi, India. (c) The quantity of mangoes produced for the mangoes market. (d) The national economy’s annual rate of growth. 81. Which of the following statements is correct? (a) Microeconomics is important for study of a particular household and a particular firm (b) Macroeconomics is important for study of economic conditions of a country (c) None of the above (d) Both (a) and (b) 82. Mr. Satish hired a business consultant to guide him for growth of his business. The consultant visited his factory and suggested some changes with respect to staff appointment, loan availability and so on. Which approach is that consultant using? (a) Micro economics (b) Macro economics (c) None of the above (4) Both (a) and (b) 83. Which of the following would be considered a topic of study in Macro economics? (a) The effect of increase in wages on the profitability of cotton industry (b) The effect on steel prices when more steel is imported (c) The effect of an increasing inflation rate on living standards of people in India (d) The effect of an increase in the price of coffee on the quantity of tea consumed 12 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 84. Which of the following is not a study of Macro-economics? [July 2021] (a) Consumer behaviour (b) National Income (c) General price level (d) Level of employment 85. Which of the following is a part of the subject matter of macro economics? [CA CPT Dec. 2012] (a) Study of firms (b) Aggregate profits of a firm (c) Market demand for a product (d) Net national product 86. A study of how increases in the corporate income tax rate will affect the national unemployment rate an example of [Nov. 2019] (a) Macro-Economics (b) Descriptive Economics (c) Micro-economics (d) Normative Economics 87. The Macro Economics does not cover the area of (a) General price level and interest rates (b) Level of employment and rate of economic growth (c) Balance of trade & Balance of payments (d) Product Pricing 88. Normative science suggests which of the following? [June 2022] (a) What should be (b) What to produce (c) How to produce (d) When to produce 89. Shyam: This year due to heavy rainfall my option crop was damaged Krishna: Climates affects crop yields. Some years are bad, other are good Hari: Don’t worry-Price increase will compensate for the fall in quantity supplied Radhe: The Government ought to guarantee that our income will not fall. In this conversation, the normative statement is made by [CA CPT May 2019] (a) Shvam (b) Krishna (c) Hari (d) Radhe 90. Which of the following statements is incorrect about Macro Economics? (a) Macro-Economics is the branch of Economics that deals with the study of the behaviour and performance of the economy in total. (b) Macro-Economics studies the particular market segment of the economy 13 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS (c) Macro-Economics deals with various issued like national income, distribution, employment, general price level, money and more. (d) It is applied to environmental and external issues. 91. Which one of the area comes under macro-economics? [Jan. 2021] (a) Product pricing (b) Consumer behaviour (c) The general price level and interest rates (d) Economics conditions of a Section of people Nature of Business Economics 92. Business Economics enables application of economic logic and analytical tools to (a) Bridge the gap between theory and practice. (b) Increase the implementation science. (c) Increase the effectiveness (d) Apply tools of macroeconomics. 93. Business Economics relies heavily on the techniques of __________ (a) Micro Economics (b) Macro Economics (c) Normative Science only (d) Economics discipline only 94. Which one of the following is not the scope of business economics? [July 2021] (a) Cost standards (b) Cost analysis (c) Demand analysis (d) Inventory management 95. Business Economic is pragmatic in approach because of which of the following cause? [June 2022] (a) Based on assumptions (b) Tackles practical problems (c) Considers profit only (d) Considers internal value 14 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 96. Which of the following is a normative statement? (a) Planned economies allocate resources via government departments. (b) Most transitional economies have experienced problems of falling output and rising prices over the past decade. (c) There is a greater degree of consumer sovereignty in market economies than planned economies. (d) Reducing inequality should be a major priority for mixed economies. 97. An example of ‘positive’ economic analysis would be: (a) An analysis of the relationship between the price of food and the quantity purchased. (b) Determining how much income each person should be guaranteed (c) Determining the ‘fair’ price for food. (d) Deciding how to distribute the output of the economy. 98. Which of the following is not a correct statement? [June 2023] (a) Business Economics is a normative science (b) Business Economics is an art (c) Business Economics is based largely on Micro Economics (d) Business Economics does not incorporate elements of Macro Economics 99. Which of the following is not correct statement? [June 2022] (a) Business economics is a normative science (b) Business economics is an art (c) Business economics is based largely on micro economics (d) Business economics does not incorporate elements of Macro Economic analysis 100. Business Economics is ____________ in its approach as it tackles practical problems which the firm faces in the real world. (a) Scientific (b) Programmatic (c) Theoretical (d) Mathematical 101. The difference between positive and normative Economics is: (a) Positive Economics explains the performance of the economy while normative Economics find out the reasons for poor performance. 15 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS (b) Positive Economics describes the facts of the economy while normative Economics involves evaluating whether some of these are good or bad for the welfare of the people. (c) Normative Economics describes the facts of the economy while positive Economics involves evaluating whether some of these are good or bad for the welfare of the people. (d) Positive Economics prescribes while normative Economics describes. 102. Normative aspect of Economics given by: [CA CPT Dec. 2008] (a) Marshall (b) Robbins (c) Adam Smith (d) Samuelson 103. Normative Economics is based on: [CA CPT June 2012] (a) Ethical Considerations (b) Facts and Generalization (c) What is? (d) All of the above 104. Deductive and Inductive methods are complimentary to each other. It is: [CA CPT June 2013] (a) Absolutely correct (b) Absolutely incorrect (c) Partially incorrect (d) None of the above 105. In inductive method, logic proceeds from: [CA CPT June 2012] (a) General to Particular (b) Particular to General (c) Both (a) and (b) (d) None of these 106. Which of the following is a normative economic statement? (a) Unemployment rate decreases with industrialization (b) Economics is a social science that studies human behaviour (c) The minimum wage should be raised to ` 200 per day (d) India spends a huge amount of money on national defence. 107. Ram: My corn harvest this year is poor. Krishan: Don’t worry. Price increases will compensate for the fall in quantity supplied. Vinod: Climate affects crop yields. Some years are bad, others are good. Madhu: The Government ought to guarantee that our income will not fall. In this conversation, the normative statement is made by (a) Ram (b) Krishan (c) Vinod (d) Madhu 16 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 108. Positive Science only explains __________ [Nov 2020] (a) What is? (b) What ought to be? (c) What is right or wrong? (d) None of the above 109. Positive science only explains [CA CPT Dec. 2013] (a) What is? (b) What ought to be? (c) What is right or wrong (d) None of the above 110. Under Inductive method logic proceeds from: [CA CPT Dec. 2014] (a) General to particular (b) Positive to normative (c) Normative to positive (d) Particular to general 111. ___________ economics explain economics phenomenon according to their causes and effects [Nov. 2020] (a) positive (b) Normative (c) Empirical (d) Applied 112. ________ analyses causes and effect relationship between variables in an objective and scientific manner. (a) Positive Science (b) Normative Science (c) Negative Science (d) Analytical Science 113. Business Economics is generally __________ in nature. (a) Normative (b) Prescriptive (c) Normative or Prescriptive (d) Theoretical 114. Which of the following statements is incorrect? (a) Business economics is normative in nature. (b) Business Economics has a close connection with statistics. (c) Business Economist need not worry about macro variables. (d) Business Economics is also called Managerial Economics. 115. Under Inductive method, the logic proceeds from: [CA CPT Nov. 2007] (a) General to particulars (b) Particular to general (c) Both (a) and (b) (d) None 17 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 116. Rama: My corn harvest this year is poor. Manoj: Don’t worry. Price increase will compensate for this fall in quantity supplied. Meera: Climate affects crop yield. Some years are bad, others are good. Bharti: The Government ought to guarantee that our income will not fall. In this conversation, the normative statement is made by: [Jan. 2021] (a) Rama (b) Manoj (c) Meera (d) Bharti 117. Who gave the positive aspect of science? [CA CPT June 2011] (a) Alfred Marshall (b) A.C. Pigou (c) Adam Smith (d) Robbins 118. Although business economics combines the essentials of normative and positive economic theory but the emphasis is on: (a) Positive (b) Normative (c) Both Positive and Normative (d) Neither Positive nor Normative 119. Business Economics is [CA CPT May 2019] (a) Normative in nature (b) Interdisciplinary in nature (c) Bath (d) None 120. Find out the correct statement [CA CPT Dec. 2015] (a) Higher the prices, lower the quality demanded of a product are a normative statement (b) Micro and macro-economics are interdependent (c) In a capitalist economy, the economic problems are solved by planning commission (d) In deductive method logic proceeds from particular to the general 121. “Economics is neutral between ends”. The statement is given by: [CA CPT Dec. 2013] (a) L. Robbins (b) Mrs. Joan (c) Alfred Marshall (d) A.C. Pigou 122. Economics which is concerned with welfare propositions is called [CA CPT June 2013] (a) Socialistic economics (b) Capitalistic economics (c) Positive economics (d) Normative economics 18 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 123. The Business Economics incorporates tools from other disciplines such as Mathematics, operations Research, Management theory, Accounting, etc. Therefore, Business Economics is ____________. (a) Intra-disciplinary (b) Inter-disciplinary (c) Multi-disciplinary (d) Flexi-disciplinary 124. Under inductive method logic proceeds from: [CA CPT May 2018] (a) General to particular (b) Positive to narrative (c) Normative to positive (d) Particular to general 125. Business Economics involves the elements of [CA CPT Nov. 2018] (a) Micro Environment (b) Macro Environment (c) Both (a) and (b) (d) None of the above 126. In which of the following methods conclusions are drawn on the basis of collection and analysis of facts? [CA CPT June 2017] (a) Deductive method (b) Scientific method (c) Inductive method (d) Experimental method 127. Business economy involves theory of Business economics with _________. [CA CPT Nov. 2018] (a) Normative Economics (b) Business practices (c) Micro Economics (d) Macro Economics Scope of Business Economics 128. The operational or interval issues to which economic theories can be directly applied are related with. (a) Micro Economics (b) Macro Economics (c) Business Economics (d) Environmental Economics 129. The scope of business Economics encompasses all of the following except _________. [Dec. 2021] (a) Accounting Standards (b) Resource Allocation (c) Inventory Management (d) Profit Analysis 19 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 130. Business Economics is essentially a component of Applied Economics as it includes application of selected quantitative techniques. Which technique is not included in it? [July 2021] (a) Regression analysis (b) Capital budgeting (c) Economic analysis (d) Linear programming 131. Which factor is included in business Economics? [CA CPT Nov. 2018] (a) Business Economics is an art (b) Inter-disciplinary in nature (c) Normative in nature (d) All of the above 132. Business economics is pragmatic in its approach because? [July 2021] (a) It tackles practical problem which the firm faces in real world. (b) It tackles practical problem which the firm faces due to WTO polices (c) It tackles practical problem which the firm faces due to lack of directors. (d) Business economics is abstracts and purely theoretical. 133. Which of the below enables application of economic logic and analytical tools to bridge the gap between theory and practice? [June 2023] (a) Macro economics (b) Micro economics (c) Business economics (d) Traditional economics 134. Applied economics includes [CA CPT May 2019] (a) Regression analysis and mathematical linear programming (b) Capital budgeting (c) Both (a) and (b) (d) None 135. Which of the following is not within the scope of Business Economics? (a) Capital Budgeting (b) Risk Analysis (c) Business Cycles (d) Accounting Standards 136. ________ explains the relationship between Inputs and output. (a) Production Theory (b) Demand Analysis (c) Inventory Management (d) None of the above 20 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 137. Business Economics with the help of advanced tools like _______ enables the firm to at the best course of action optimum utilisation of available resources. (a) Accounting (b) Finance (c) Linear Programming (d) Marketing Mix 138. The nature of business economics is [Nov. 2020] (a) Positive in nature (b) Pure science (c) Pragmatic (d) Independent 139. Business Economists use method(s) _____ to maintain optimum stock of inventories. (a) ABC Analysis (b) Simple simulation exercises (c) Mathematical models (d) All of the above 140. Which of the following Macro-Economic Factor is considered in Business Economics? (a) Business Cycles (b) Employment, Prices (c) Saving & investment (d) All of the above Difference between Economics and Business Economics 141. Which of the following involves the application of economic principles to solve economic problems? (a) Macro Economics (b) Economics (c) Business Economics (d) Practical Economics 142. What is the character of Economics? (a) Micro-economics (b) Macro-economics (c) Micro as well as Macro Economic (d) Positive Economics 143. What is the character of Business Economics? (a) Micro-economics (b) Macro-economics (c) Micro as well as Macro Economic (d) Positive Economics 144. What is the nature of Economics? (a) Positive (b) Negative (c) Normative (d) Positive as well as Normative 21 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 145. What is the nature of Business Economics? (a) Positive (b) Negative (c) Normative (d) Positive as well as Normative 146. Business Economics concentrates on _________ aspects of any business problem. (a) Economic (b) Non-Economic (c) Both Economic as well as Non-Economic (d) Macro Economic 147. Business Economics makes use of micro-economic analysis. Which of the following is NOT a part of such analysis? (a) Demand analysis and forecasting (b) Production and Cost Analysis. (c) Theory of Capital and Investment decisions (d) National Income 148. Which of the following is NOT a part of Macro Economics? (a) Business Cycles (b) National Income (c) Saving and Investment (d) Demand Analysis and Forecasting 149. Unlimited ends and limited means together present the problems of ________. (a) Scarcity of resources (b) Choice (c) Distribution (d) None of the above 150. Which of the following statements is/are correct regarding business economics? (a) Business economics attempt to indicate how business policies are firmly rooted to economic principles. (b) Business economics uses micro economic analysis of the business unit and macro- economic analysis of business environment. (c) Business economics take a pragmatic approach towards facilitating an integration between economic theory and business practices. (d) All of the above 22 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS UNIT 2 Basic Problems of an Economy and Role of Pri Mechanism Basic Problems of an Economy 151. Which of the following statement is false? (a) The Resources are limited. (b) The Resources have alternative uses. (c) If resources are unlimited, people would be able to satisfy all their wants. (d) The economics problem arises because resource has only a single use 152. The central economic problem of an economy arises due to _________ [July 2021] (a) Scarcity of resources relative to the wants (b) Co-existences of private and public sector (c) Govt. interference in economic activities (d) Federal structure of Constitution 153. The basic problem of scarcity give rise to: (a) Technological problems (b) Social problems (c) Cultural problems (d) Economic problems 154. Which of the following economic system has to deal with the control problem of scarcity of resources? (a) Capitalist (b) Socialist (c) Mixed (d) All of the above 155. In economics, the central economic problem means: (a) Output is restricted to the limited availability of resources. (b) Consumer do not have as much money as they would wish (c) There will always be certain level of unemployment (d) Resources are not always allocated in an optimum way 156. Which of the following is the central problem of economy? [June 2023] (a) Scarcity of resources (b) Unemployment (c) Poverty (d) Inflation 23 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 157. Which of the following is the central problem of the economy? [June 2022] (a) Unemployment (b) Poverty (c) Scarcity of resources (d) Inflation 158. The Central problem in every economic society is: [CA CPT June 2017] (a) To ensure a minimum level of income for every individual. (b) To allocate scarce resources in such a manner that societies unlimited wants are satisfied in the best possible manner (c) To ensure that production occurs in the most efficient manner. (d) To provide job to every job seeker. 159. A developed economy uses _______ technique in production. [CA CPT June 2010] (a) Labour intensive. (b) Capital intensive (c) Home-based (d) Traditional 160. The ‘Central Economics Problem’ does not deal with which of the following economic problems? [July 2021] (a) What to produce? (b) How to produce? (c) For whom to produce? (d) Where to produce? 161. The central problem in economics is that of (a) Comparing the success of command versus market economies. (b) Guaranteeing that production occurs in the most efficient manner. (c) Guaranteeing a minimum level of income for every citizen. (d) Allocating scarce resources in such a manner that society’s unlimited needs or wants are satisfied in the best possible manner 162. Which of the following refers to the sum total of arrangements for the product and distribution of goods and services in society? [June 2023] (a) Economic System (b) Business System (c) Capitalist Economic System (d) Socialist Economic System 24 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 163. Capital intensive technique would get chosen in a (a) Labour surplus economy where the relative price of capital is lower. (b) Capital surplus economy where the relative price of capital is lower. (c) Developed economy where technology is better. (d) Developing economy where technology is poor. 164. Which of the following is not a part of central economic Problem? (a) What to Produce? (b) How to Produce? (c) For whom to Produce? (d) Price fixation of Production. 165. ________ refers to the sum total of arrangements for the production and distribution of goods and services in a Society. (a) Economic System (b) Social System (c) Business system (d) Comprehensive System 166. Economic Problem arises when: [CA CPT Dec. 2009] (a) Wants are unlimited (b) Resources are limited (c) Alternative uses of resources (d) All of the above 167. Which of the following is not one of the four central questions that the study of economics is supposed to answer? (a) Who produces what? (b) When are goods produced? (c) Who consumes what? (d) How are goods produced? 168. The classification of economies into Capitalist, Socialist and Mixed is based on their: (a) Mode of Production, exchange and distribution (b) Government’s role in economic activity. (c) Both (a) and (b) (d) Neither (a) nor (b) 169. The choice between labour and Capital intensive techniques is related with. (a) What to Produce? (b) How to Produce? (c) For whom to Produce? (d) All of the above 25 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS Capitalist Economy 170. Which one of the following is not an example of capitalist economy (a) Japan (b) Mexico (c) Germany (d) Cuba 171. The capitalist Economy uses ________ as principle means of allocation of resources [Nov. 2019] (a) Price (b) Demand (c) Supply (d) None of the above 172. Freedom of choice is the advantage of ___________. [CA CPT May 2019] (a) Socialism (b) Capitalist (c) Mixed economy (d) None of the above 173. A capitalist economy consists of [CA CPT May 2019] (a) Central planning authority (b) A mechanism to decide as what, how and for whom to produce (c) Both (a) and (b) (d) None of the above 174. Capitalist system offer incentives for: (a) Efficient business decisions (b) Efficient government decisions (e) Efficient non-government decisions (d) Efficient economic decisions 175. In capitalistic economy ______ and _______ will be more [Nov. 2020] (a) Equalities, non-exploitation (b) Inequalities, exploitation (c) Exploitation, equalities (d) Non-exploitation, inequalities 176. In a free market economy the allocation of resources is determined by (a) Voting done by consumers (b) A central planning authority. (c) Consumer preferences. (d) The level of profits of firms. 26 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 177. An economy is called capitalist economy, when ________ is given. [Jan. 2021] (a) Right to private property (b) Freedom of Government interference (c) Freedom of business choices (d) Discrimination 178. A capitalist economy uses _______ as the principal means of allocating resources, (a) Demand (b) Supply (c) Efficiency (d) Prices 179. An economic system in which all means of production are owned and controlled by private individuals for profit is called as? [June 2023] (a) Free economy (b) Capitalist economy (c) Normative economy (d) Socialist economy 180. Laissez-Faire economy is also known as: [Jan. 2021] (a) Capitalist economy (b) Socialist economy (c) Mixed economy (d) Communist economy 181. Capitalist system offer incentives for ____________. [Jan. 2021] (a) Efficient business decisions (b) Efficient government decisions (c) Efficient non-government decisions (d) Efficient economic decisions. 182. One of the demerits of capitalism is that it leads to formation of ________. [Dec. 2021] (a) Duopoly (b) Oligopoly (c) Monopoly (d) Perfect Competition 183. Price Mechanism is the main feature of which economy [CA CPT Nov. 2018] (a) Capitalistic Economy (b) Mixed Economy (c) Socialist Economy (d) All of the above 27 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 184. Profit motive is a merit of (a) Socialism (b) Capitalism (c) Mixed economy (d) None of the above 185. Which out of these are the feature of capitalism? (i) Profit motive (ii) Human welfare (iii) Work through price mechanism [CA CPT Nov. 2018] (a) (i) and (ii) (b) (ii) and (iii) (c) (i) and (iii) (d) All of these 186. Which of the following is not one of the features of capitalist economy? (a) Right of private property (b) Freedom of choice by the consumers (c) No profit, No Loss motive (d) Competition 187. Capitalist economy solve their economic problems through which of the following? [June 2023] (a) Central Planning Authority (b) Price mechanism (c) Administered Prices (d) Voting done by customers 188. ___________ is an economic system in which all means of production are owned and controlled by private individuals for profit. (a) Capitalist (b) Socialist (c) Mixed (d) None of the above 189. Which of the following is considered as a disadvantage of allocating resources using the market system? (a) Income will tend to be unevenly distributed. (b) People do not get goods of their choice. (c) Men of Initiative and enterprise are not rewarded. (d) Profits will tend to be low. 28 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 190. Exploitation and inequality will be more in __________. [CA CPT May 2019] (a) Socialism (b) Capitalism (c) Mixed (d) All of the above 191. ________ means that buyers ultimately determine which goods and services will be produced and in what quantities. (a) Capitalist Economic (b) Socialist Economy (c) Mixed Economy (d) Consumer Sovereignty 192. Consumers’ sovereignty is a typical feature of __________. (a) Command economy (b) Socialistic economy (c) Mixed economy (d) Capitalist economy 193. In which type of economy do consumers and producers make their choices based on the market forces of demand and supply? [CA CPT Feb. 2007] (a) Open Economy (b) Controlled Economy (c) Command Economy (d) Market Economy 194. The economic system in which all the means of production are owned and controlled by private individuals for profit. (a) Socialism (b) Capitalism (c) Mixed economy (d) Communism 195. In a free market economy, when consumers increase their purchase of a goods and the level of ________ exceeds _______ then prices tend to rise: [CA CPT Aug. 2007] (a) Demand, supply (b) Supply, demand (c) Prices, demand (d) Profits, supply 196. Capitalistic Economy uses _______ as principal means of allocating resources. [CA CPT Nov. 2006] (a) Demand (b) Supply (c) Price (d) All of the above 197. In a capitalist economy, allocation of resources is done by: [CA CPT June 2012] (a) Producers (b) Government (c) Planners (d) Price mechanism 29 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 198. A Free-Market economy solves its Central Problems through __________. [CA CPT Dec. 2008] (a) Planning authority (b) Market mechanism (c) Both (d) None 199. Capitalistic economy uses ________ as principal means of allocating resources [Nov. 2019] (a) Demand (b) Supply (c) Price (d) All of the above 200. A capitalist economy is by and large _____________. [CA CPT Dec. 2012] (a) A closed economy (b) A free market economy (c) A centrally controlled economy (d) An economy in which a government neither collects any taxes nor incurs any expenditure. 201. Which one is not the characteristic of capitalistic economy? [CA CPT June 2009] (a) Profit motive (b) Income inequality (c) Free employment (d) Collective ownership 202. Consumer sovereignty is found in which economy? [Nov. 2019] (a) Capitalist Economy (b) Socialist Economy (c) Mixed Economy (d) Communist Economy 203. Capitalistic Economy uses ________ as principal means of allocating resources. [CA CPT Dec. 2009] (a) Demand (b) Supply (c) Price (d) All of the above 204. Which one of the following is not true about capitalist economy? (a) There is freedom of economic choice. (b) Profit motive is the driving force. (c) It is also called as free market economy or laissez-Faire economy. (d) Producer is the king under capitalism. 30 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 205. The merits of Capitalist economy my do not include: (a) Faster process of economic growth (b) Efficient economic decisions and their implementation (c) Incentives for innovation and technological progress (d) Welfare of labour 206. A free market economy’s driving force is: [CA CPT June 2013] (a) Profit motive (b) Welfare of the people (c) Rising income and levels of living (d) None of the above. 207. Capitalist or Laissez faire economy has which of the following characteristics? [Dec. 2021] (a) Relatively equal income distribution (b) Competition (c) Price mechanism (d) Collective ownership 208. An economic system in which all means of production are owned and controlled by private individuals for profit is called: [CA CPT Dec. 2016] (a) Mixed Economy (b) Socialist Economy (c) Capitalist Economy (d) Developed Economy 209. Where does price mechanism exists? [CA CPT Dec. 2013] (a) Capitalist Economy (b) Socialist Economy (c) Both type of economies (d) None of the above. 210. In which among the following systems the ‘right to property’ exists [CA CPT Dec. 2013] (a) Mixed economy (b) Capitalist economy (c) Socialist economy (d) Traditional economy 31 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 211. A system of economy in which all the means of production are owned and controlled by the private individuals for the purpose of profit, is called: [CA CPT June 2013] (a) Socialist Economy (b) Capitalist Economy (c) Mixed Economy (d) All of the above 212. Capitalistic Economy user _______ as principal means of allocating resources: [CA CPT May 2018] (a) Demand (b) Supply (c) Price (d) All of the above 213. Factors of production are owned by _________ in market economies. [Nov. 2019] (a) Govt. (b) Investors (c) Privately (d) None 214. Which of the following is not demerit of Capitalism? (a) Precedence of property rights over human rights. (b) Misallocation of resources. (c) Punishment for inefficient & imprudent men. (d) Environmental degradation due to excessive materialism. 215. Freedom of choice is the advantage of [CA CPT Dec. 2016] (a) Socialism (b) Capitalism (c) Mixed Economy (d) Communism 216. Under a free economy, prices are: [CA CPT May 2007] (a) Regulated (b) Determined through free inter play of demand and supply (c) Partly regulated (d) None of these 217. Which of the following statements does not apply to a market economy? (a) Firms decide whom to hire and what to produce. (b) Firms aim at maximizing profits. (c) Households decide which firms to work for and what to buy with their incomes. (d) Government policies are the primary forces that guide the decisions of firms and households. 32 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 218. Economic system is self-regulating and run by invisible hands. (a) Mixed (b) Socialistic (c) Capitalistic (d) Planned 219. Which of the following is not a feature of a capitalist economy? [CA CPT June 2014] (a) Right to private property (b) Restrictions on consumers Right to choose (c) Profit motive (d) Freedom of enterprise 220. Freedom of choice is the advantage of (a) Socialism (b) Capitalism (c) Communism (d) None of the above 221. A Capitalist Economy follows the policy of:- [CA CPT Dec. 2012] (a) Laissez faire (b) Regulated markets (c) Promoting public sector (d) None of the above 222. In a capitalist economy the allocation of resources is performed by: [CA CPT Dec. 2011] (a) Producers (b) Government (c) Planners (d) Price mechanism 223. Which of the following statement does not apply to a market economy? [Nov. 2019] (a) Firms decide whom to hire and what to product (b) Firms at maximizing profits (c) Households decide which firms to work for and what to buy with their incomes (d) Government policies are the primary forces that guide the decisions of firms and household. Socialist Economy 224. The Concept of socialist economy was propounded by (a) Karl Mark (b) Frederic Engels (c) Adam Smith (d) Both (a) & (b) 33 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 225. Which of the following is NOT a characteristic of a socialist economy? (a) Absence of consumer choice (b) Central planning (c) Relatively equal income distribution (d) Competition 226. Socialist economy is ___________ [CA CPT May 2019] (a) Self regulation (b) Profit Oriented (c) Command economy (d) Allocation of resources as per market requirements 227. Under which of the following economy the consumer has limited freedom of choice? [June 2023] (a) Social (b) Mixed (c) Capital (d) Restricted 228. The concept of socialist economy was propounded by ________ [Dec. 2021] (a) Alfred Marshall (b) Joel dean (c) Albert Einstein (d) Karl Marx and Fredric Engles 229. Exploitation and inequality are minimal under: (a) Socialism (b) Capitalism (c) Mixed economy (d) None of the above 230. Socialist Economy was propounded by: [CA CPT May 2018] (a) Karl Marx (b) Samuelson (c) A.C. Pigou (d) Adam Smith 231. Socialist economy is also called as (a) Command Economy (b) Centrally Planned Economy (c) Free market Economy (d) Both (a) & (b) 232. The economic system in which production and distribution of goods are aimed at maximizing the welfare of the community as a whole is known as __________. [July 2021] (a) Capitalism (b) Socialism (c) Mixed economy (d) Communist Economy 34 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 233. Which of the following statements is not correct? [June 2022] (a) Scarcity of resources is the key problem of all economies (b) Economic inequalities lead to wide difference in economic opportunities to people (c) Economic instability is very common under capitalism (d) Freedom of enterprise is one of the main characteristics of command economy 234. Although Price mechanism exists in ________, but it has only a secondary role. (a) Capitalist economy (b) Socialist economy (c) Mixed Economy (d) Price Economy 235. Inequalities of income do not perpetuate in _________. [CA CPT Dec. 2011] (a) Socialism (b) Mixed economy (c) Capitalism (d) None 236. Administered prices refer to: (a) Prices determined by forces of demand and supply (b) Prices determined by sellers in the market (c) Prices determined by an external authority which is usually the government (d) None of the above 237. Socialism ensures [CA CPT May 2019] (a) Rapid growth and balanced development (b) Right to work (c) Incentives for efficient economic decisions (d) Both (a) and (b) 238. A socialistic economy is also called as [Nov. 2020] (a) Profit oriented economy (b) Centrally planned economy (c) self-regulatory economy (d) Unorganized economy 239. Which of the following is one of the merits of socialism? [June 2023] (a) Importance given to personal efficiency (b) Importance given to productivity (c) Incentive for economic decisions (d) Rapid growth and balanced economic development. 35 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 240. In a socialistic economy the allocation of resources is done by [June 2022] (a) Market prices (b) Consumer preferences (c) A central planning authority (d) The level of corporate profits 241. ________ involves the predominance of bureaucracy and resulting in inefficiencies and delays. (a) Socialistic economy (b) Capitalist economy (c) Mixed economy (d) Free market economy 242. The erstwhile U.S.S.R. is an example of ____________ economy. (a) Capitalist (b) Socialist (c) Mixed (d) Price 243. The concept of Socialist economy was propounded by ________. [July 2021] (a) Karl Marx and Adam Smith (b) Frederic Engels and Adam Smith (c) Frederic Engels (d) Karl Marx and Frederic Engel 244. Which one of the following is Not a feature of socialist economy? (a) Collective ownership (b) Absence of consumer choice (c) Minimum role of Price Mechanism (d) High Competition. 245. Which of the following is an example of Socialist economy? (a) Erstwhile U.S.S.R. (b) North Korea (c) China and Cuba (d) All of the above 246. A socialist economy is called as which of the following [June 2022] (a) Command economy (b) Military economy (c) Behaviouralist economy (d) Applied economy 247. The demerits of Socialism do not include: (a) Predominance of bureaucracy (b) Red tapism & favouritism (c) Corruption (d) Consumer Sovereignty 248. _______________ involves the predominance of bureaucracy and resulting inefficiencies and delays. [June 2022] (a) Socialistic economy (b) Capitalist economy (c) Mixed economy (d) Free market economy 36 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 249. Under ________, the Consumers have no freedom of choice. (a) Capitalist (b) Socialist (c) Mixed (d) None of the above 250. Socialist Economy is also known as [CA CPT Dec. 2013] (a) Mixed Economy (b) Planned Economy (c) Capitalist Economy (d) None of the above 251. Socialist economy is called as ___________. [Dec. 2021] (a) Centrally planned economy (b) Mixed economy (c) Private economy (d) Consumer economy 252. In which economic system production and distribution of goods and services aim at maximizing the welfare of community as a whole [Nov. 2020] (a) Normative (b) Mixed (c) Socialism (d) Capitalistic economy Mixed Economy 253. In which economy market and government both play on important role? [CA CPT Nov. 2018] (a) Mixed economy (b) Socialistic economy (c) Capitalistic economy (d) Business economy 254. Important feature of mixed economy is __________. [Dec. 2021] (a) Only Public Sector (b) Absence of consumer behaviour (c) Absence of government interferences (d) Co-existences of both private and public enterprises 255. Which economic system is described by Schumpeter as capitalism in the oxygen tent? [CA CPT May 2018] (a) Laissez-faire Economy (b) Command Economy (c) Mixed Economy (d) Agrarian Economy 37 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 256. The Government itself must run important and selected industries and eliminate the free play of profit motive and self-interest. It is applicable in case of _______ economy. (a) Capitalist (b) Socialist (c) Mixed (d) Price 257. _____________ both are the tools used in the Mixed economy. (a) Price mechanism and market (b) Central planning and bureaucracy (c) Price mechanism and central planning (d) Administered prices and competition 258. Co-existence of public and private sector is the feature of ____________ [Jan. 2021] (a) Capitalist Economy (b) Mixed Economy (c) Socialist Economy (d) Federal Economy 259. The term “Mixed Economy” denotes: [CA CPT June 2014] (a) Co-existence of both consumers and producers goods’ industries in the economy. (b) Co-existence of both private and public sectors in the economy. (c) Co-existence of both rural and urban sectors in the economy. (d) Co-existence of both large and small industries in the economy 260. In which economy, cost benefit analysis is used to answer the fundamental questions of economy [Nov. 2020] (a) Socialistic economy (b) Capitalistic economy (c) Regulatory economy (d) Mixed economy 261. Mixed economy means [CA CPT June 2009] (a) All economic decisions are taken by Central Authority (b) All economic decisions are taken by private entrepreneurs (c) Economic decisions are partly taken by the state and partly by private entrepreneurs (d) None of these 38 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 262. Which of the following are the features of a mixed economy? [CA CPT June 2012] (a) Planned economy (b) Dual system of pricing exists (c) Balance regional development (d) All of the above 263. In a mixed economy (a) All economic decisions are taken by the central authority. (b) All economic decisions are taken by private entrepreneurs. (c) Economic decisions are partly taken by the state and partly by the private entrepreneurs. (d) None of the above. 264. ________ is also called as command economy (a) Socialist (b) Capitalist (c) Mixed economy (d) None of the above 265. In a mixed economy, there are ________ sectors of industries. [Jan. 2021] (a) Two (b) Three (c) Four (d) Five 266. Which of the following statement is correct? [June 2022] (a) Mixed economy is not always a ‘golden path’ between capitalistic and socialistic economy (b) Socialistic economy is not always a ‘golden path’ between mixed economy and capitalism (c) Capitalistic economy is not always a ‘golden path’ between mixed economy and socialism. (d) Local economy is not always a ‘golden path between internal and international economy 267. Dual system of pricing exist in: [CA CPT June 2012] (a) Free market economy (b) Socialistic economy (c) Mixed economy (d) None of the above 39 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 268. Which Economic System is described by Schumpeter as ‘capitalism in the oxygen tent’? [CA CPT June 2017] (a) Laissez-Faire Economy (b) Command Economy (c) Mixed Economy (d) Agrarian Economy 269. The existence of three sectors of industries (Private, Public and Combine sector) is one of the futures of ___________. (a) Capitalist (b) Socialist (c) Mixed (d) Price 270. Which of the following statement is correct? [July 2021] (a) Mixed economy is not always a ‘golden path’ 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. 271. Mixed economy means: [CA CPT June 2011] (a) Co-existence of both private and public sector (b) Co-existence of poor and rich people (c) Both (a) and (b) (d) None 272. Which of the following economic system is self regulating and run by in available hands? [June 2022] (a) Mixed economic system (b) Socialistic economic system (c) Capitalist economic system (d) Planned economic system 273. Mixed economy means: [CA CPT June 2008] (a) Co-existence of small and large industries (b) Promoting both agriculture and industries in the economy (c) Co-existence of rich and poor (d) Co-existence of public and private sectors 40 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 274. ________ is a sector in which both the government and the private enterprises have equal access and join hands to produce commodities and services, leading to the establishment of joint sector. (a) Private Sector (b) Public Sector (c) Combined sector (d) Price 275. Indian economy is example of: (a) Mixed economy (b) Socialist economy (c) Capitalist economy (d) Unregulated economy 276. Encourage enterprise & risk taking is considered as a merit of which of the following economy? [June 2023] (a) Social economy (b) Political (c) Mixed (d) Managerial economy 277. In India Mixed Economy exists due to: [CA CPT May 2018] (a) Co-existence of public sector and private sector. (b) Individual forces of demand and supply. (c) Orders by government. (d) None of these. Miscellaneous 278. Larger production of ________ goods would lead to higher production in future. (a) Consumer goods (b) Capital goods (c) Agricultural goods (d) Public goods 279. _______ refers to the work area where surplus manpower is employed out of which some individuals have zero or almost zero marginal productivity, such that if they are removed the total level of output remains unchanged. [CA CPT May 2019] (a) Voluntary (b) Disguised (c) Structural (d) Technological 41 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 280. Which of the following statements is incorrect? [CA CPT Dec. 2011] (a) Alfred marshall propagated the wealth definition of Economics (b) L. Robbins introduces the “Scarcity definition of Economic (c) Samuelson emphasized upon the “growth” aspect of Economics (d) A.C. Pigou believed in “welfare aspect of Economics 281. Who has defined economics as “Science which deals with wealth? [CA CPT June 2014] (a) Adam Smith (b) Canon (c) J.B. Say (d) A.C. Pigou 282. Who is the author of “The Nature and causes of wealth of Nation”? [CA CPT Dec. 2015] (a) Karl Marx (b) Adam Smith (c) JB Say (d) AC Pigou 283. “Features of the book wealth of nations” [CA CPT May 2018] (a) It was the first book user on economics. (b) It was created in 1776. (c) It was also known as ‘wealth of nations’. (d) All of the above. 42 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS ANSWERS 1. (c) 2. (d) 3 (a) 4. (b) 5. (b) 6. (c) 7. (d) 8. (c) 9. (b) 10. (d) 11. (b) 12. (c) 13. (a) 14. (c) 15. (c) 16. (c) 17. (b) 18. (b) 19. (c) 20. (a) 21. (c) 22. (b) 23. (d) 24. (a) 25. (b) 26. (c) 27. (d) 28. (a) 29. (d) 30. (c) 31. (a) 32. (c) 33. (a) 34. (a) 35. (d) 36. (d) 37. (b) 38. (c) 39. (d) 40. (a) 41. (d) 42. (a) 43. (a) 44. (b) 45. (a) 46. (a) 47. (b) 48. (c) 49. (d) 50. (a) 51. (b) 52. (b) 53. (d) 54. (a) 55. (b) 56. (a) 57. (a) 58. (d) 59. (a) 60. (d) 61. (d) 62. (a) 63. (a) 64. (a) 65. (b) 66. (c) 67. (a) 68. (c) 69. (b) 70. (d) 71. (b) 72. (b) 73. (c) 74. (b) 75. (b) 76. (a) 77. (d) 78. (a) 79. (c) 80. (d) 81. (d) 82. (a) 83. (c) 84. (a) 85. (d) 86. (a) 87. (d) 88. (a) 89. (d) 90. (b) 91. (c) 92. (a) 93. (a) 94. (a) 95. (b) 96. (d) 97. (a) 98. (d) 99. (d) 100. (b) 101. (b) 102. (a) 103. (a) 104. (a) 105. (b) 106. (c) 107. (d) 108. (a) 109. (a) 110. (d) 111. (a) 112. (a) 113. (c) 114. (c) 115. (b) 116. (d) 117. (d) 118. (b) 119. (a) 120. (b) 121. (a) 122. (d) 123. (b) 124. (d) 125. (c) 126. (c) 127. (b) 128. (a) 129. (a) 130. (c) 131. (d) 132. (a) 133. (c) 134. (c) 135. (d) 136. (a) 137. (c) 138. (c) 139. (d) 140. (d) 141. (c) 142. (c) 143. (a) 144. (d) 145. (c) 146. (c) 147. (d) 148. (d) 149. (b) 150. (d) 151. (d) 152. (a) 153. (d) 154. (d) 155. (a) 156. (a) 157. (c) 158. (b) 159. (b) 160. (d) 161. (d) 162. (a) 163. (b) 164. (d) 165. (a) 166. (d) 167. (b) 168. (c) 169. (b) 170. (d) 171. (a) 172. (b) 173. (b) 174. (d) 175. (b) 176. (c) 177. (a) 178. (d) 179. (b) 180. (a) 181. (d) 182. (c) 183. (a) 184. (b) 185. (c) 186. (c) 187. (b) 188. (a) 189. (a) 190. (b) 191. (d) 192. (d) 193. (d) 194. (b) 195. (a) 196. (c) 197. (d) 198. (b) 199. (c) 200. (b) 201. (d) 202. (a) 203. (c) 204. (d) 205. (d) 206. (a) 207. (b) 208. (c) 209. (a) 210. (b) 211. (b) 212. (c) 213. (c) 214. (c) 215. (b) 216. (b) 217. (d) 218. (c) 219. (b) 220. (b) 221. (a) 222. (d) 223. (d) 224. (d) 225. (d) 226. (c) 227. (a) 228. (d) 229. (a) 230. (a) 231. (d) 232. (b) 233. (d) 234. (b) 235. (a) 236. (c) 237. (d) 238. (b) 239. (d) 240. (c) 241. (a) 242. (b) 243. (d) 244. (d) 245. (d) 43 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 246. (a) 247. (d) 248. (a) 249. (b) 250. (d) 251. (a) 252. (c) 253. (a) 254. (d) 255. (c) 256. (c) 257. (c) 258. (b) 259. (b) 260. (d) 261. (c) 262. (d) 263. (c) 264. (a) 265. (b) 266. (a) 267. (c) 268. (c) 269. (c) 270. (a) 271. (a) 272. (c) 273. (d) 274. (c) 275. (a) 276. (c) 277. (a) 278. (b) 279. (b) 280. (a) 281. (c) 282. (b) 283. (d) Hints of Selected Questions 6. Adam Smith published his masterpiece “An enquiry into the nature and causes of wealth and Nations” in the year 1776. Ans.: (c) 115. A normative science involves value judgments. It is prescriptive in nature and suggests ‘What should be’ a particular course of action under given circumstances. Ans.: (d) 147. National Income is a part of Macro-economics. Ans.: (d) 148. The Option (d) is a part of Micro economic analysis. Ans.: (d) 178. Laissez-faire is the policy of allowing private businesses to develop without government control. Ans.: (a) 264. There are three sectors of industries in mixed economy namely Private Sector, Public Sector and Combined Sector. Ans.: (b) 44 Nature And Scope Of Business Economics CA FOUNDATION BUSINESS ECONOMICS 2 THEORY OF DEMAND AND SUPPLY UNIT 1 LAW OF DEMAND & ELASTICITY OF DEMAND Meaning of Demand 1. Demand for a commodity refers to: (a) Desire backed by ability to pay for the commodity. (b) Need for the commodity and willingness to pay for it. (c) The quantity demanded of that commodity at a certain price. (d) The quantity of the commodity demanded at a certain price during any particular period of time. 2. The term ‘demand’ refers to: [Dec. 2021] (4) Demand of money (b) Need for the commodity (c) Need for services (d) The quantity of a good or service that buyers are willing and able to purchase at various prices during a given period of time 3. Demand is the: (a) The desire for a commodity given its price and those of related commodities. (b) The entire relationship between the quantity demanded and the price of a good other things remaining the same. (c) Willingness to pay for a good if income is larger enough. (d) Ability to pay for a good. 4. The quantity demanded is always expressed (a) Separately in isolation (b) Separately with quantity supplied (c) At a given price (d) None of these 45 Theory of Demand and Supply CA FOUNDATION BUSINESS ECONOMICS 5. Which of the following statements is correct? [Nov. 2019] (a) With the help of statistical tools, the demand can be forecasted accurately. (b) The more the number of substitutes of a commodity, more elastic is the demand. (c) Demand for butter is perfectly elastic. (d) Gold jewellery will have negative income elasticity. 6. The demand for a firm’s product when expressed as a percentage of industry demand it signifies the __________ of the firm [June 2022] (a) Product share (b) Market share (c) Demand (d) Supply 7. The quantity demanded is a _______________. (a) Flow (b) Stock (c) Single isolated purchase (d) Concept without reference to time 8. Effective demand depends on. [Jan. 2021] (a) Price (b) Cost (c) Desire (d) Product 9. In economics, Effective Demand for a thing depends on: (a) Desire (b) Means to purchase (c) Willingness to use those means for that purchase (d) All of the above Determinants of Demand 10. All of the following are determinants of demand except: (a) Tastes and preferences. (b) Quantity supplied. (c) Income of the consumer. (d) Price of related goods. 11. _____________is not a determinant of demand for commodity (a) Price of substitute commodities (b) Price of complementary goods (c) Consumer expectations about future price of the commodity (d) Quantity of stock of the commodity 46 Theory of Demand and Supply CA FOUNDATION BUSINESS ECONOMICS 12. Which is not an important factor that determines demand? [Dec. 2021] (a) Price of commodity (b) Disposable income of consumer (c) Tastes and preferences of buyers (d) Educational qualification buyer of buyer 13. Price of goods expresses value. [June 2023] (a) Exchange (b) Cost (c) Demand (d) Fair 14. Which of the following will affect the demand for non-durable goods? [CA CPT May 2019] (a) Disposable income (b) Price (c) Demography (d) All of the above 15. What is not a determinant of demand? [Jan. 2021] (a) Consumer’s expectations (b) Consumer’s tastes and preference (c) Income of the consumers (d) Prices of unrelated goods. 16. The term “Ceteris Paribus” refers to __________. (a) Other things being equal (b) Other things also change (c) Other things may change (d) None of the above 17. Ceteris Paribus, the demand for commodity is inversely related to price. This happens because of: (a) Income Effect (b) Substitution Effect (c) Both (a) & (b) (d) None of above 18. ______________ is/are the types of Related Commodities. (a) Complementary (b) Substitutes (c) Complementary and Substitutes (d) Complementary or Substitutes 19. The increase in demand on account of an increase in real income is known as: (a) Substitution effect (b) Income effect (c) Marginal effect (d) Demand effect 20. Which one of the following set of Commodities represents Complementary goods? (a) Tea and Sugar (b) Automobile and Petrol (c) Pen and ink (d) All of the above 47 Theory of Demand and Supply CA FOUNDATION BUSINESS ECONOMICS 21. __________ are those goods which are consumed together or simultaneously. (a) Complementary (b) Substitutes (c) Similar (d) Unrelated 22. Goods which are inferior, with no close substitutes easily available and which occupy a substantial place in consumer’s budget are called __________ goods. [July 2021] (a) Speculative (b) Prestige (c) Conspicuous (d) Giffen 23. When two commodities are complementary, a fall in
