UGC NET Paper 2 Commerce Mock Test - 7 - UGC NET MCQ

The correct answer is all determinants of demand, other than own price of the commodity, remain constant

Key Points

•  The law of demand states that all else being equal, as the price of a commodity or service increases, the quantity demanded will decrease, and vice versa. This is also known as the inverse relationship between price and quantity demanded.
• This law is based on the assumption of "ceteris paribus", which means "all else being equal" in Latin. This assumption allows us to focus on the relationship between price and quantity demanded while ignoring other factors that could complicate the analysis.
• The other factors that could affect demand include income levels, prices of substitute goods, prices of complementary goods, expectations about future prices, demographic factors, and consumer tastes and preferences.
• For example, if we were trying to understand how the demand for apples changes when the price of apples changes, we'd have to assume that the consumers' incomes, the price of other fruits, consumer preferences for apples, etc., all remain constant or else those changes could impact the demand as well.
• Thus, the law of demand holds true when all determinants of demand, other than its own price, remain constant.

Important Points Here are some additional insights related to the law of demand:

• The law of demand is represented graphically with the demand curve, which slopes downwards from left to right. This graphical representation visually shows the inverse relationship between the price of a good or service and the quantity demanded.
• The law of demand is essentially a reflection of the consumer behavior of rational self-interest. When the price of goods rises, consumers tend to buy less because they are trying to get the most utility (satisfaction or need fulfillment) out of their limited budget, and vice versa.
• In certain cases, demand doesn't obey the law of demand. These are called Giffen goods and Veblen goods. In the case of Giffen goods (named after economist Robert Giffen), when price rises, people consume more - these tend to be inferior goods, for example, staple foods like bread or rice in very poor countries. Veblen goods (named after economist Thorstein Veblen) are luxury goods, where higher prices actually make the goods more desirable, encouraging more consumption.
• The law of demand also plays a crucial role in market equilibrium. It helps set the market price by interacting with the law of supply, and the point where the demand and supply curves meet is considered the market equilibrium.
• The concept of elasticity is closely linked to the law of demand. Price elasticity of demand measures the responsiveness of the quantity demanded to a change in the price. Some goods are highly elastic, meaning that a small price change can have a big impact on demand, while others are inelastic, meaning that demand doesn't change much when the price does.
• The law of demand is a fundamental principle of economics that helps businesses, governments, and individuals understand market dynamics, set prices, and predict responses to changes in price. However, it's important to remember that this law is a simplification of complex real-world phenomena and may not always apply due to other external factors and changing preferences.

The correct answer is Olaf Helmer and Norman Dalkey.

Key Points

•  The Delphi method was invented by Olaf Helmer and Norman Dalkey of the RAND Corporation in the 1950s. It is a forecasting method that uses a panel of experts to reach a consensus on a particular issue. The Delphi method is based on the idea that experts can provide better forecasts if they are isolated from each other and allowed to interact anonymously.
• The Delphi method works in a series of rounds. In the first round, the experts are asked to provide their individual forecasts on the issue at hand. In the second round, the experts are given the results of the first round and are asked to revise their forecasts based on the feedback from the other experts. This process continues until the experts reach a consensus on the issue.
• The Delphi method has been used to forecast a wide range of events, including technological developments, economic trends, and political events. It is a valuable tool for forecasting because it allows experts to provide their input without being influenced by the opinions of others.

Here are some of the benefits of using the Delphi method:

• It can be used to forecast a wide range of events.
• It is anonymous, which allows experts to provide their input without being influenced by the opinions of others.
• It is iterative, which allows experts to revise their forecasts based on the feedback from the other experts.
• It is a relatively inexpensive method to use.

Here are some of the drawbacks of using the Delphi method:

• It can be time-consuming.
• It can be difficult to get a quorum of experts.
• The experts may not be representative of the population as a whole.
• The experts may not be willing to participate in the Delphi process.

Key Points

• An import or export agent acts as a middle person for the purchase or sale of products between both domestic and overseas companies.
• Responsibilities for this career vary depending on the field and type of company for which the agent works.
• Duties may also be different depending on where the agent is in the supply chain.

Important PointsPrimary functions of Domestic-based export agents are as follows:

• The agent may travel abroad, do research, prepare an export plan, advise the exporter on how to adapt their marketing mix, make contact with potential buyers, negotiate deals with the buyers, take care of all promotional activities, handle the logistics and documentation, and much more.
• All of these tasks, the export will do on the exporter’s behalf.
• The exporter normally pays the agent for the expenses they have incurred marketing the firm’s products and handling the export administration, and will generally earn a commission on any sales generated.
• In essence, the export agent becomes the exporter’s export department. In some cases, the principal will want to keep tight control over the agent’s activities, while in other instances, the agent is given free rein.

The correct answer is, Both (A) and (R) are correct and (R) is the correct explanation of (A).

Key Points

 Price Consumption Curve shows that how consumption of consumer changes with regard to change in its price. Basically Price Effect shows the effect on quantity demanded when the price of same commodity changes.

Important Points 

Assertion: The price consumption curve is backward sloping in case of Giffen goods.

• Impact of price on different goods are as follows:
  • Substitute Goods are those goods which can be replaced with each other. For Example: Tea and Coffee. In this case, if the price of one commodity increases then the demand for other commodity will also increases and vice versa. In this type of relation, the PCC curve slopes downward which shows positive relation between price and quantity demanded.
  • Complementary Goods are those that need to be consume together, which means goods cannot be consumed/ used in isolated form. For Example: Pen and Ink/ Car and Petrol etc. In this type of relation, the PCC curve is upward sloping because there is inverse relation between price of one commodity and its quantity demanded.
  • Giffen Goods falls under the category of inferior and low income group goods. When demand for a commodity decreases with decrease in its price and vice versa, then it means that these goods are giffen goods. In this type of relation, the PPC curve shows backward bending which means that the change in price and quantity demanded of giffen goods has positive relation with each other.

Reason: A fall in price of a good leads to a smaller quantity of the good demanded.

• A good's  backward sloping price consumption curve shows that after a certain point of time, less of it (product) is bought when its price drops.

​Hence, the correct answer is Both (A) and (R) are correct and (R) is the correct explanation of (A).

Key Points

Distribution in Statistics:

• A statistical dataset's distribution is its spread, which demonstrates all potential values or intervals of the data as well as their occurrence patterns.
• In other words, a distribution is a grouping of data or scores for a variable. These scores are often shown graphically after being organised in ascending to descending order.

Important PointsSampling Distribution:

• A statistical probability distribution that results from selecting random samples from a specific population is referred to as a sampling distribution.
• It depicts the distribution of frequencies on how dispersed various outcomes will be for a particular population and is also referred to as a finite-sample distribution.
• It is crucial to use a sampling distribution since populations are frequently enormous in size.
• This will allow you to randomly choose a subset of the entire population. When collecting statistical data or doing research, doing this helps eliminate unpredictability.
• Additionally, it facilitates data management and creates the groundwork for statistical inference, which enables drawing conclusions about the entire population.
• Understanding statistical inference is crucial because it clarifies the distribution of frequencies and the characteristics of different outcomes within a dataset.

Thus, the sampling distribution is formed by all possible values of a statistic by selecting a sample from the population.

Additional InformationBinomial distribution: A popular probability distribution known as the binomial distribution simulates the likelihood of getting one of two outcomes given a set of parameters.

Normal distribution: Data is symmetrically distributed and skew-free in a normal distribution. When the data is plotted on a graph, it has the shape of a bell, with the majority of numbers congregating in the centre and dropping off as they move farther away from the centroid.

Hypergeometric distribution: The number of successes in a hypergeometric experiment is a hypergeometric random variable. A hypergeometric distribution is the probability distribution of a hypergeometric random variable.

The correct answer is Both (A) and (R) are true and (R) is the correct explanation of (A).

Key Points

• Assertion (A): SEBI issues guidelines for all companies for the disclosure of information and protection of investors' interests.
  • ​To make available details relevant to an investment in the public domain, the Securities and Exchange Board of India has adopted a disclosure-based regulatory regime.
  • Under this regime, issuers and intermediaries disclose relevant details about themselves, the products, the market, and the regulations so that the investor can make informed investment decisions based on such disclosures.

Thus, the assertion is correct.

• Reason (R): Computerised screen-based trading has been introduced on all major stock exchanges.
  • The screen-based trading system enables distant trade participants to trade with each other, improving the liquidity of the securities markets.
  • The high speed with which the exchange of securities is executed and the large number of participants who can trade simultaneously facilitate faster incorporation of price-sensitive information into prevailing prices.
  • The screen-based trading system ensures transparency and helps in fixing the prices efficiently, because of the efficiency of information dissemination.

Thus, the reason is correct.

Screen-based trading in stock exchanges facilitates efficient disclosure of information and protection of investors' interests.

On the basis of the above information, it can be concluded that both assertion and reason are true and the reason is the correct explanation of the assertion.

The correct answer is regain possession.

Key Points

• Stoppage in transit" refers to a situation in logistics and transportation where a shipment or goods are halted or detained while they are in transit from the point of origin to the final destination.
• This can happen for various reasons, and it has implications for both the sender (consignor) and the receiver (consignee) of the goods.

Important PointsConditions for Exercising the Right -

• For the right of stoppage in transit to be valid, certain conditions must be met. These conditions include:
• The seller must be unpaid and must have a lien on the goods (i.e., the right to retain possession until payment is made).
• The buyer must be insolvent or must have failed to make the payment.

Objective of 'Stoppage in Transit' -

• The primary objective of exercising the right of stoppage in transit is not to recover the price or damages, but rather to retain possession of the goods until payment is made.

Retaining Possession vs. Recovering Price or Damages -

• While the seller's ultimate goal is to receive the payment for the goods, the direct action taken under "stoppage in transit" is to regain or retain possession of the goods until the financial obligation is met by the buyer.

Effect on Legal Rights -

• When the seller exercises the right of stoppage in transit, they essentially suspend the buyer's right to take possession of the goods. This is a legal remedy available to the seller.

Confusion Points retain possession v/s regain possession

There may be a little bit of confusion between options retain possession v/s regain possession. But the correct answer is to regain possession. It is the primary objective because until/without regaining the possession it is not possible to retain possession.

Key Points Long term Capital Gains:

• Long-term capital gains refer to the profit made on the sale of an asset that has been held for more than one year.
• The tax rate for long-term capital gains is usually lower than the tax rate for short-term capital gains.
• Long-term capital gains can be realized from the sale of various assets, such as stocks, bonds, real estate, and mutual funds.

Important Points Calculation of Long-Term Capital gain

Long term Capital Gain tax = Taxable long-term capital gains × Applicable long-term capital gains tax rate

Hence, the correct sequence is (A), (C), (D), (B), (E).

Additional Information The formula to calculate indexed cost of acquisition is:

The correct answer is Assertion is true, but Reasoning is false.

Key Points

• In the passage, "Variances in state-level policies, tax structures, and administrative efficiency create a complex web that businesses must adeptly navigate."
• The passage contradicts the reasoning by stating that there are variances in state-level policies, tax structures, and administrative efficiency.
• Therefore, while the assertion is true (political decisions do affect businesses at the state level), the reasoning is false, leading to option 3 as the correct answer.

Additional Information

• The other options (1. Both Assertion and Reasoning are true, and Reasoning is the correct explanation of Assertion, 2. Both Assertion and Reasoning are true, but Reasoning is not the correct explanation of Assertion, 4. Both Assertion and Reasoning are false) are ruled out based on the accurate alignment of the Assertion and Reasoning with the passage.
• The mention of a "complex web" emphasizes the intricate nature of navigating state-level policies for businesses.

Key-Points

Insurable Interest:

• The Marine Insurance Act (MIA), 1963 contains a clear definition of insurable interest.
• This definition states that there must be a physical object exposed to marine perils and the insured must have a legal relationship to the object.
• In consequence of this, he benefits from its preservation and is prejudiced by damage or loss happening to it or where he may incur liability in respect thereof.
• In the case of fire insurance, the insurable interest should exist at the time of contract and also at the time of loss whereas, in the case of marine insurance, the insurable interest must exist at the time of loss, even though it may have not existed when the insurance was affected.
• This is significant when one considers the mercantile practice, under which there is the possibility of the sale and purchase of goods during transit.
• The MIA states that when the goods are insured "lost or not lost" the assured may recover the loss, even though he may not have acquired his interest until after the loss, unless at the time of effecting insurance he was aware of the loss and the insurer was not.
• If the assured has no interest at the time of loss, they cannot acquire an interest in any act or election after he is aware of the loss.
• Arising from this, both a contingent and defeasible interest are insurable.
• A partial interest is also insurable.

Thus, from the above explanation, we can conclude that the above two statements are correct.

Production of goods is not a function of marketing management. 

Key Points

Marketing Management: 

• Marketing management refers to the process of planning, organizing, implementing, and controlling marketing activities to create and deliver value to customers and achieve the goals of an organization.
• It involves identifying customer needs and wants, developing marketing strategies to satisfy those needs and wants, and managing the marketing mix, which includes product, price, promotion, and place (distribution).
• Marketing management also involves conducting market research, analyzing market trends, and tracking marketing performance to ensure that marketing objectives are met.
• Effective marketing management is critical to the success of any business, as it helps to attract and retain customers, increase sales and profitability, and build brand loyalty.

Important Points

Functions of Marketing Management:

• Assessing marketing opportunities: Marketing management is responsible for identifying and assessing potential market opportunities, understanding consumer needs and preferences, and conducting market research to gather insights for developing effective marketing strategies.
• Providing effective marketing organization: Marketing management plays a crucial role in establishing and managing an effective marketing organization. This involves designing the marketing structure, allocating resources, managing marketing teams, and ensuring coordination and collaboration within the marketing department.
• Planning marketing activities: Marketing management is responsible for developing marketing plans and strategies to achieve the organization's marketing objectives. This includes identifying target markets, setting marketing goals, determining the marketing mix (product, price, promotion, and distribution), and creating action plans to implement and monitor marketing activities.

Additional Information Production of goods:

• The production of goods is not a function of marketing management.
• It falls under the domain of operations management or production management, which focuses on manufacturing and delivering products.

In psychological research, we seek to determine the relationship between two variables for forecasting purposes.

The correlation r measures the strength of the linear relationship between two quantitative variables. 

Pearson

r is always a number between -1 and 1. So, 1.20 does not lie in this range. r > 0 indicates a positive association. r < 0 indicates a negative association. Values of r near 0 indicate a very weak linear relationship. The strength of the linear relationship increases as r moves away from 0 toward -1 or 1. The extreme values r = -1 and r = 1 occur only in the case of a perfect linear relationship.

Since -0.98 is close to -1 as compared between 0.90 and 1 therefore, -0.98 coefficients of correlation indicate the strongest relationship between two sets of variables.

The definition that many marketers learn as they start out in the industry is: Putting the right product in the right place, at the right price, at the right time.

Marketing Mix is one of the most fundamental concepts in marketing management. For attracting consumers and for sales promotion, every manufacturer has to concentrate on four basic elements/components. These are product, pricing, distributive channels (place), and sales promotion techniques. A fair combination of these marketing elements is called Marketing Mix.

Price discovery is the overall process, whether explicit or inferred, of setting the spot price or the proper price of an asset, security, commodity, or currency.

• The process of price discovery looks at a number of tangible and intangible factors, including supply and demand, investor risk attitudes, and the overall economic and geopolitical environment.
• Simply put, it is where a buyer and a seller agree on a price and a transaction occurs.
• The derivatives market serves as an important source of information about prices. Prices of derivative instruments such as futures and forwards can be used to determine what the market expects future spot prices to be.
• The information is accurate and reliable. Thus, the futures and forwards markets are especially helpful in the price discovery mechanism.

So, both (A) and (R) are correct

A list of all the units of population and their description understudy is called a sampling frame.

A sampling frame is the source material or device from which a sample is drawn. It is a list of all those within a population who can be sampled and may include individuals, households, or institutions.

Total utility is the total satisfaction received from consuming a given total quantity of a good or service, while the marginal utility is the satisfaction gained from consuming another quantity of a good or service. Negative marginal utility is when the consumption of an additional item decreases the total utility.

HRD does not focus on autonomous workgroups. HRD focuses on all the human resources of the organisation i.e. individual staff members.

4 aspects of business that affect the growth of a startup:

• Project management
• Knowledge management
• Sales management
• Customer support

The correct answer is India-UAE (CEPA)

Key Points Free Trade Agreement:

• Free Trade Agreement is an agreement between two or more countries that reduces or eliminates tariffs and other trade barriers on goods and services traded between the countries.
• FTAs can also include provisions on investment, intellectual property, and dispute settlement.
• FTAs are designed to boost trade and economic growth by making it easier for businesses to sell their goods and services in other countries.
• They can also help to create jobs and improve standards of living.

Important Points India-UAE (CEPA):

• The India-UAE Comprehensive Economic Partnership Agreement (CEPA) is a trade agreement between India and the United Arab Emirates (UAE).
• It was signed on February 18, 2022, and entered into force on May 1, 2022.
• The CEPA aims to boost trade and investment between India and the UAE.
• It includes provisions on trade in goods, services, investment, intellectual property, and dispute settlement.
• Under the CEPA, India and the UAE have agreed to reduce or eliminate tariffs on a wide range of goods.
• The UAE has also agreed to grant India preferential market access for a number of services sectors, including IT, financial services, and healthcare.
• The CEPA is expected to boost trade between India and the UAE by up to $100 billion over the next five years.
• It is also expected to create jobs and boost economic growth in both countries.

Additional Information

List of India's FTA's

Key PointsSection 144 of the Companies Act of 2013 states that an auditor must only offer the company other services that have been authorised by the audit committee or the board of directors.

Important Points

• To ensure the independence and accountability of the auditor, the requirements of section 144 have been established to forbid statutory auditors from undertaking non-audit services.
• Actually, the auditor ought to be fair as well and shouldn't let bias or unfairness trump objectivity.
• He must approach his professional task with honesty, sincerity, and openness.

List of Non-Audit Services that Company Auditor cannot Render

• Accounting and bookkeeping services.
• Internal audit.
• Design and implementation of any financial information system.
• Actuarial services.
• Investment advisory services.
• Investment banking services.
• Rendering of outsourced financial services.
• Management services; and
• Any other kind of services as may be prescribed.

Hence, it can be concluded that as per section 144 of the Companies Act, 2013, the auditor does not provide Actuarial Services, Management Service and Investment advisory services.

The correct answer is Making loans to risky borrowers by attracting savings from the savers who are risk-averse.

Important Points

• Default-risk intermediation refers to the process by which financial institutions, such as banks or other lending institutions, assume the risk of loan default from borrowers in exchange for a fee or interest rate premium.
• Default-risk intermediation involves the process of taking funds from risk-averse savers and using those funds to make loans to borrowers who may have a higher risk of defaulting on their obligations.

Risk Aversion of Savers -

• Savers typically prefer low-risk investment options to protect their savings.
• They may be hesitant to directly lend their money to risky borrowers who have a higher likelihood of defaulting.

Role of Intermediary -

• The intermediary plays a crucial role in this process.
• They act as a bridge between the risk-averse savers and the potentially risky borrowers.
• The intermediary is responsible for assessing and mitigating the risks associated with lending to these borrowers.

Lending to Risky Borrowers -

• The intermediary takes on the responsibility of assessing the creditworthiness of borrowers.
• They identify potential borrowers who may have a higher risk of default due to factors such as poor credit history, unstable income, or other financial vulnerabilities.

Therefore, a good method of identifying and understanding customers is to develop a Customer Profile.

The correct answer is It allows employees to share ideas and concerns

Key Points Open communication is crucial in the workplace for several reasons:

Improved Collaboration: Open communication encourages team members to share ideas, feedback, and insights. This leads to better collaboration, as employees can work together more effectively, leveraging diverse perspectives to solve problems and achieve common goals.

Enhanced Problem Solving: When communication channels are open, issues and challenges can be identified and addressed more quickly. Team members can openly discuss problems, brainstorm solutions, and collectively find effective ways to overcome obstacles.

Increased Transparency: Open communication fosters transparency within an organization. When employees are informed about company goals, strategies, and decisions, they feel more engaged and trusted, which can boost morale and job satisfaction.

Stronger Relationships: Open communication builds trust and rapport among team members. When people feel comfortable sharing their thoughts and concerns, relationships are strengthened, leading to a more positive and supportive work environment.

Effective Leadership: Leaders who practice open communication are perceived as approachable and responsive. Employees are more likely to follow leaders who are transparent and communicate their expectations clearly, leading to better alignment and a more motivated workforce.

The correct answer is Both statements 1 and 2 are true.

Key Points

Statement 1: In the digital age, technology has revolutionized communication, allowing instant interactions across vast distances.

Explanation: The advancement of technology, especially the internet and mobile devices, has transformed the way people communicate. With the advent of emails, instant messaging, social media platforms, and video conferencing tools, individuals can now interact and exchange information instantaneously, regardless of their physical location. This revolution in communication has made it much easier to connect with others worldwide and has greatly accelerated the speed of information exchange.

Statement 2: Striking a balance between digital and face-to-face communication is crucial for maintaining healthy human connections.

Explanation: While digital communication offers convenience and efficiency, it cannot fully replace the value of face-to-face interactions. Human connections often thrive on emotional intimacy, empathy, and the ability to perceive non-verbal cues. Face-to-face communication provides a deeper understanding of each other's emotions, expressions, and body language, leading to more genuine and meaningful connections.

Maintaining a balance between digital and face-to-face communication is crucial because relying solely on digital interactions may lead to a sense of detachment and superficial relationships. On the other hand, neglecting digital communication entirely may limit opportunities for instant connections across long distances and hinder productivity in certain aspects of life, such as remote work and collaborations.

The correct code is: (a) - iii, (b) - i, (c) - ii, (d) - iv

A Provident Fund is a government-sponsored retirement scheme. Both the employer and the employee are required to contribute to the provident fund account with an aim to create a retirement corpus for the employee.

Personal safety and security is a major concern for families living away from home. Luckily for most of our families, they feel as safe and secure in their new homes. For some this was not the case at all as they now endured a range of new threats to the safety and security of their families.Severance pay amounts to a week or two of pay for every year that the employee was with the company. Executives may receive a month's pay for each year of service and senior executives generally receive severance pay as outlined in the employment contract.While transport allowance is an allowance given to meet commuting expenses between place of residence and office or to meet personal expenditure of employee of transport business, conveyance allowance is an allowance granted to meet the expenditure on conveyance in performance of office duty.