Business Economics Mock Test - 5

Markets for agricultural products like rice, wheat etc resemble perfectly competitive markets because there are a large number of producers, free entry and exit and products are identical.

Value added = Value of output in primary sector - Value of raw materials purchased by primary sector
= 800 - 400 
= 400

For full-bodied money, the money value and commodity value of the money are equal in the market. 

The difference between gross domestic product and net domestic product is due to depreciation.

An indifference curve is a locus of all such points, which show different combinations offering the same level of satisfaction to the consumer. It is always related to the choice and preference of the consumer.

Wealth is a stock variable.

An increase in the money supply increases the aggregate demand, as people now hold more money.

Gift tax belonged to direct taxes which does not have much significance in terms of revenue yield. It is not a non-tax receipt.

Note that the supply curve of C starts only above a price level of 15. Hence, at a price of Rs 10, only the supply curves of B and C are relevant.
q=qA+qB
⇒q=7p−10
At p=10, the quantity supplied is 60 units.

Profit maximization rule for a monopolistic competition is the same as that of a monopoly.
P >MC = MR

Imports = Exports - Balance of Trade = 700 - (-200) = 900

A consumer buys a commodity only when a rupee spent on it yields rupee worth of satisfaction (MU_M). A poor man stops the consumption of onion when he finds that a rupee spent on it does not yield rupee worth of satisfaction (no matter what quantity of onions is purchases), so that, Mux/P_X<Mu_M.

Tax that is imposed on value added at the various stages of production is known as value-added tax.

Deflationary periods often see depression or recession.

Both A and B. Economic problem is the problem of choice. It arises because resources are scarce and have alternative uses.

C + S = Y
At zero income level,
C = -S
When Y = 0, C = 300 + 0.8(0) = 300
Therefore, S = -300

Income of consumers who buy a good will only affects the demand for the good. All other factors will affect the supply.

The act of holding money as insurance against cases of emergency gives rise to precautionary demand.

Producer surplus, II is the area above the supply curve and below the price line.
It can be seen that at a price of $3
II =1/2×(3−1)×2=$2,

On account of an injection of aggregate demand, the equilibrium level of income increases.

Velocity of circulation of money is the number of times a rupee is used in transactions.

Fiscal deficit estimates borrowings.

This is part of a financial markets linkage.

All of these economists made an attempt to estimate the per capita income during the colonial period.

Point of inflexion is the point where the slope of the TP curve reaches the maximum and starts decreasing. At this point, MP is maximum.

Borrowings belong to the capital account.

The UK technology was capital intensive and labour saving and made sense in a high wage US economy.

If a consumer has monotonic preferences, he would prefer the bundle (6,6) to the bundle (4,6), because the bundle (6,6) has more of Good-1 as compared to the bundle (4,6)

TC = TFC + TVC

Out of the given options, deficit financing is not a monetary tool.

A cut in direct taxes causes a rightward shift of the AD curve.

The difference between average total cost and average variable cost is the average fixed cost.

A firm encountering economies of scale over some range of output will have a  falling long-run average cost curve. 

All of the listed reasons contribute to the instability of cartels.

In order to avoid double counting, we subtract the intermediate consumption from total value.

National income refers to all the given options.

The correct option is B.

The multiplier is M/H = 500000/250000 = 2.5

A decrease in the money supply will lead to a decrease in price levels.

A tax, the burden of which can be shifted on to others, is called indirect tax.

Budgetary Deficit = Total Expenditures - Total Receipts
= (Revenue Expenditure + Capital Expenditure) - (Revenue Receipts + Capital Receipts)
= (Rs 25,000 crore + Rs 35,000 crore) - (Rs 20,000 + Rs 30,000 crore)
= Rs 60,000 crore - Rs 50,000 crore
= Rs 10,000 crore

In case of Giffen's Paradox, the slope of demand curve is positive.

Domestic product is "National product - Net factor income from abroad".

Fiscal Deficit = Total expenditure - Total receipts other than borrowings

Taxes like wealth tax and gift tax in India which carry their significance only on paper and have no significance in terms of revenue yield are called paper taxes.

Unilateral transfers give rise to both demand and supply of foreign exchange.

The point of inflection on the total product curve corresponds to the level of output where marginal product is at a maximum.

The maximum limit of SLR is 40%.

The efficient scale of production is the quantity of output that minimizes the average total cost.

Its value is indeterminate

Savings are a leakage from the CFD.

High internal tariffs is not a part of the standard model of economic development. Internal tariffs are actually removed for the creation of a national market.

Imports of goods appears in the current account.

Substitution effect takes place when price of the commodity becomes either relatively cheap or relatively dear. 

Personal disposable income can be used at will by households.

Fiscal Deficit= Borrowings= 600 lakh 

Companies hire brokers to circulate the prospectus to the public.

It signifies that management is an intangible force.

A procedure provides much of the detail to the managers in directing subordinates by specifying the steps to be taken and the time and order of the performance. 

'Gang Plank' in 'Scalar Chain' indicates that management principles are flexible in nature. 

The occupation where people work for others and receive a remuneration in return is known as employment.

Ritu works at the middle level.

Political environmental factors led to the rise of the price index. 

Firm that outsources seek to lower their costs. The try to get the most efficient manpower available. 

The top management work on framing policies.

Public company to form requires a minimum of 7 members to form. 

Risk are caused by natural, human or economic causes. 

Planning is a flexible,goal-oriented and time-bound process.

The correct option is D.

Noise pollution impacts millions of people on a daily basis. The most common health problem it causes is Noise Induced Hearing Loss (NIHL). Exposure to loud noise can also cause high blood pressure, heart disease, sleep disturbances, and stress. These health problems can affect all age groups, especially children.

All the activities related to one type of product are grouped under one department only which brings integration and coordination in the activities. This is also called product specialisation.

Consolidation function shows that a warehouse receives and consolidates, materials /goods from different production plants and dispatches the same to a particular customer on a single transportation shipment. 

Deforestation is the conversion of forested areas to non-forest land use such as arable land, pasture, urban use, logged area, or wasteland. Generally, the removal or destruction of significant areas of forest cover has resulted in a degraded environment with reduced biodiversity. Deforestation results from removal of trees without sufficient reforestation, and results in declines in habitat and biodiversity, wood for fuel and industrial use, and quality of life. Due to deforestation, transpiration will be decreased, air temperature will be increased and water content will be decreased hence rainfall decreases.

Legal environment provides the framework, within which the business has to function.

The following indicates the importance of business environment:
1. Identification
2. Improvement in performance
3. Coping with rapid changes

Public sector enterprises are responsible for the development of the economy.

Language is a factor that does not play an important role in attracting FDI.

The range of members is between 2 and 200, then it is called a private company. 

While filling the form the insured should be truthful and honest in giving information to the insurance company. 

Programmed instruction is a method, information is broken into meaningful units and arranged in a logical and sequential learning package.

Public Sector Enterprises are organisations owned by Government. 

Outsourcing refers to a long-term contracting out generally the non-core activities and of late even some of the core activities of a captive or third-party specialist with a view of benefitting from their experience, expertise, efficiency and even investment.

The common gaseous pollutants are oxides of carbon (CO and CO₂), oxides of nitrogen (NO and NO₂) oxides of sulphur (SO₂ and SO₃), all these together contribute 90% of the global air pollution. Out of all these CO₂ is not a pollutant normally, the green plants, by photosynthesis balance the CO₂ and O₂ ratios in the air to a great extent, whereas others like carbon monoxide, NO₂ etc. are poisonous gases.

False advertising is the use of false, misleading, or unproven information to advertise products to consumers or advertising that does not disclose its source. One form of false advertising is to claim that a product has a health benefit or contains vitamins or minerals that it in fact does not.

To organize educational, health and vocational training programmes is a social objective.

The principle that focuses on specialisation is 'Division of Work'. 

Planning reduces the risk of uncertainty. By deciding in advance, planning shows the way to deal with changes and uncertain events. Such changes, when anticipated can be handled in an effective manner to reduce uncertainties. 

Two individuals want to start an organisation but have a limited liability can only form a company. 

Important characteristics of maangement are pervasive and multidimensional. 

Private sector is that type of business units which are carried out with the motive of earning profits.

Apprenticeship training is the type of training in which the trainee learns under the guidance of a master worker.

Public sector banks are those in which the government has a major stake and they usually need to emphasise on social objectives than on profitability.

Under the planning incharge, route clerk is responsible to specify the route of production. 

The establishment of working relationships clarifies lines of communication and specifies who has to report to whom. In this way, organising establishes clarity in working relations.

Farmers' cooperatives are set up to protect the interest of farmers by providing better inputs at a reasonable rate. 

All of the above are indoor pollutants in classrooms

Panchayats in our country have been given more powers to decide and spend funds granted to them by the government for the welfare of villages. This is decentralisation at a national level.