UGC NET Paper 2 Mock Test - 3 (Management) - UGC NET MCQ

The income elasticity of demand is defined as the percentage change in quantity demanded due to certain percent change in consumer's income. In the case of an inferior commodity, the income elasticity of demand is negative. It is because as the income of consumers increases, they either stop or consume less of inferior goods.

In the given figure, quantity demanded and consumer's income is measured along X-axis and Y-axis, respectively. When the consumer's income rises from OY to OY1, the quantity demanded of inferior goods falls from OQ to OQ1 and vice versa. Thus, the demand curve DD shows negative income elasticity of demand.

Macroeconomics is a branch of economics that focuses on the behaviour and decision-making of an economy as a whole. The important macroeconomic aggregates are:

• Aggregate Consumption
• Gross Domestic Capital Formation
• Gross Domestic Savings and GNP

Macroeconomists study aggregated indicators to understand how the whole economy functions and develop models that explain the relationship between such factors as national income, output, consumption, unemployment, inflation, savings, investment, government spending, and international trade. These variables taken as a whole comprise a grouping of variables that are referred to as economic indicators. These indicators, which are classified as leading, lagging and coincident relative to their predictive capability, in combination with one another provide economists with a directional attribution for the economy.

Utility Theory is a positive theory that seeks to explain the individuals' observed behaviour and choices.
Cardinal measure of utility is required in Utility Theory. The Cardinal Utility approach is propounded by neo-classical economists, who believe that utility is measurable, and the customer can express his satisfaction in cardinal or quantitative numbers, such as 1, 2, 3, and so on.

Corporate governance refers to the way a corporation is governed. It is the technique by which companies are directed and managed. It means carrying the business as per the stakeholders' desires. It is actually conducted by the board of directors and the concerned committees for the benefit of company's stakeholders.

Vertical Phillips curve is a single-equation economic model, named after William Phillips, describing an inverse relationship between rates of unemployment and corresponding rates of rises in wages that result within an economy. Stated simply, decreased unemployment (i.e. increased levels of employment) in an economy will correlate with higher rates of wage rises.

Behaviours developed through the reinforcement of successive approximations to the eventual desired behaviour are called shaped behaviours and the process is called shaping.

According to the principle of absolute responsibility, authority can be delegated but responsibility and accountability cannot be delegated by a manager. The manager is responsible or accountable to his own superior for both, the tasks that he has assigned to his subordinates and the acts of his subordinates. Hence, in 'delegation', only authority can be delegated, but responsibility and accountability are absolute.

In 1938, Henry Murray developed a system of needs as part of his theory of personality, which he named 20+ needs. Murray's system of needs has influenced the creation of personality testing, including both objective and subjective measures.

Raymond Cattell generated sixteen dimensions of human personality traits, known as the 16 traits.

Three traits concept of personality was given by Eysenck. Eysenck's theory of personality is based on three dimensions: introversion vs. extroversion, neuroticism vs. stability, and psychoticism vs. socialisation.

Ernest Tupes and Raymond Christal proposed 5 traits of personality. The Big Five personality traits are: openness, conscientiousness, extraversion, agreeableness, and neuroticism.

Hence, only (A) represents the correct combination.

Equity Theory defines motivation is a function of fairness in social exchanges. It focuses on determining whether the distribution of resources is fair to both relational partners. Equity is measured by comparing the ratio of contributions and benefits for each person.

Expectancy theory, initially put forward by Victor Vroom at the Yale School of Management, suggests that behavior is motivated by anticipated results or consequences. Vroom proposed that a person decides to behave in a certain way based on the expected result of the chosen behavior.

Goal-setting involves the development of an action plan designed to motivate and guide a person or group toward a goal. It helps in determining specific levels of performance for workers to attain and then striving to attain them.

ERG Theory is a theory in psychology proposed by Clayton Alderfer. Alderfer's regression hypothesis suggests that when people are frustrated by their inability to meet needs at the next higher level in the hierarchy, they regress to the next lower category of needs and intensify their desire to gratify these needs.

Psychological contract is a deep and varied concept and is open to a wide range of interpretations and theoretical studies. Primarily, a psychological contract refers to the relationship between an employer and its employees, and specifically concerns mutual expectations of inputs and outcomes.
Hence, option d is correct.

Cross-functional groups that operate across space, time and organisational boundaries with members who communicate mainly through information technologies are called virtual teams.

For virtual teams to perform well, three enabling conditions need to be established:

• Shared understanding
• Integration
• Mutual trust

Benefits of virtual teams include reduction in travelling expenses, inclusion of more people in labour pool, decrease in air pollution; moroever, physical handicaps are not a concern.

A lockout is the temporary closing of work or denial of employment initiated by the management of a company during a labour dispute. It implies the temporary closing of a business or the refusal by an employer to allow employees to come to work until they accept the employer's terms.
In contrast to a strike, in which employees refuse to work, a lockout is initiated by employers or industry owners. Lockouts are usually implemented by simply refusing to admit employees onto company premises, and may include changing locks or hiring security guards for the premises.

An unsafe work environment occurs when an employee is unable to perform her required daily duties because the physical conditions of the workplace are too dangerous.
Product safety screening is necessary to protect consumers from harm when using commercially available personal care products and household or workplace chemicals.
Environmental pollution is defined as the contamination of the physical and biological components of the earth/atmosphere system to such an extent that normal environmental processes are adversely affected. Whole society is affected by environmental pollution.
Each multi-national company has its own specific host country authorities that enforce local laws, and in some cases compliance standards will differ due to bi-lateral treaties with the home country government.

An assessment centre is a place and a technique where candidates are examined to determine their suitability for specific types of employment, especially management. The candidates' personality and aptitudes are determined by techniques including interviews, group exercises, presentations, examinations and psychometric testing.

Work measurement refers to the length of time it takes to complete a work task assigned to a specific job. It is the application of techniques which is designed to establish the time for an average worker to carry out a specified manufacturing task at a defined level of performance.

Deep discount bonds are very similar to zero coupon bonds. Only, these bonds are issued at deep discounts against the face value. For example - A bond having a face value of Rs. 1000 is sold at a price of Rs. 600. Notice that the amount of discount given to the buyer is of Rs. 400 (Certainly a deep discount, as the name suggests). These bonds are sold at a discounted value and on maturity, face value of the bond is paid to the investors.

Rate of return (ROR) is a technique of capital budgeting. A rate of return (ROR) is the gain or loss of an investment over a certain period of time. In case of merger, purchase consideration is the agreed amount which transferee company (purchasing company) pays to the transferor company (vendor company) in exchange for the ownership of the transfer or company. It may be in form of cash, shares or any other assets as agreed between both the companies. Diminishing balance method is a technique of depreciation. According to the diminishing balance method, depreciation is charged at a fixed percentage on the book value of the asset. As the book value reduces every year, it is also known as the reducing balance method or written-down value method. Fifo method is used for stock valuation. The first in, first out (fifo) method of stock valuation is a cost flow assumption that the first goods purchased are also the first goods sold. In most companies, this assumption closely matches the actual flow of goods, and so is considered the most theoretically correct inventory valuation method.

Money market instruments are securities that provide businesses, banks, and the government with large amounts of low-cost capital for a short time. The period is overnight, a few days, weeks, or even months, but always less than a year.
Commercial Paper is an important money market instrument. Commercial Paper is a money-market security issued (sold) by large corporations to obtain funds to meet short-term debt obligations (for example, payroll) and is backed only by an issuing bank or company promise to pay the face amount on the maturity date specified on the note.

The life-cycle hypothesis was developed by Franco Modigliani in 1957. The theory states that individuals seek to smooth consumption over the course of a lifetime – borrowing in times of low-income and saving during periods of high income.
The theory states that consumption will be a function of wealth, expected lifetime earnings and the number of years until retirement.
Consumption will depend on:

where,
C = Consumption
W = Wealth
R = Years until retirement
Y = Income
T = Remaining years of life

The modern approach views finance function in broader sense. It includes both raising of funds as well as their effective utilisation under the purview of finance. The finance function does not stop only by finding out sources of raising enough funds; their proper utilisation is also to be considered. The cost of raising funds and the returns from their use should be compared. Simply, we can say that modern approach to financial management revolves around:

I. The total fund requirement of the firm
II. The asset to be acquired
III. Payment of dividend to shareholders

Centroid Method is used for factor analysis. It extracts the largest sum of absolute loadings for each factor in turn. It is defined by linear combinations in which all weights are either +1.0 or -1.0.
Hierarchical Method is used for Cluster Analysis. Hierarchical cluster analysis is an algorithm that groups similar objects into groups called clusters.
Multiple Regression is the relationship between a single metric dependent and two or more independent variables. It is used when we want to predict the value of a variable based on the value of two or more other variables. The variable we want to predict is called the dependent variable (or sometimes, the outcome, target or criterion variable).
Multivariate analysis of variance (MANOVA) is a procedure for comparing multivariate sample means. As a multivariate procedure, it is used when there are two or more dependent variables, and is often followed by significance tests involving individual dependent variables separately.

Section 291 of the Indian Companies Act, 1956 provides that the Board of Directors of a company is entitled to exercise all such powers and to do all such acts and things as the company is authorised to exercise and do. This means that the powers of the Board of Directors are co-extensive with those of the company.
(a) The power to make calls on shareholders in respect of money unpaid on their shares
(b) The power to authorise the buy back of shares
(c) The power to issue debentures
(d) The power to borrow monies otherwise than on debentures
(e) The power to invest the funds of the company
(f) The power to make loans
(g) The power to forfeit shares
Directors don't have powers to borrow monies exceeding the aggregate of the paid-up capital of the company and its free reserves.

In highly competitive environment, an organisation to achieve sustained success should be resilient. Resilience relates more to how an organisation can access and utilise resources when it needs them. Resilience exists when the person uses "mental processes and behaviours in promoting personal assets and protecting self from the potential negative effects of stressors".

Merger is defined as combination of two or more companies into a single company where one survives and the others lose their corporate existence. The survivor acquires all the assets as well as liabilities of the merged company or companies. Generally, the surviving company is the buyer, which retains its identity, and the extinguished company is the seller.

Consumer buying process consists of sequential steps the consumer follows to arrive at the final buying decisions. Mostly, consumers follow a typical buying process. Marketer must know how consumers reach the final decision to buy the product.
According to Philip Kotler, the typical buying process involves five stages the consumer passes through described as under:

Services marketing is marketing based on relationship and value. It may be used to market a service or a product. Marketing a service-base business is different from marketing a product-base business.
There are six key distinguishing characteristics of services as follows:
a. Intangibility
b. Inseparability
c. Variability
d. Perishability
e. Heterogeneity
f. Lack of Ownership
Intangibility is used in marketing to tangibilise the intangible. It describes the inability to assess the value gained from engaging in an activity using any tangible evidence. It is often used to describe services where there isn't a tangible product that the customer can purchase, that can be seen, tasted, or touched.
Inseparability is used to train more service providers and build up client confidence. It occurs whether the producer is human, as in healthcare services, or a machine, as in the case of a bank ATM machine. The service of the ATM machine can only be realised if the producer and consumer interact. In some cases, it has been possible to separate service production and consumption, especially where there is little need for personal contact.
Variability is used for preparing a service blueprint showing each service and process in a flow chart. It expresses the notion that a service may vary in standard or quality from one provider to the next or from occasion to the next. It is also referred to as heterogeneity.
Perishability is used in marketing for differential pricing. It describes the way in which a service capacity cannot be stored for sale in the future.

Shoplifting is the theft of goods from an open retail establishment, typically by concealing a store item on one's person, in pockets, under clothes, or in a bag, and leaving the store without paying. Shoplifting typically involves consumer and/or customer.
One way to do shoplifting online is through the process of credit card paying. A customer uses a credit card to buy goods online, purchases the goods and then submits a complaint to the credit card company saying he never received the goods. As a result, a chargeback is initiated by the credit card company, and the merchant is forced to refund the purchase made by the client.

A marketing plan is a comprehensive document or blueprint that outlines the advertising and marketing efforts for the coming year. It describes business activities involved in accomplishing specific marketing objectives within a set time frame.
A marketing plan is composed of three basic components, namely:
1. Objectives
2. Policies
3. Programme

The "Marketing plan" is not included in the 7 Ps of services marketing. The 7 Ps framework is a marketing concept specifically designed for services marketing and includes the following elements:

• Product (or service): Refers to the core offering being provided to customers.
• Price: Determines the monetary value assigned to the service.
• Place (or distribution): Concerns the channels and locations through which the service is made available to customers.
• Promotion: Involves the marketing activities aimed at promoting and communicating the service to the target audience.
• People: Refers to the personnel, employees, or individuals involved in delivering the service and interacting with customers.
• Process: Describes the procedures, systems, and activities involved in delivering the service to customers.
• Physical evidence: Includes the tangible elements or physical aspects that support the delivery of the service, such as the environment, facilities, or equipment.

While a marketing plan is an essential component of any marketing strategy, it is not one of the 7 Ps specifically associated with services marketing.

Below stated common reactions can occur when the balance between customers and service capacity is overthrown:
Jockeying: When the customer enters one line and then switches to a different one in an effort to reduce the waiting time.
Balking: The customer decides not to enter the waiting line.
Reneging: The customer enters the line but decides to leave before being served.