Business Economics Mock Test - 2 - CA Foundation MCQ

Slope of TFC curve = 0 since TFC is a constant. TFC curve is a straight line parallel to the x-axis. 

If the price is greater than the marginal cost of the next unit, the firm should continue production as there is a profit on producing the additional unit.

Market price - Net Indirect tax = Factor Cost.

At equilibrium, buyers' willingness to pay is equal to sellers' willingness to accept. The quantity demanded is equal to the quantity supplied. Hence there is no excess demand or supply.

Microeconomics concentrates on the behavior of individual consumers and firms while macroeconomics focuses on the performance of the entire economy.

The slope of the TC curve = ΔTC/Δq= MC

Legal market power arises because of barriers to entry created by the government. This is achieved through patents, copyrights and sometimes even government monopolies like Indian railways.

Money has both separated the acts of purchase and sale, and expanded their scope. 

Inflation refers to the increase in the quantity of money in circulation without any corresponding increase in goods thus leading to an abnormal rise in price levels.

Demand for necessary goods is inelastic.

Let the fixed cost be F and the variable cost per unit be v.
F +100 v = Rs 2000
F + 250 v = Rs 3500
On solving, we get F = 1000 =TFC and v = 10 = AVC
Now, AFC = TFC / 10 = 1000/100 = Rs 10

The phenomenon of increased differences in wealth between the rich and poor countries which started around 1800 is called the great divergence. 

Microeconomics studies economic problems relating to individual economic units like a consumer, or a producer. An increase in the price of TATA Nano is related to an individual unit, which makes it a microeconomics topic.

A commercial bank provides long-term and short-term loans and creates credit. 

The supply of foreign exchange varies positively and directly with the exchange rate. 

Economics is the study of how society chooses to allocate its scarce resources in order to satisfy unlimited wants.

Change in stock = Closing stock - Opening stock = 50 - 5 = 45

Production is a process, not an input. 

Multiplier = 1/(1−MPC)
If entire additional income is converted into additional consumption, MPC = 1.
Therefore, the value of multiplier will be infinity.

The demand for normal goods increases as income increases.

Land is a free gift of nature and alcks geographical mobility.

Velocity is a flow variable. 

When RBI wants to reduce liquidity in the banking system, it increases the CRR as it reduces the money supply in the economy.

Chronic poverty is a phenomenon whereby an individual or group is in a state of poverty over extended period of time. Casual workers are covered under chronic poor, because they are employed for brief periods, and are generally unemployed.

In the BOO (Build. Own. Operate) system, the ownership of the facility lies with the private enterprise.

Any point inside the PPC indicates inefficient utilization of resources.

Flow variables are measured per unit time. 

India’s BOP has seen a deficit during most years, as India is a net importer.

Workers in the informal sector are paid unfairly low wages.