UGC NET Paper 2 Commerce Mock Test - 1 - UGC NET MCQ

The correct answer is Supply chain networks.

Key Points

As per the passage,  "One of the significant impacts was on the supply chain dynamics. Global supply chain networks experienced severe disruptions due to pandemic-induced restrictions."

The correct answer is Data security.

Key Points

As per the passage, "The sudden and extensive requirement for remote workforce management posed substantial challenges in terms of operational continuity, productivity checks, data security, and employee wellbeing."

The correct answer is Profit.

Key Points

• Profit is the excess of revenue of a business over its costs. It can be gross profit or net profit.
• Gross profit is the difference between sales revenue or the proceeds of goods sold and/or services provided over its direct cost of the goods sold.
• Whereas Net profit is the profit made after allowing for all types of expenses.
• There may be a net loss if the expenses exceed the revenue

Additional Information

• Loss means something against which the firm receives no benefit. It is a fact that expenses lead to revenue but losses do not, such as theft.
• Costs incurred by a business in the process of earning revenue are known as expenses. In general, it is measured by the cost of assets consumed or services used during the accounting period. The common items of expenses are Depreciation, Rent, Wages, Salaries, Interest, Cost of Heating, Light and water and Telephone, etc.
• Expenditure is Spending money or incurring liability for some benefit, service or property received. For example Payment of rent, salary, purchase of goods, purchase of machinery, etc.

The correct answer is IC15.

In News

• IC15, India’s first global index of cryptocurrencies is a rule-based broad market index by market capitalization, that tracks the performance of widely traded liquid cryptocurrencies in the world.
• The index will help crypto enthusiasts and participants to monitor the performance of cryptocurrencies in the global markets.
• IC15 will measure the performance of the 15 most widely traded cryptocurrencies listed on leading crypto exchanges by market capitalization, which include:
  • Bitcoin, Ethereum, Binance coin, Solana, Cardano, Ripple, Terra, Dogecoin and Shiba Inu, Avalanche, Polkadot, Uniswap, Litecoin, Chainlink, Bitcoin Cash.
• "S&P Cryptocurrency Index, with more than 243 coins, offers a better insight into the digital asset ecosystem.
• And is trusted by everyone in the crypto ecosystem," says Sharat Chandra, a blockchain and emerging technology expert and advisor to blockchain startups.
• IC15, with 15 coins, is not inclusive enough, he says, adding that the likes of Coindesk and Cryptocompare too have crypto indices.

Production Function 

Production function depicts the technical relationship between physical inputs and physical output.

• The given production function Q = 10 L^0.8K^0.2 is an example of a Cobb-Douglass production function. 
• This production function was given by C.W. Cobb and P.H. Douglas.

The Marginal product of labour (MP_L)

The marginal product of labour is the addition made to total physical product through the employment of an additional unit of labour, given, the quantities of other inputs remain constant.

In mathematical terms, MP_L can be expressed as

MP_L = dQ / dL = Change in output / Change in labour

Marginal product of capital (MP_K)

Marginal product of capital is the addition made to total physical product through the employment of an additional unit of capital, given, the quantities of other inputs remain constant.

In mathematical terms, MP_K can be expressed as - 

MP_K = dQ / dK = Change in output / Change in capital

Important Points Numerical solution

Calculation of Marginal product of labour

 Q = 10 L^0.8K^0.2    (Given)

Taking the first derivative w.r.t. labour, 

MP_L = dQ / dL 

MP_L = 0.8 (10 L^0.8-1)K^0.2

MP_L = 8L^-0.2K^0.2

MP_L = 8K^0.2 / L^0.2

MP_L = 8 (K/L)^0.2

Calculation of marginal product of capital

Taking the first derivative w.r.t. capital,

MP_K = dQ / dK

MP_K = 10 L ^0.8  (0.2 K ^0.2-1)

MP_K = 10 L^0.8 (0.2 K^-0.8)

MP_k = 2 L ^0.8 K^-0.8

MP_K = 2 (L / K)^0.8

Hence, given the production function Q = 10 L^0.8 K^0.2, the marginal product of labour (MP_L) and capital (MP_K) are given by MP^L = 8 (K/L)^0.2 and MP_K = 2 (L / K)^0.8 respectively.

Management skill - Executive needs have certain qualities or skills in order to carry out specific jobs in an organization, and these qualities or talents are referred to as management competencies.

Important PointsThe three fundamental categories of managerial talents, according to American social and organizational psychologist Robert Katz, are as follows: 

Technical Skills: 

• These abilities give the management the knowledge and capability to apply various approaches to accomplish their goals, as implied by the talents' names.
• Technical talents are not only relevant for machines, production tools, or other equipment; they are also necessary for boosting sales, designing various products and services, marketing the goods and services, and other tasks.

Perceptual\conceptual Skills: 

• Conceptual talents demonstrate a manager's understanding or capacity for more abstract thought.
• That implies that he can quickly diagnose various states and analyse the total through doing so.
• They are able to forecast the direction of the company or department as a whole in this way.
• For top managers, conceptual skills are essential. For mid-level managers, they are less important, and for first-level managers, they are not necessary.
• The significance of these talents will increase as we move up the administrative ladder.

Human Skills: 

• A manager's knowledge and interpersonal abilities are demonstrated through their human or interpersonal management skills.
• Working with people is one of the most important management responsibilities.
• There won't be a need for management or managers if there are no humans.

​Thus, Writing Skills is not a recognized key management skill.

Assertion (A): One finds always a difference of opinion between the Government and the RBI regarding interest rates.

Reasoning (R): While the main focus of the Government is on growth, the RBI always focuses on inflation.

Here,​ (A) is incorrect but (R) is correct

Key-Points

• The main government aims for the economy are full employment, price stability, economic growth, redistribution of income, and stability of the balance of payments. A government can operate a range of policy measures to achieve these aims and it is judged on their success or otherwise.
• The main purpose of the RBI is to conduct consolidated supervision of the financial sector in India, which is made up of commercial banks, financial institutions, and non-banking finance firms.
• An interest rate is the amount of interest due per period, as a proportion of the amount lent, deposited, or borrowed (called the principal sum). The total interest on an amount lent or borrowed depends on the principal sum, the interest rate, the compounding frequency, and the length of time over which it is lent deposited or borrowed.
• It is defined as the proportion of an amount loaned which a lender charges as interest to the borrower, normally expressed as an annual percentage. It is the rate a bank or other lender charges to borrow its money or the rate a bank pays its savers for keeping money in an account.
• To combat this, a country's appropriate monetary authority, like the central bank, then takes the necessary measures to manage the supply of money and credit to keep inflation within permissible limits and keep the economy running smoothly. However one cannot claim to always find a difference of opinion between the Government and the RBI regarding interest rates.

FIFO and LIFO accounting are methods used in managing inventory and financial matters involving the amount of money a company has to have tied up within inventory of produced goods, raw materials, parts, components, or feedstocks. They are used to manage assumptions of costs related to inventory, stock repurchases (if purchased at different prices), and various other accounting purposes.

Key Points

1. FIFO:

• "FIFO" stands for first-in, first-out, meaning that the oldest inventory items are recorded as sold first but do not necessarily mean that the exact oldest physical object has been tracked and sold.
• In other words, the cost associated with the inventory that was purchased first is the cost expensed first.

2. LIFO:

• Last-in First-out (LIFO) is an inventory valuation method based on the assumption that assets produced or acquired last are the first to be expensed.

Important Point

1. Last-in, first-out, or LIFO, uses the most recent cost first. When prices are rising, you prefer LIFO because it gives you the highest cost of goods sold and the lowest taxable income thereby leading to a lower valuation of inventory.
2. First-in, first-out, or FIFO, applies the earliest costs first. In rising markets, FIFO yields the lowest cost of goods sold and the highest taxable income.

Therefore, when prices show a rising trend, LIFO methods of inventory valuation will result in lower-income and lower valuation of inventory.

The correct answer is (A) - (III), (B) - (IV), (C) - (II), (D) - (I)

Key PointsNegatively skewed distribution (also known as left-skewed) is a type of distribution in which more values are concentrated on the right side (tail) of the distribution graph while the left tail of the distribution graph is longer.

Positively skewed distribution (also known as right-skewed) is a type of distribution in which most values are clustered around the left tail of the distribution while the right tail of the distribution is longer.

Normal distribution describes continuous data which have a symmetric distribution, with a characteristic 'bell' shape.

Binomial distribution describes the distribution of binary data from a finite sample. Thus it gives the probability of getting r events out of n trials.

The correct answer is A, D and E only.

Key Points

• The Group gains its identity: The group having a fixed identity is primarily associated with the Norming stage. However, the Performing stage can continue to build upon and reinforce this identity. Consequently, this is considered a relevant characteristic of the Performing stage in this context.

• Leadership is shared: While shared leadership can happen in the Performing stage due to high levels of trust and cooperation, it's not distinct to this stage. It can occur at different stages of group development based on the group's dynamics and maturity. Therefore, this characteristic isn't considered exclusive to the Performing stage in this context.

• Disengagement from relationships: The disengagement, or dissolution of relationships, is most closely associated with the Adjourning or Mourning stage, where the group disbands after fulfilling its purpose. It's not characteristic of the Performing stage, which is marked by engagement and high productivity. Therefore, this point isn't considered correct in this context.

• Group morale is high: This statement is correct for the Performing stage. During this stage, the team is productive, efficient, and confident in its abilities to achieve its goals, contributing to high morale among team members.

• Group loyalty is intense: Given the high level of teamwork, effectiveness, and shared commitment to group goals during the Performing stage, loyalty to the group is indeed likely to be intense. This feature is accurately tied to the Performing stage in this context.

Additional InformationThe Group Building Process, often known as the Team Development Process, is a four-stage model developed by psychologist Bruce Tuckman in 1965. He later added a fifth stage in 1977. Each stage represents a different phase that teams naturally progress through during their formation and operation. This model helps in understanding the team's behavior, progress, and dynamics. Here are the five stages:

• Forming: This is the first stage wherein the group of individuals come together. In this stage, group members are often polite and eager to fit in. They learn about the challenges ahead and start to formulate goals together. The main feelings here are anticipation, optimism, and also some anxiety and uncertainty.

• Storming: This stage is characterized by conflict and competition as individual personalities start to emerge within the group. People exhibit more of their personal attitudes, can be confrontational, and at times things might feel chaotic. The storming stage is a crucial part of the development process as it helps the team members understand each other better.

• Norming: As conflicts start to be resolved, the team moves into the norming phase. This stage is marked by a growing cohesiveness, the development of established roles within the group, and a stronger sense of identity. Team members now understand each other better, appreciate others' skills, and are more empathetic towards each other.

• Performing: At this stage, the team is functional and working smoothly towards their common goals. Now there is lesser supervision needed as team members are highly self-directed. There is unity, loyalty, and group consciousness, with high levels of satisfaction and motivation.

• Adjourning (also known as "Mourning"): This final stage was added by Tuckman later. It happens when the tasks of the team have been accomplished and it's time for the team members to separate. The reactions of team members vary – some might feel a sense of accomplishment, while others might have a hard time letting go.

The correct answer is (a), (b), and (c).

• The Asia-Pacific Economic Cooperation (APEC) is a regional economic forum founded in 1989 to capitalize on the Asia-Pacific region's growing interconnectedness. The 21 members of APEC want to increase regional prosperity by fostering balanced, inclusive, sustainable, creative, and secure growth and by speeding up regional economic integration.
• To achieve these objectives, APEC member economies devised a framework in 1995 in Osaka, Japan, that identifies trade and investment liberalization, business facilitation, and economic and technical cooperation as the three core areas of cooperation, also known as the "Three Pillars" of APEC.
• APEC facilitates the movement of products, services, investments, and people across borders. Members promote this trade by facilitating speedier border customs procedures, improving business climates behind the border, and unifying legislation and standards across the region.

Hence, three pillars of the Asia-Pacific Economic Cooperation (APEC) are trade and investment liberalization, business facilitation, and economic and technical cooperation.

According to Robbins, "perception may be defined as a process by which individuals organize and interpret their sensory impressions in order to give meaning to their environment."

Key-Points

Customer Perception Analysis:

• Customers are dynamic in thought but tend to converge while displaying certain emotions and behaviors.
• These complex thoughts and behavioral patterns that the customers exhibit can be combined into a concept called customer perception.
• Customer perception is a marketing concept that tells us what customers feel about a brand or company or its offerings.
• It can be positive or negative perceptions, inhibitions, feelings, predispositions, expectations or experiences that a customer has.
• Customer perception can be typically affected by advertising, social media, public relations, personal experience, and other channels. 
• Customer perception analysis is a value-chain assessment methodology that gives a better understanding of one’s interaction with customers.

• The factors influencing Customer perception analysis are stated below:
  • ​Exposure (advertisement)
  • Interpretations (involves making sense out of stimulus)
  • Relevant several other factors (substitute)
  • Surprising stimuli
  • Subliminal stimuli
  • Selective perception process
  • Selective Exposure
  • Selective Attention
  • Selective Comprehension
  • Selective Retention

Therefore, Selective credit control is not the factor influencing Customers Perception Analysis.

The correct answer is (d) All of the above.

Self-Help Groups (SHGs) are informal associations of people who come together to find ways to improve their living conditions. They are typically composed of 10-20 members from the same socioeconomic background who come together to save money, provide loans to their members, and engage in social activities. SHGs play a significant role in promoting economic and social empowerment of poor women, providing micro-credit to their members, and promoting social awareness and participation.

Additional InformationHere's a breakdown of how SHGs contribute to these objectives:

Economic empowerment: SHGs encourage women to save money and provide them with access to loans, enabling them to start small businesses or invest in income-generating activities. This financial independence fosters economic empowerment and improves their livelihoods.

Micro-credit: SHGs operate a system of internal lending, where members take turns using the collective savings as loans. This micro-credit facility allows members to access financial resources without the stringent requirements of traditional banks, promoting entrepreneurship and economic activity.

Social awareness and participation: SHGs provide a platform for women to discuss social issues, share experiences, and learn from each other. This fosters social awareness, encourages participation in community decision-making, and promotes social cohesion

Pharmaceutical does not ignore regulatory agencies. They usually spend much time effort trying to influence the decisions made by them e.g. to get approval for the use of their drugs. The firms also go in for lobbying and may, at times, use threats or promises to achieve their desired.

Reducing the capital of the company is called internal reconstruction. Internal reconstruction of a company is done through the reorganization of its share capital. It is a scheme of reorganization in which all interested parties in the capital structure volunteer to sacrifice.

RBI is the controller of money supply.

• RBI acts as a banker to the Government of India.
• RBI full form Reserve Bank of India is the Central bank of India.
• It is also known as the Banker’s Bank.
• It controls the monetary policy with respect to the national currency, the Indian Rupee.
• RBI is headquartered in Mumbai.
• Reserve Bank of India is entrusted with monetary stability, the management of currency, and the supervision of the financial as well as the payments system.
• Reserve Bank of India is the regulator of the Banking Industries in India.
• It supervises, guides, and regulates all the banks that are operating in our country.

Matrix organization aims to combine the benefits of decentralization with those of coordination. It usually requires employees from distinct departments to form a group to achieve a specific target.

A functional structure is common in organizations, not divisional structures that have outgrown the entrepreneurial structure. It is appropriate for small companies having few products.

Mutually exclusive projects are projects in which acceptance of one project excludes the others from consideration. In such a case, the best project is accepted. NPV and IRR conflict, which can sometimes arise in case of mutually exclusive projects, becomes critical. The conflict either arises due to the relative size of the project or due to the different cash flow distribution of the projects.

WTO (World Trade Organisation) is a permanent inter-governmental body governing and regulating international trade in goods and services. The WTO has the following objectives: 

• To set and enforce rules for international trade 
• To provide a forum for negotiating and monitoring further trade liberalisation
• To resolve trade disputes
• To increase the transparency of decision-making processes 
• To cooperate with other major international economic trade-related issues

The Mercantilist Theory holds that "exports were good and had to be encouraged but imports were bad and had to be discouraged". His policy was to export to the countries he controlled and not to import.

Money can be transferred using mobile phones through the service called IMPS.

Immediate Payment Service is an instant payment inter-bank electronic funds transfer system in India. IMPS offers an inter-bank electronic fund transfer service through mobile phones. The service is available 24×7 throughout the year including bank holidays.

An income tax is a tax imposed on individuals or entities (taxpayers) that varies with respective income or profits (taxable income).

Income tax generally is computed as the product of a tax rate times taxable income. Taxation rates may vary by type or characteristics of the taxpayer.

In India, the nature of the income tax is progressive. The tax rate may increase as taxable income increases (referred to as graduated or progressive rates). 

The first income tax is generally attributed to Egypt. In the early days of the Roman Republic, public taxes consisted of modest assessments on owned wealth and property. The tax rate under normal circumstances was 1% and sometimes would climb as high as 3% in situations such as war.

Retirement oriented taxes, such as Social Security or national insurance, also are a type of income tax, though not generally referred to as such.

Key PointsThe CAG (The Comptroller and Auditor General of India) shall within 60 days from audit report received u/s 143(5) have right to conduct a supplementary audit by the person authorised by him to require additional information on matters and in form as directed by him.

Important PointsSection 143(6) – CAG (The Comptroller and Auditor General of India) Right to Supplementary Audit of Government Company

• On receipt of audit report of the govt company the C&AG can carry out supplementary audit with 60 days from the date of receipt of such audit report.
• The CAG will then comment on or supplement the audit report, which will then be sent by the company in accordance with section 143(6)'s first proviso to every member, trustee for debenture holder, and other parties entitled to copies of the audited financial statements under section 136(1).
• The audit report and the CAG's comments will also be placed before the AGM at the same time and in the same manner.
• The Annual Report on the operations and affairs of that firm must be prepared in accordance with Section 394(1) within 3 months of the AGM, before which the CAG's comments and the audit report are subject to Section 143's proviso (6).

Hence, it can be concluded that The Comptroller and Auditor General of India has the right to conduct a supplementary audit under Sec 143(6)(a).

The correct answer is bearish.

Key Points

• The primary trend lasts from one to three years.
• Over this period, the markets exhibit definite upward or downward movement which is punctuated by shorter spans of a trend reversal in the opposite directions.
• The trend reversal is called the secondary trend.
• The primary trend is indicative of the overall pattern of movement.
• In Dow Theory, the primary trend is the major trend of the market, which makes it the most important one to determine.
• This is because the overriding trend is the one that affects the movements in stock prices.
• The primary trend will also impact the secondary and minor trends within the market.
• If the primary trend is upward, it is called a bullish phase of the market.
• If the primary trend is downwards, it is called a bearish phase.
• In a bullish phase, after each peak, there is a fall but the subsequent rise is higher than the previous one. The prices reach a higher level with each rise. After the peak has been reached, the primary trend now turns to a bearish phase.
• In a bearish phase, the overall trend is that of a decline in share values. After each fall, there is a slight rise but the subsequent fall is even sharper.

Key Points

For the pricing of home loans by a commercial bank.

1 Credit check - a credit check is a procedure used by the lender to determine your ability to repay the loan

2 MCLR - Marginal Cost of Funds-Based Landing Rate

3 Spread specification - final interest rate after adding a few % to the prime rate.

4 Price determination - Loan price is the interest rate that borrowers have to pay to the bank and the amount borrowed (principal).

5 Quoting to the prospective borrower - lenders offer quotes to prospective borrowers that reflect prevailing interest rates at the time of the offer, rather than at the time of settlement. The quoted rate will also include a lender’s margin.

A commercial bank is a financial institution that provides services to its customers such as loans, certificates of deposit, savings accounts, overdrafts, etc. Examples of commercial banks are PNB, Allahabad Bank, etc.

Additional Information

The MCLR is a reference rate or internal benchmark for the financial institution. The marginal cost-based lending rate defines the procedure for determining the minimum interest rate for home loans.

The MCLR method was introduced in the Indian financial system by the Reserve Bank of India in 2016.

Prospective borrower means any person who seeks to borrow money to finance the acquisition, construction, repair, or maintenance of real property.

The selling concept is based on the premise that the customers won’t buy goods/services of your brand unless you perform sales and promotional activities on a large scale.

• The selling concept essentially mirrors the thought that consumers will not purchase enough of the company’s products unless large-scale promotional and selling efforts are carried out by it.
• The selling concept is used for goods that customers don’t buy normally, unsought goods like insurance, etc. These goods are aggressively sold by tracking down the target segment and sold on the virtue of the product benefits.
• The final objective is to increase sales revenue and increase profits.
• The focus in the selling concept is more on selling the products of the company to consumers without comprehending the market needs and increasing sales transactions rather than building and enhancing relationships with customers.

Important Points

1. Production Concept:

• The basic proposition of the production concept is that customers will choose products and services that are widely available and are of low cost.
• So business is mainly concerned with making as many units as possible.
• By concentrating on producing maximum volumes, such a business aims to maximize profitability by exploiting economies of scale.

2. Product Concept:

• The product concept is on the assumption that the customers would choose the product if it has better quality, features, and performance.
• The reason the product concept is important is that it makes it necessary for you to meet the demands and wishes of customers by delivering the best product.
• Sales, marketing, and distribution are also important factors in the product concept.

3. Marketing Concept:

• The marketing concept is based on increasing a company’s ability to compete and achieve maximum profits by marketing the ways in which it offers better value to customers than its competitors.
• It’s all about knowing the target market, sensing its needs, and meeting them most effectively.
• Many refer to this as the “customer-first approach.”

The European Union benefited its member nations by reducing barriers to trade and travel.

When the EU was founded in 1957, the Member States concentrated on building a 'common market' for trade. Since 1957, the European Union has benefited its citizens by working for peace and prosperity. Free trade among its members was one of the EU's founding principles. The European Union was a group of 28 countries that operate as a cohesive economic and political block.