Mock Test: Business Economics & Business and Commercial Knowledge(Paper-4) - May 2023 | Mock Tests & Past Year Papers for CA Foundation PDF Download

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1 
 
 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER 4: BUSINESS ECONOMICS AND BUSINESS AND COMMERCIAL KNOWLEDGE 
PART- I: BUSINESS ECONOMICS 
QUESTIONS 
1 Business Economics is a : 
(a) Normative Science  
(b) Interdisciplinary  
(c) Pragmatic  
(d) All of these 
2 Rationale of the law of demand is: 
(a) Price effect of a fall in price  
(b) Different uses  
(c) Arrival of new consumers  
(d) All of these 
3. Methods of demand forecasting are: 
(a) Survey of Buyer’s intension 
(b) Collective opinion Method  
(c) Both (a) and (b) 
(d) None of these 
4. Entrepreneur has its most important function as ______  
(a) Bear the sense of responsibility 
(b) Earn profit 
(c) Innovate  
(d) None of these 
5. Pears, Liril & Dove are example of 
(a) Perfect Competition 
(b) Monopoly 
(c) Monopolistic Competition 
(d) None of these 
6. Monopolist Charges different price for his commodity in discriminating monopoly implies: 
(a) At different places 
(b) For different uses 
(c) From different group of consumers 
(d) Any of the above 
7. Variables that change before the real output changes are called: 
(a) Lagging indicator 
© The Institute of Chartered Accountants of India
Page 2


1 
 
 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER 4: BUSINESS ECONOMICS AND BUSINESS AND COMMERCIAL KNOWLEDGE 
PART- I: BUSINESS ECONOMICS 
QUESTIONS 
1 Business Economics is a : 
(a) Normative Science  
(b) Interdisciplinary  
(c) Pragmatic  
(d) All of these 
2 Rationale of the law of demand is: 
(a) Price effect of a fall in price  
(b) Different uses  
(c) Arrival of new consumers  
(d) All of these 
3. Methods of demand forecasting are: 
(a) Survey of Buyer’s intension 
(b) Collective opinion Method  
(c) Both (a) and (b) 
(d) None of these 
4. Entrepreneur has its most important function as ______  
(a) Bear the sense of responsibility 
(b) Earn profit 
(c) Innovate  
(d) None of these 
5. Pears, Liril & Dove are example of 
(a) Perfect Competition 
(b) Monopoly 
(c) Monopolistic Competition 
(d) None of these 
6. Monopolist Charges different price for his commodity in discriminating monopoly implies: 
(a) At different places 
(b) For different uses 
(c) From different group of consumers 
(d) Any of the above 
7. Variables that change before the real output changes are called: 
(a) Lagging indicator 
© The Institute of Chartered Accountants of India
2 
 
(b) Leading Indicator 
(c) Concurrent Indicator  
(d) None of these 
8. Supply is the -  
(a) Limited resources-that are available within the seller   
(b) Cost of Producing a good 
(c) Entire-relationship between the quantity supplied and the price of good.  
(d) Willingness to produce a good if the technology to produce it becomes available  
9. Economy’s historical performance was reflected by: 
(a) Lagging indicating 
(b) Leading indicating 
(c) Either (a) or (b 
(d) None of these 
10. Contraction of demand is the result of  
(a) Decrease in the number of Consumers  
(b) Increase in the price of the good concerned  
(c) Price of related products 
(d) None of these 
11. Cost of living increase when business cycle is operating at its  
(a) Lowest point 
(b) Peak 
(c) Contracting 
(d) Expanding 
12. In the beginning economics was named as: 
(a) Political Economy  
(b) Welfare Economics 
(c) Economies of Wealth 
(d) None of these 
13. The market price cannot be influenced by a seller under:  
(a) Monopolistic Competition  
(b) Monopoly  
(c) Perfect Competition 
(d) All the above 
14. Time elements was conceived by :  
(a) Paul Sweezy  
(b) Hicks 
(c) Marshall  
(d) Simon Kuznets 
 
© The Institute of Chartered Accountants of India
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1 
 
 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER 4: BUSINESS ECONOMICS AND BUSINESS AND COMMERCIAL KNOWLEDGE 
PART- I: BUSINESS ECONOMICS 
QUESTIONS 
1 Business Economics is a : 
(a) Normative Science  
(b) Interdisciplinary  
(c) Pragmatic  
(d) All of these 
2 Rationale of the law of demand is: 
(a) Price effect of a fall in price  
(b) Different uses  
(c) Arrival of new consumers  
(d) All of these 
3. Methods of demand forecasting are: 
(a) Survey of Buyer’s intension 
(b) Collective opinion Method  
(c) Both (a) and (b) 
(d) None of these 
4. Entrepreneur has its most important function as ______  
(a) Bear the sense of responsibility 
(b) Earn profit 
(c) Innovate  
(d) None of these 
5. Pears, Liril & Dove are example of 
(a) Perfect Competition 
(b) Monopoly 
(c) Monopolistic Competition 
(d) None of these 
6. Monopolist Charges different price for his commodity in discriminating monopoly implies: 
(a) At different places 
(b) For different uses 
(c) From different group of consumers 
(d) Any of the above 
7. Variables that change before the real output changes are called: 
(a) Lagging indicator 
© The Institute of Chartered Accountants of India
2 
 
(b) Leading Indicator 
(c) Concurrent Indicator  
(d) None of these 
8. Supply is the -  
(a) Limited resources-that are available within the seller   
(b) Cost of Producing a good 
(c) Entire-relationship between the quantity supplied and the price of good.  
(d) Willingness to produce a good if the technology to produce it becomes available  
9. Economy’s historical performance was reflected by: 
(a) Lagging indicating 
(b) Leading indicating 
(c) Either (a) or (b 
(d) None of these 
10. Contraction of demand is the result of  
(a) Decrease in the number of Consumers  
(b) Increase in the price of the good concerned  
(c) Price of related products 
(d) None of these 
11. Cost of living increase when business cycle is operating at its  
(a) Lowest point 
(b) Peak 
(c) Contracting 
(d) Expanding 
12. In the beginning economics was named as: 
(a) Political Economy  
(b) Welfare Economics 
(c) Economies of Wealth 
(d) None of these 
13. The market price cannot be influenced by a seller under:  
(a) Monopolistic Competition  
(b) Monopoly  
(c) Perfect Competition 
(d) All the above 
14. Time elements was conceived by :  
(a) Paul Sweezy  
(b) Hicks 
(c) Marshall  
(d) Simon Kuznets 
 
© The Institute of Chartered Accountants of India
3 
 
15. The Pure monopolist in the long run can make pure profit due to :  
(a) High Selling Price 
(b) Advertising 
(c) Low LAC Cost 
(d) Blocked entry 
16 Law of variable proportion is related to :  
(a) Long Run  
(b) Short Run 
(c) Both (a) and (b) 
(d) None of these 
17 What are the Central Problem of an economy: 
(a) What to Produce 
(b) What provisions are to be made for economic growth? 
(c) How to Produce 
(d) All the above 
18. Which of the following is not the demerit of Capitalism: 
(a)  There is usually high degree of operative efficiency under the capitalist system 
(b)  Under Capitalism there is precedence of property right over human rights 
(c)  Due to income inequality the pattern of demand does not represent the real needs of the society. 
(d) Capitalism leads to the formation of monopolies 
19. Macroeconomics is also called_____economics. 
(a) experimental 
(b) aggregate 
(c ) applied. 
(d) none of these 
20. The Substitution effect will be stronger when: 
(a) there is lower inconvenience while switching to the Substitute good 
(b)  the goods are closer substitute. 
(c) there is lower cost of switching to the substitute good 
(d)  All of the above 
21. Which of the following is the exception to the law of demand: 
(a) Speculative goods 
(b) Conspicuous necessities 
(c) Future expectation about prices 
(d) Income effect 
22. If the price of A rises by 10% and the demand for B increases by 15% then the Cross elasticity will be: 
(a) 1.5 
(b) 1.5  
(c) 2   
© The Institute of Chartered Accountants of India
Page 4


1 
 
 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER 4: BUSINESS ECONOMICS AND BUSINESS AND COMMERCIAL KNOWLEDGE 
PART- I: BUSINESS ECONOMICS 
QUESTIONS 
1 Business Economics is a : 
(a) Normative Science  
(b) Interdisciplinary  
(c) Pragmatic  
(d) All of these 
2 Rationale of the law of demand is: 
(a) Price effect of a fall in price  
(b) Different uses  
(c) Arrival of new consumers  
(d) All of these 
3. Methods of demand forecasting are: 
(a) Survey of Buyer’s intension 
(b) Collective opinion Method  
(c) Both (a) and (b) 
(d) None of these 
4. Entrepreneur has its most important function as ______  
(a) Bear the sense of responsibility 
(b) Earn profit 
(c) Innovate  
(d) None of these 
5. Pears, Liril & Dove are example of 
(a) Perfect Competition 
(b) Monopoly 
(c) Monopolistic Competition 
(d) None of these 
6. Monopolist Charges different price for his commodity in discriminating monopoly implies: 
(a) At different places 
(b) For different uses 
(c) From different group of consumers 
(d) Any of the above 
7. Variables that change before the real output changes are called: 
(a) Lagging indicator 
© The Institute of Chartered Accountants of India
2 
 
(b) Leading Indicator 
(c) Concurrent Indicator  
(d) None of these 
8. Supply is the -  
(a) Limited resources-that are available within the seller   
(b) Cost of Producing a good 
(c) Entire-relationship between the quantity supplied and the price of good.  
(d) Willingness to produce a good if the technology to produce it becomes available  
9. Economy’s historical performance was reflected by: 
(a) Lagging indicating 
(b) Leading indicating 
(c) Either (a) or (b 
(d) None of these 
10. Contraction of demand is the result of  
(a) Decrease in the number of Consumers  
(b) Increase in the price of the good concerned  
(c) Price of related products 
(d) None of these 
11. Cost of living increase when business cycle is operating at its  
(a) Lowest point 
(b) Peak 
(c) Contracting 
(d) Expanding 
12. In the beginning economics was named as: 
(a) Political Economy  
(b) Welfare Economics 
(c) Economies of Wealth 
(d) None of these 
13. The market price cannot be influenced by a seller under:  
(a) Monopolistic Competition  
(b) Monopoly  
(c) Perfect Competition 
(d) All the above 
14. Time elements was conceived by :  
(a) Paul Sweezy  
(b) Hicks 
(c) Marshall  
(d) Simon Kuznets 
 
© The Institute of Chartered Accountants of India
3 
 
15. The Pure monopolist in the long run can make pure profit due to :  
(a) High Selling Price 
(b) Advertising 
(c) Low LAC Cost 
(d) Blocked entry 
16 Law of variable proportion is related to :  
(a) Long Run  
(b) Short Run 
(c) Both (a) and (b) 
(d) None of these 
17 What are the Central Problem of an economy: 
(a) What to Produce 
(b) What provisions are to be made for economic growth? 
(c) How to Produce 
(d) All the above 
18. Which of the following is not the demerit of Capitalism: 
(a)  There is usually high degree of operative efficiency under the capitalist system 
(b)  Under Capitalism there is precedence of property right over human rights 
(c)  Due to income inequality the pattern of demand does not represent the real needs of the society. 
(d) Capitalism leads to the formation of monopolies 
19. Macroeconomics is also called_____economics. 
(a) experimental 
(b) aggregate 
(c ) applied. 
(d) none of these 
20. The Substitution effect will be stronger when: 
(a) there is lower inconvenience while switching to the Substitute good 
(b)  the goods are closer substitute. 
(c) there is lower cost of switching to the substitute good 
(d)  All of the above 
21. Which of the following is the exception to the law of demand: 
(a) Speculative goods 
(b) Conspicuous necessities 
(c) Future expectation about prices 
(d) Income effect 
22. If the price of A rises by 10% and the demand for B increases by 15% then the Cross elasticity will be: 
(a) 1.5 
(b) 1.5  
(c) 2   
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4 
 
(d) None of these 
23. What are the limitation of Consumer Surplus: 
(a) Consumer surplus cannot be measured precisely 
(b) The Consumer surplus derived from a commodity is affected by availability of substitute 
(c)  Both (a) &  (b) 
(d) None of these 
24. Which of the following is not the characteristic of land: 
(a) It is a passive factor 
(b) It has multiple uses 
(c) It’s supply is fixed 
(d) It is a active factor 
25. Accounting costs are also called: 
(a) Explicit cost 
(b) Implicit Cost 
(c) Either a or b 
(d) None of these 
26. The Vertical difference between TVC and TC is equal to : 
(a) Marginal Cost 
(b) Average variable cost 
(c) Total fixed Cost 
(d) None of these. 
27. The classification of market is made on the basis of : 
(a) Geographical Area 
(b) Time  
(c) Volume of business 
(d) All the above  
28. How do monopoly arises: 
(a) Strategic Control over scarce resources 
(b) Governments granting exclusive rights to produce and sell a good or a service 
(c) Stringent legal and regulatory requirements effectively discourages entry of new firms without being 
specifically prohibited 
(d) All of the above 
29. Which of the following involve a trade-off ? 
(a) Taking a nap 
(b) Going to University  
(c) Watching a football game on Saturday afternoon 
(d) All of these 
30. The indifference curve of two substitute will be: 
(a) Straight line 
© The Institute of Chartered Accountants of India
Page 5


1 
 
 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER 4: BUSINESS ECONOMICS AND BUSINESS AND COMMERCIAL KNOWLEDGE 
PART- I: BUSINESS ECONOMICS 
QUESTIONS 
1 Business Economics is a : 
(a) Normative Science  
(b) Interdisciplinary  
(c) Pragmatic  
(d) All of these 
2 Rationale of the law of demand is: 
(a) Price effect of a fall in price  
(b) Different uses  
(c) Arrival of new consumers  
(d) All of these 
3. Methods of demand forecasting are: 
(a) Survey of Buyer’s intension 
(b) Collective opinion Method  
(c) Both (a) and (b) 
(d) None of these 
4. Entrepreneur has its most important function as ______  
(a) Bear the sense of responsibility 
(b) Earn profit 
(c) Innovate  
(d) None of these 
5. Pears, Liril & Dove are example of 
(a) Perfect Competition 
(b) Monopoly 
(c) Monopolistic Competition 
(d) None of these 
6. Monopolist Charges different price for his commodity in discriminating monopoly implies: 
(a) At different places 
(b) For different uses 
(c) From different group of consumers 
(d) Any of the above 
7. Variables that change before the real output changes are called: 
(a) Lagging indicator 
© The Institute of Chartered Accountants of India
2 
 
(b) Leading Indicator 
(c) Concurrent Indicator  
(d) None of these 
8. Supply is the -  
(a) Limited resources-that are available within the seller   
(b) Cost of Producing a good 
(c) Entire-relationship between the quantity supplied and the price of good.  
(d) Willingness to produce a good if the technology to produce it becomes available  
9. Economy’s historical performance was reflected by: 
(a) Lagging indicating 
(b) Leading indicating 
(c) Either (a) or (b 
(d) None of these 
10. Contraction of demand is the result of  
(a) Decrease in the number of Consumers  
(b) Increase in the price of the good concerned  
(c) Price of related products 
(d) None of these 
11. Cost of living increase when business cycle is operating at its  
(a) Lowest point 
(b) Peak 
(c) Contracting 
(d) Expanding 
12. In the beginning economics was named as: 
(a) Political Economy  
(b) Welfare Economics 
(c) Economies of Wealth 
(d) None of these 
13. The market price cannot be influenced by a seller under:  
(a) Monopolistic Competition  
(b) Monopoly  
(c) Perfect Competition 
(d) All the above 
14. Time elements was conceived by :  
(a) Paul Sweezy  
(b) Hicks 
(c) Marshall  
(d) Simon Kuznets 
 
© The Institute of Chartered Accountants of India
3 
 
15. The Pure monopolist in the long run can make pure profit due to :  
(a) High Selling Price 
(b) Advertising 
(c) Low LAC Cost 
(d) Blocked entry 
16 Law of variable proportion is related to :  
(a) Long Run  
(b) Short Run 
(c) Both (a) and (b) 
(d) None of these 
17 What are the Central Problem of an economy: 
(a) What to Produce 
(b) What provisions are to be made for economic growth? 
(c) How to Produce 
(d) All the above 
18. Which of the following is not the demerit of Capitalism: 
(a)  There is usually high degree of operative efficiency under the capitalist system 
(b)  Under Capitalism there is precedence of property right over human rights 
(c)  Due to income inequality the pattern of demand does not represent the real needs of the society. 
(d) Capitalism leads to the formation of monopolies 
19. Macroeconomics is also called_____economics. 
(a) experimental 
(b) aggregate 
(c ) applied. 
(d) none of these 
20. The Substitution effect will be stronger when: 
(a) there is lower inconvenience while switching to the Substitute good 
(b)  the goods are closer substitute. 
(c) there is lower cost of switching to the substitute good 
(d)  All of the above 
21. Which of the following is the exception to the law of demand: 
(a) Speculative goods 
(b) Conspicuous necessities 
(c) Future expectation about prices 
(d) Income effect 
22. If the price of A rises by 10% and the demand for B increases by 15% then the Cross elasticity will be: 
(a) 1.5 
(b) 1.5  
(c) 2   
© The Institute of Chartered Accountants of India
4 
 
(d) None of these 
23. What are the limitation of Consumer Surplus: 
(a) Consumer surplus cannot be measured precisely 
(b) The Consumer surplus derived from a commodity is affected by availability of substitute 
(c)  Both (a) &  (b) 
(d) None of these 
24. Which of the following is not the characteristic of land: 
(a) It is a passive factor 
(b) It has multiple uses 
(c) It’s supply is fixed 
(d) It is a active factor 
25. Accounting costs are also called: 
(a) Explicit cost 
(b) Implicit Cost 
(c) Either a or b 
(d) None of these 
26. The Vertical difference between TVC and TC is equal to : 
(a) Marginal Cost 
(b) Average variable cost 
(c) Total fixed Cost 
(d) None of these. 
27. The classification of market is made on the basis of : 
(a) Geographical Area 
(b) Time  
(c) Volume of business 
(d) All the above  
28. How do monopoly arises: 
(a) Strategic Control over scarce resources 
(b) Governments granting exclusive rights to produce and sell a good or a service 
(c) Stringent legal and regulatory requirements effectively discourages entry of new firms without being 
specifically prohibited 
(d) All of the above 
29. Which of the following involve a trade-off ? 
(a) Taking a nap 
(b) Going to University  
(c) Watching a football game on Saturday afternoon 
(d) All of these 
30. The indifference curve of two substitute will be: 
(a) Straight line 
© The Institute of Chartered Accountants of India
5 
 
(b) U- Shaped 
(c) C Shaped 
(d ) L shaped 
31. Sweezy’s Model is related to which market form : 
(a) Oligopoly market 
(b) Perfect Competition market 
(c) Monopoly market 
(d) None of these 
32. Price discrimination cannot persist Under which market form – 
(a) Perfect competition 
(b) Monopolistic Competition 
(c) Monopoly 
(d) None of these 
33. In law of variable proportion how many stages are there: 
(a) 1 
(b) 3 
(c) 5 
(d) None of these 
34. At the stage when Negative Return sets in :  
(a) MP is negative 
(b) MP is diminishing 
(c) Either a or b 
(d) none of these 
35 Minimum assured price to the farmers to purchase their output by the government is called: 
(a) Market Price 
(b) Equilibrium Price 
(c) Support Price  
(d) Ceiling Price 
36. The income elasticity For Luxuries goods is: 
(a) E > 1 
(b) E < 1 
(c) E = 0 
(d) None of these 
37. Unique supply curve is monopoly is not due to __________ 
(a) P > MC 
(b) P < MC 
(c) P = MC 
(d) None of these 
 
© The Institute of Chartered Accountants of India