Page 1
CA Foundation
THEORY OF PRODUCTION & COST
Practice Questions
1. The term production in economics means-
(a) creation of a physical product only,
(b) rendering of a service only
(c) creation of economic utilities
(d) none of the above
2. Which of the following is considered
production in economics?
(a) Singing a song in a birthday party
(b) Run for fun
(c) Giving tuitions
(d) Helping an old man to cross road
3. Making use of personal skill of doctors,
lawyers, actors, etc. results in the creation
of-
(a) form utility
(b) place utility
(c) personal/ service utility
(d) time utility
4. Making available materials at times when
they are normally not available is called
conferring of utility of-
(a) place (b) time
(c) form (d) service
5. Which of the following statements
incorrect?
(a) Man cannot create matter.
(b) Production is an activity of making
something material only.
(c) Production can be defined as addition
of utility.
(d) Production is any economic utility
which is directed towards the
satisfaction of the wants of the people.
6. Economic utilities may be created or added
(a) By changing the form of raw materials
into finished goods
(b) By transporting goods from one place
to another
(c) By making things available when they
are required
(d) All the above
7. Which of the following is not a feature of
land
(a) Free gift
(b) Limited in quantity
(c) Mobile factor
(d) Indestructible
8. The factor of production which has no
reserve price is-
(a) land (b) labour
(c) capital (d) all the above
9. Which of the following can be considered
as labour in economics-
(a) Singing for pleasure
(b) A teacher teaching his own child at
home
(c) Looking after, a sick friend
(d) A teacher teaching in school
10. The supply of land is-
(a) Unlimited (b) Increased
(c) Decreased (d) Limited
11. Land in economics means-
(a) Material and Non-material goods
(b) Minerals under the surface of earth
(c) All natural resources available to man
for producing wealth
(d) All the above
12. Labour is-
(a) Active factor
(b) Passive factor
(c) Alternative factor
(d) None of the above
Page 2
CA Foundation
THEORY OF PRODUCTION & COST
Practice Questions
1. The term production in economics means-
(a) creation of a physical product only,
(b) rendering of a service only
(c) creation of economic utilities
(d) none of the above
2. Which of the following is considered
production in economics?
(a) Singing a song in a birthday party
(b) Run for fun
(c) Giving tuitions
(d) Helping an old man to cross road
3. Making use of personal skill of doctors,
lawyers, actors, etc. results in the creation
of-
(a) form utility
(b) place utility
(c) personal/ service utility
(d) time utility
4. Making available materials at times when
they are normally not available is called
conferring of utility of-
(a) place (b) time
(c) form (d) service
5. Which of the following statements
incorrect?
(a) Man cannot create matter.
(b) Production is an activity of making
something material only.
(c) Production can be defined as addition
of utility.
(d) Production is any economic utility
which is directed towards the
satisfaction of the wants of the people.
6. Economic utilities may be created or added
(a) By changing the form of raw materials
into finished goods
(b) By transporting goods from one place
to another
(c) By making things available when they
are required
(d) All the above
7. Which of the following is not a feature of
land
(a) Free gift
(b) Limited in quantity
(c) Mobile factor
(d) Indestructible
8. The factor of production which has no
reserve price is-
(a) land (b) labour
(c) capital (d) all the above
9. Which of the following can be considered
as labour in economics-
(a) Singing for pleasure
(b) A teacher teaching his own child at
home
(c) Looking after, a sick friend
(d) A teacher teaching in school
10. The supply of land is-
(a) Unlimited (b) Increased
(c) Decreased (d) Limited
11. Land in economics means-
(a) Material and Non-material goods
(b) Minerals under the surface of earth
(c) All natural resources available to man
for producing wealth
(d) All the above
12. Labour is-
(a) Active factor
(b) Passive factor
(c) Alternative factor
(d) None of the above
CA Foundation
13. Which factor loses its value of it cannot
find a purchaser today-
(a) Land (b) Labour
(c) Capital (d) All the above
14. Supply curve of labour is-
(a) upward sloping (b) horizontal
(c) backward bending (d) vertical
15. Income effect when wage rises means
(a) work hours rise
(b) work hours fall
(c) work hours remain constant
(d) work hours first fall and then rise
16. Which of the following statements is not
true?
(a) Capital is a produced means a
production.
(b) Capital is a man made instruments of
production.
(c) Capital is a primary factor of
production.
(d) Machine tools, factories, dams, canals,
etc. are examples of capital.
17. Tools, machines, etc. are included in-
capital
(a) circulating capital (b) fixed capital
(c) sunk capital (d) human capital
18. The capital which belongs to the society as
a whole is called-
(a) Individual Capital (b) Human Capital
(c) Social Capital (d) Floating Capital
19. Raw material is an example of-
(a) Circulating Capital (b) Fixed Capital
(c) Tangible Capital (d) Real Capital
20. Which capital includes education training,
skill, ability?
(a) Human Capital (b) Individual Capital
(c) Social Capital (d) Real Capital
21. Goodwill, patent rights, etc. are examples
of-
(a) Tangible Capital (b) Real Capital
(c) Intangible Capital (d) Human Capital
22. Which of the following statements is true?
(a) Capital Formation involves production
of more capital goods.
(b) Capital Formation is also called
investment.
(c) To accumulate capital goods, some
current consumption is to be sacrificed.
(d) All the above
23. Surplus of production over consumption
in an economy in a year is called-
(a) Capital (b) Capital formation
(c) Stock (d) Savings
24. The third stage of capital formation is-
(a) creation of savings
(b) mobilization of savings
(c) distribution of savings
(d) investment of savings
25. With an increase in income-
(a) the propensity to consume increases
(b) the propensity y to save increases
(c) the propensity to consume remains
constant
(d) the propensity to save falls
26. A_______ country has greater ability to
save.
(a) poor
(b) developing
(c) rich
(d) under developed
27. An individual's saving level depends
upon-
(a) ability to save
(b) willingness to save
(c) both (a) & (b)
(d) only (a)
Page 3
CA Foundation
THEORY OF PRODUCTION & COST
Practice Questions
1. The term production in economics means-
(a) creation of a physical product only,
(b) rendering of a service only
(c) creation of economic utilities
(d) none of the above
2. Which of the following is considered
production in economics?
(a) Singing a song in a birthday party
(b) Run for fun
(c) Giving tuitions
(d) Helping an old man to cross road
3. Making use of personal skill of doctors,
lawyers, actors, etc. results in the creation
of-
(a) form utility
(b) place utility
(c) personal/ service utility
(d) time utility
4. Making available materials at times when
they are normally not available is called
conferring of utility of-
(a) place (b) time
(c) form (d) service
5. Which of the following statements
incorrect?
(a) Man cannot create matter.
(b) Production is an activity of making
something material only.
(c) Production can be defined as addition
of utility.
(d) Production is any economic utility
which is directed towards the
satisfaction of the wants of the people.
6. Economic utilities may be created or added
(a) By changing the form of raw materials
into finished goods
(b) By transporting goods from one place
to another
(c) By making things available when they
are required
(d) All the above
7. Which of the following is not a feature of
land
(a) Free gift
(b) Limited in quantity
(c) Mobile factor
(d) Indestructible
8. The factor of production which has no
reserve price is-
(a) land (b) labour
(c) capital (d) all the above
9. Which of the following can be considered
as labour in economics-
(a) Singing for pleasure
(b) A teacher teaching his own child at
home
(c) Looking after, a sick friend
(d) A teacher teaching in school
10. The supply of land is-
(a) Unlimited (b) Increased
(c) Decreased (d) Limited
11. Land in economics means-
(a) Material and Non-material goods
(b) Minerals under the surface of earth
(c) All natural resources available to man
for producing wealth
(d) All the above
12. Labour is-
(a) Active factor
(b) Passive factor
(c) Alternative factor
(d) None of the above
CA Foundation
13. Which factor loses its value of it cannot
find a purchaser today-
(a) Land (b) Labour
(c) Capital (d) All the above
14. Supply curve of labour is-
(a) upward sloping (b) horizontal
(c) backward bending (d) vertical
15. Income effect when wage rises means
(a) work hours rise
(b) work hours fall
(c) work hours remain constant
(d) work hours first fall and then rise
16. Which of the following statements is not
true?
(a) Capital is a produced means a
production.
(b) Capital is a man made instruments of
production.
(c) Capital is a primary factor of
production.
(d) Machine tools, factories, dams, canals,
etc. are examples of capital.
17. Tools, machines, etc. are included in-
capital
(a) circulating capital (b) fixed capital
(c) sunk capital (d) human capital
18. The capital which belongs to the society as
a whole is called-
(a) Individual Capital (b) Human Capital
(c) Social Capital (d) Floating Capital
19. Raw material is an example of-
(a) Circulating Capital (b) Fixed Capital
(c) Tangible Capital (d) Real Capital
20. Which capital includes education training,
skill, ability?
(a) Human Capital (b) Individual Capital
(c) Social Capital (d) Real Capital
21. Goodwill, patent rights, etc. are examples
of-
(a) Tangible Capital (b) Real Capital
(c) Intangible Capital (d) Human Capital
22. Which of the following statements is true?
(a) Capital Formation involves production
of more capital goods.
(b) Capital Formation is also called
investment.
(c) To accumulate capital goods, some
current consumption is to be sacrificed.
(d) All the above
23. Surplus of production over consumption
in an economy in a year is called-
(a) Capital (b) Capital formation
(c) Stock (d) Savings
24. The third stage of capital formation is-
(a) creation of savings
(b) mobilization of savings
(c) distribution of savings
(d) investment of savings
25. With an increase in income-
(a) the propensity to consume increases
(b) the propensity y to save increases
(c) the propensity to consume remains
constant
(d) the propensity to save falls
26. A_______ country has greater ability to
save.
(a) poor
(b) developing
(c) rich
(d) under developed
27. An individual's saving level depends
upon-
(a) ability to save
(b) willingness to save
(c) both (a) & (b)
(d) only (a)
CA Foundation
28. The factor which mobilize land labour and
capital; combines them in the right
proportion and then organizes the
production activity is –
(a) Owner (b) Labour
(c) Manger (d) Entrepreneur
29. The reward of all factors of production is
usually predetermined (pre-fixed) except-
(a) Land (b) Labour
(c) Capital (d) Entrepreneur
30. The reward of an entrepreneur for his
efforts and risk-taking is-
(a) Interest (b) Profit/Loss
(c) Rent (d) Wages
31. The reward of capital is-
(a) Rent (b) Interest
(c) Wages (d) Profit
32. The reward of an entrepreneur i.e. profit is-
(a) pre-determined income
(b) residual income
(c) constant income
(d) none of the above
33. The risks which can be anticipated and can
be insured against are called-
(a) Insurable risks
(b) Non-Insurable risks
(c) Unforeseeable risks
(d) None of the above
34. The risks like change in demand for a
commodity, the cost structure, fashion,
technological, etc. which an entrepreneur
has to bear are called-
(a) Uncertainties (b) Insurable risks
(c) Foreseeable risks (d) Both (a) and (c)
35. According to________ innovations
introduced by an entrepreneur give rise to'
profits.
(a) Prof. FH. Knight
(b) Prof. Joseph A. Schumpeter
(c) Prof. Paul Samuelson
(d) Dr. Alfred Marshall
36. Which of the following statement is
incorrect?
(a) Mobilisation of savings done through
network of banking and other financial
institutions.
(b) Land lacks geographical mobility but
has occupational mobility.
(c) Entrepreneur is also called the
organizer, the manager or the risk
taker.
(d) Labour can be stored.
37. Labour is________
(a) Human factor
(b) Perishable
(c) inseparable from labour
(d) All the above
38. Leather in a shoe factory is_______
(a) Fixed capital
(b) Sunk capital
(c) Floating Capital
(d) Circulating capital
39. _________Cannot be stored.
(a) Land (b) Labour
(c) Capital (d) Both (a) & (b)
40. Capital that can be used for several
purposes or by several industries is_____
(a) Working capital (b) Social capital
(c) Floating capital (d) Human capital
41. Addition to the stock of capital good sin a
country means________
(a) Capital reduction
(b) Investment
(c) Capital formation
(d) Both (b) & (c)
Page 4
CA Foundation
THEORY OF PRODUCTION & COST
Practice Questions
1. The term production in economics means-
(a) creation of a physical product only,
(b) rendering of a service only
(c) creation of economic utilities
(d) none of the above
2. Which of the following is considered
production in economics?
(a) Singing a song in a birthday party
(b) Run for fun
(c) Giving tuitions
(d) Helping an old man to cross road
3. Making use of personal skill of doctors,
lawyers, actors, etc. results in the creation
of-
(a) form utility
(b) place utility
(c) personal/ service utility
(d) time utility
4. Making available materials at times when
they are normally not available is called
conferring of utility of-
(a) place (b) time
(c) form (d) service
5. Which of the following statements
incorrect?
(a) Man cannot create matter.
(b) Production is an activity of making
something material only.
(c) Production can be defined as addition
of utility.
(d) Production is any economic utility
which is directed towards the
satisfaction of the wants of the people.
6. Economic utilities may be created or added
(a) By changing the form of raw materials
into finished goods
(b) By transporting goods from one place
to another
(c) By making things available when they
are required
(d) All the above
7. Which of the following is not a feature of
land
(a) Free gift
(b) Limited in quantity
(c) Mobile factor
(d) Indestructible
8. The factor of production which has no
reserve price is-
(a) land (b) labour
(c) capital (d) all the above
9. Which of the following can be considered
as labour in economics-
(a) Singing for pleasure
(b) A teacher teaching his own child at
home
(c) Looking after, a sick friend
(d) A teacher teaching in school
10. The supply of land is-
(a) Unlimited (b) Increased
(c) Decreased (d) Limited
11. Land in economics means-
(a) Material and Non-material goods
(b) Minerals under the surface of earth
(c) All natural resources available to man
for producing wealth
(d) All the above
12. Labour is-
(a) Active factor
(b) Passive factor
(c) Alternative factor
(d) None of the above
CA Foundation
13. Which factor loses its value of it cannot
find a purchaser today-
(a) Land (b) Labour
(c) Capital (d) All the above
14. Supply curve of labour is-
(a) upward sloping (b) horizontal
(c) backward bending (d) vertical
15. Income effect when wage rises means
(a) work hours rise
(b) work hours fall
(c) work hours remain constant
(d) work hours first fall and then rise
16. Which of the following statements is not
true?
(a) Capital is a produced means a
production.
(b) Capital is a man made instruments of
production.
(c) Capital is a primary factor of
production.
(d) Machine tools, factories, dams, canals,
etc. are examples of capital.
17. Tools, machines, etc. are included in-
capital
(a) circulating capital (b) fixed capital
(c) sunk capital (d) human capital
18. The capital which belongs to the society as
a whole is called-
(a) Individual Capital (b) Human Capital
(c) Social Capital (d) Floating Capital
19. Raw material is an example of-
(a) Circulating Capital (b) Fixed Capital
(c) Tangible Capital (d) Real Capital
20. Which capital includes education training,
skill, ability?
(a) Human Capital (b) Individual Capital
(c) Social Capital (d) Real Capital
21. Goodwill, patent rights, etc. are examples
of-
(a) Tangible Capital (b) Real Capital
(c) Intangible Capital (d) Human Capital
22. Which of the following statements is true?
(a) Capital Formation involves production
of more capital goods.
(b) Capital Formation is also called
investment.
(c) To accumulate capital goods, some
current consumption is to be sacrificed.
(d) All the above
23. Surplus of production over consumption
in an economy in a year is called-
(a) Capital (b) Capital formation
(c) Stock (d) Savings
24. The third stage of capital formation is-
(a) creation of savings
(b) mobilization of savings
(c) distribution of savings
(d) investment of savings
25. With an increase in income-
(a) the propensity to consume increases
(b) the propensity y to save increases
(c) the propensity to consume remains
constant
(d) the propensity to save falls
26. A_______ country has greater ability to
save.
(a) poor
(b) developing
(c) rich
(d) under developed
27. An individual's saving level depends
upon-
(a) ability to save
(b) willingness to save
(c) both (a) & (b)
(d) only (a)
CA Foundation
28. The factor which mobilize land labour and
capital; combines them in the right
proportion and then organizes the
production activity is –
(a) Owner (b) Labour
(c) Manger (d) Entrepreneur
29. The reward of all factors of production is
usually predetermined (pre-fixed) except-
(a) Land (b) Labour
(c) Capital (d) Entrepreneur
30. The reward of an entrepreneur for his
efforts and risk-taking is-
(a) Interest (b) Profit/Loss
(c) Rent (d) Wages
31. The reward of capital is-
(a) Rent (b) Interest
(c) Wages (d) Profit
32. The reward of an entrepreneur i.e. profit is-
(a) pre-determined income
(b) residual income
(c) constant income
(d) none of the above
33. The risks which can be anticipated and can
be insured against are called-
(a) Insurable risks
(b) Non-Insurable risks
(c) Unforeseeable risks
(d) None of the above
34. The risks like change in demand for a
commodity, the cost structure, fashion,
technological, etc. which an entrepreneur
has to bear are called-
(a) Uncertainties (b) Insurable risks
(c) Foreseeable risks (d) Both (a) and (c)
35. According to________ innovations
introduced by an entrepreneur give rise to'
profits.
(a) Prof. FH. Knight
(b) Prof. Joseph A. Schumpeter
(c) Prof. Paul Samuelson
(d) Dr. Alfred Marshall
36. Which of the following statement is
incorrect?
(a) Mobilisation of savings done through
network of banking and other financial
institutions.
(b) Land lacks geographical mobility but
has occupational mobility.
(c) Entrepreneur is also called the
organizer, the manager or the risk
taker.
(d) Labour can be stored.
37. Labour is________
(a) Human factor
(b) Perishable
(c) inseparable from labour
(d) All the above
38. Leather in a shoe factory is_______
(a) Fixed capital
(b) Sunk capital
(c) Floating Capital
(d) Circulating capital
39. _________Cannot be stored.
(a) Land (b) Labour
(c) Capital (d) Both (a) & (b)
40. Capital that can be used for several
purposes or by several industries is_____
(a) Working capital (b) Social capital
(c) Floating capital (d) Human capital
41. Addition to the stock of capital good sin a
country means________
(a) Capital reduction
(b) Investment
(c) Capital formation
(d) Both (b) & (c)
CA Foundation
42. Find the odd out________
(a) Capital is man-made
(b) All capital is wealth
(c) Capital is durable
(d) Mobilisation of savings
43. Consider the following groups of items:
(i) Factory buildings
(ii) Plant and Machinery
(iii) Stocks of raw materials
(iv) Wage bills
Which of these are known as working
capital?
(a) (i) and (ii) (b) (iii) and (iv)
(c) (i), (ii) and (iii) (d) (i), (iii) and (iv)
44. The production function means
relationship between
(a) Cost of input
(b) Cost of output
(c) Physical input to physical output
(d) Wages of profit
45. A production function is an expression of
________ relation between inputs and
outputs.
(a) monetary (b) economic
(c) quantitative (d) qualitative
46. A short run production function is one in
which-
(a) at least one factor is fixed
(b) all factors are fixed
(c) all factors are variable
(d) at least one factor is variable
47. Technically efficient combinations of
inputs of those which-
(a) minimizes wastage
(b) maximizes profits
(c) minimises cost
(d) maximises revenue
48. In the short period there is no change in
_________ factors.
(a) fixed (b) variable
(c) human (d) physical
49. In the______ period all factors are variable.
(a) short (b) long
(c) market (d) secular
50. In its original for Cobb-Douglas
production function applies to-
(a) individual manufacturing firm
(b) individual firm
(c) whole of manufacturing in US
(d) None of the above
51. Cobb-Dauglas production function
revealed that the increase in the
manufacturing production was
contributed by labour and capital
respectively by
(a) 3/4th and 1/4th (b) 1/4th and 3/4th
(c) 2/3rd and 1/3rd (d) None of the above
52. Cobb-Douglas production-
(a) is linear
(b) is homogeneous
(c) shows constant returns to scale
(d) all the above
53. Cobb-Douglas production function
exhibits______ returns to scale.
(a) increasing (b) diminishing
(c) Constant (d) negative
54.
( )
50 5 , 4
xL
fk =
( )
50 6 , 4
xL
fk =
The above equations shows that-
(a) One factor is fixed and another variable
(b) Both factors are fixed
(c) Both factors are variable
(d) Both factors are semi-variable
Page 5
CA Foundation
THEORY OF PRODUCTION & COST
Practice Questions
1. The term production in economics means-
(a) creation of a physical product only,
(b) rendering of a service only
(c) creation of economic utilities
(d) none of the above
2. Which of the following is considered
production in economics?
(a) Singing a song in a birthday party
(b) Run for fun
(c) Giving tuitions
(d) Helping an old man to cross road
3. Making use of personal skill of doctors,
lawyers, actors, etc. results in the creation
of-
(a) form utility
(b) place utility
(c) personal/ service utility
(d) time utility
4. Making available materials at times when
they are normally not available is called
conferring of utility of-
(a) place (b) time
(c) form (d) service
5. Which of the following statements
incorrect?
(a) Man cannot create matter.
(b) Production is an activity of making
something material only.
(c) Production can be defined as addition
of utility.
(d) Production is any economic utility
which is directed towards the
satisfaction of the wants of the people.
6. Economic utilities may be created or added
(a) By changing the form of raw materials
into finished goods
(b) By transporting goods from one place
to another
(c) By making things available when they
are required
(d) All the above
7. Which of the following is not a feature of
land
(a) Free gift
(b) Limited in quantity
(c) Mobile factor
(d) Indestructible
8. The factor of production which has no
reserve price is-
(a) land (b) labour
(c) capital (d) all the above
9. Which of the following can be considered
as labour in economics-
(a) Singing for pleasure
(b) A teacher teaching his own child at
home
(c) Looking after, a sick friend
(d) A teacher teaching in school
10. The supply of land is-
(a) Unlimited (b) Increased
(c) Decreased (d) Limited
11. Land in economics means-
(a) Material and Non-material goods
(b) Minerals under the surface of earth
(c) All natural resources available to man
for producing wealth
(d) All the above
12. Labour is-
(a) Active factor
(b) Passive factor
(c) Alternative factor
(d) None of the above
CA Foundation
13. Which factor loses its value of it cannot
find a purchaser today-
(a) Land (b) Labour
(c) Capital (d) All the above
14. Supply curve of labour is-
(a) upward sloping (b) horizontal
(c) backward bending (d) vertical
15. Income effect when wage rises means
(a) work hours rise
(b) work hours fall
(c) work hours remain constant
(d) work hours first fall and then rise
16. Which of the following statements is not
true?
(a) Capital is a produced means a
production.
(b) Capital is a man made instruments of
production.
(c) Capital is a primary factor of
production.
(d) Machine tools, factories, dams, canals,
etc. are examples of capital.
17. Tools, machines, etc. are included in-
capital
(a) circulating capital (b) fixed capital
(c) sunk capital (d) human capital
18. The capital which belongs to the society as
a whole is called-
(a) Individual Capital (b) Human Capital
(c) Social Capital (d) Floating Capital
19. Raw material is an example of-
(a) Circulating Capital (b) Fixed Capital
(c) Tangible Capital (d) Real Capital
20. Which capital includes education training,
skill, ability?
(a) Human Capital (b) Individual Capital
(c) Social Capital (d) Real Capital
21. Goodwill, patent rights, etc. are examples
of-
(a) Tangible Capital (b) Real Capital
(c) Intangible Capital (d) Human Capital
22. Which of the following statements is true?
(a) Capital Formation involves production
of more capital goods.
(b) Capital Formation is also called
investment.
(c) To accumulate capital goods, some
current consumption is to be sacrificed.
(d) All the above
23. Surplus of production over consumption
in an economy in a year is called-
(a) Capital (b) Capital formation
(c) Stock (d) Savings
24. The third stage of capital formation is-
(a) creation of savings
(b) mobilization of savings
(c) distribution of savings
(d) investment of savings
25. With an increase in income-
(a) the propensity to consume increases
(b) the propensity y to save increases
(c) the propensity to consume remains
constant
(d) the propensity to save falls
26. A_______ country has greater ability to
save.
(a) poor
(b) developing
(c) rich
(d) under developed
27. An individual's saving level depends
upon-
(a) ability to save
(b) willingness to save
(c) both (a) & (b)
(d) only (a)
CA Foundation
28. The factor which mobilize land labour and
capital; combines them in the right
proportion and then organizes the
production activity is –
(a) Owner (b) Labour
(c) Manger (d) Entrepreneur
29. The reward of all factors of production is
usually predetermined (pre-fixed) except-
(a) Land (b) Labour
(c) Capital (d) Entrepreneur
30. The reward of an entrepreneur for his
efforts and risk-taking is-
(a) Interest (b) Profit/Loss
(c) Rent (d) Wages
31. The reward of capital is-
(a) Rent (b) Interest
(c) Wages (d) Profit
32. The reward of an entrepreneur i.e. profit is-
(a) pre-determined income
(b) residual income
(c) constant income
(d) none of the above
33. The risks which can be anticipated and can
be insured against are called-
(a) Insurable risks
(b) Non-Insurable risks
(c) Unforeseeable risks
(d) None of the above
34. The risks like change in demand for a
commodity, the cost structure, fashion,
technological, etc. which an entrepreneur
has to bear are called-
(a) Uncertainties (b) Insurable risks
(c) Foreseeable risks (d) Both (a) and (c)
35. According to________ innovations
introduced by an entrepreneur give rise to'
profits.
(a) Prof. FH. Knight
(b) Prof. Joseph A. Schumpeter
(c) Prof. Paul Samuelson
(d) Dr. Alfred Marshall
36. Which of the following statement is
incorrect?
(a) Mobilisation of savings done through
network of banking and other financial
institutions.
(b) Land lacks geographical mobility but
has occupational mobility.
(c) Entrepreneur is also called the
organizer, the manager or the risk
taker.
(d) Labour can be stored.
37. Labour is________
(a) Human factor
(b) Perishable
(c) inseparable from labour
(d) All the above
38. Leather in a shoe factory is_______
(a) Fixed capital
(b) Sunk capital
(c) Floating Capital
(d) Circulating capital
39. _________Cannot be stored.
(a) Land (b) Labour
(c) Capital (d) Both (a) & (b)
40. Capital that can be used for several
purposes or by several industries is_____
(a) Working capital (b) Social capital
(c) Floating capital (d) Human capital
41. Addition to the stock of capital good sin a
country means________
(a) Capital reduction
(b) Investment
(c) Capital formation
(d) Both (b) & (c)
CA Foundation
42. Find the odd out________
(a) Capital is man-made
(b) All capital is wealth
(c) Capital is durable
(d) Mobilisation of savings
43. Consider the following groups of items:
(i) Factory buildings
(ii) Plant and Machinery
(iii) Stocks of raw materials
(iv) Wage bills
Which of these are known as working
capital?
(a) (i) and (ii) (b) (iii) and (iv)
(c) (i), (ii) and (iii) (d) (i), (iii) and (iv)
44. The production function means
relationship between
(a) Cost of input
(b) Cost of output
(c) Physical input to physical output
(d) Wages of profit
45. A production function is an expression of
________ relation between inputs and
outputs.
(a) monetary (b) economic
(c) quantitative (d) qualitative
46. A short run production function is one in
which-
(a) at least one factor is fixed
(b) all factors are fixed
(c) all factors are variable
(d) at least one factor is variable
47. Technically efficient combinations of
inputs of those which-
(a) minimizes wastage
(b) maximizes profits
(c) minimises cost
(d) maximises revenue
48. In the short period there is no change in
_________ factors.
(a) fixed (b) variable
(c) human (d) physical
49. In the______ period all factors are variable.
(a) short (b) long
(c) market (d) secular
50. In its original for Cobb-Douglas
production function applies to-
(a) individual manufacturing firm
(b) individual firm
(c) whole of manufacturing in US
(d) None of the above
51. Cobb-Dauglas production function
revealed that the increase in the
manufacturing production was
contributed by labour and capital
respectively by
(a) 3/4th and 1/4th (b) 1/4th and 3/4th
(c) 2/3rd and 1/3rd (d) None of the above
52. Cobb-Douglas production-
(a) is linear
(b) is homogeneous
(c) shows constant returns to scale
(d) all the above
53. Cobb-Douglas production function
exhibits______ returns to scale.
(a) increasing (b) diminishing
(c) Constant (d) negative
54.
( )
50 5 , 4
xL
fk =
( )
50 6 , 4
xL
fk =
The above equations shows that-
(a) One factor is fixed and another variable
(b) Both factors are fixed
(c) Both factors are variable
(d) Both factors are semi-variable
CA Foundation
55. The main difference between the short
period/run and the long period/run is
that -
(a) in the short period all inputs are fixed,
while in the long period all inputs are
variable.
(b) in the short run at least one input is
fixed
(c) in the short run firm varies the
quantities of all inputs
(d) in the long run, the firm uses the
existing plant capacity
56. The law of variable proportions is a law of
production which takes place in the-
(a) market period (b) short run
(c) long run (d) very long period
57. All but one are the assumptions of the law
of variable proportions. Which one is not?
(a) There is only one factor which is
variable
(b) All units of variable factor are
homogeneous
(c) State of technology remains constant
(d) Applies in long run
58. When there is a fixed factor and a variable
factor, then the law would be-
(a) law of increasing returns to scale
(b) law of constant returns to scale
(c) law of decreasing returns to scale
(d) law of variable proportions
59. The total quantity of goods and services
produced by a firm with the given inputs
during a specified period of time is called-
(a) Total Product (b) Average Product
(c) Marginal Product (d) Labour Product
60. The amount of output produced per unit of
variable factor employed is called-
(a) Total Product (b) Average Product
(c) Marginal Product (d) Labour Product
61. The change in TP resulting from the
employment of an additional unit of a
variable factor is called-
(a) Total Product (b) Marginal Product
(c) Average Product (d) All the above
62. The average product of a variable input
can be described as-
(a) total product divided by the number of
units of variable input
(b) additional output resulting from
employment of additional unit of
variable factor
(c) the total quantity of good produced
with all input
(d) None of the above
63. TP of variable factor is –
i. MP
?
ii. TPn – TPn-1
iii. APxL (units of variable factor)
iv.
TP
L
(a) only (i)
(b) only (i) and (iii)
(c) only (ii)
(d) only (ii) and (iv)
64. Initially TP curve increases at an-
(a) increasing rate
(b) diminishing rate
(c) constant rate
(d) maximum rate
65. As more units of variable factor is
employed it will-
(a) always increase the TP
(b) always decrease the TP
(c) not always increase the TP
(d) always result in constant TP
66. As long as TP is positive, AP is-
(a) negative (b) constant
(c) positive (d) falling
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