Mock Test: Business Economics and Business & Commercial Knowledge(Paper-4) - Dec 2022 | Business and Commercial Knowledge (Old Scheme) - 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 
1.  Which of the following statements is true? 
(a)  The study of economics ensures that all problems will be appropriately tackled.  
(b)  The study of economics cannot ensure that all problems will be appropriately tackled. 
(c)  The study of economics does not enable a student to examine a problem in its ri ght perspective. 
(d)  None of these 
2.  Business economics is____ 
(a)  A science  
(b)  An art 
(c)  Both science and art  
(d)  None of these 
3. A rational person does not act unless___ 
(a)  The action is ethical. 
(b)  The action produces marginal cost that exceeds marginal revenue. 
(c)  The action produces marginal benefits that exceed marginal costs.  
(d)  The action makes money for the person. 
4.  Opportunity cost is ____________. 
(a)  A cost that cannot be avoided. 
(b)  The cost incurred in the past before we make a decision about what to do in the future. 
(c)  That which we forgo or give up when we make a choice or a decision. 
(d)  The additional benefit of buying an additional unit of a product. 
5. The regulatory mechanism of the market system is- 
(a)  Self-interest  
(b)  Private property 
(c)  Competition  
(d)  Specialization 
6.   Which one of the following countries does not follow Capitalist economic system? 
(a)  USA 
(b)  UK 
(c)  Germany 
(d)  India 
7.  The price which a consumer would be willing to pay for a commodity equals to his-. 
(a)  Total utility 
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1 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER 4: BUSINESS ECONOMICS AND BUSINESS AND COMMERCIAL KNOWLEDGE 
PART- I: BUSINESS ECONOMICS 
1.  Which of the following statements is true? 
(a)  The study of economics ensures that all problems will be appropriately tackled.  
(b)  The study of economics cannot ensure that all problems will be appropriately tackled. 
(c)  The study of economics does not enable a student to examine a problem in its ri ght perspective. 
(d)  None of these 
2.  Business economics is____ 
(a)  A science  
(b)  An art 
(c)  Both science and art  
(d)  None of these 
3. A rational person does not act unless___ 
(a)  The action is ethical. 
(b)  The action produces marginal cost that exceeds marginal revenue. 
(c)  The action produces marginal benefits that exceed marginal costs.  
(d)  The action makes money for the person. 
4.  Opportunity cost is ____________. 
(a)  A cost that cannot be avoided. 
(b)  The cost incurred in the past before we make a decision about what to do in the future. 
(c)  That which we forgo or give up when we make a choice or a decision. 
(d)  The additional benefit of buying an additional unit of a product. 
5. The regulatory mechanism of the market system is- 
(a)  Self-interest  
(b)  Private property 
(c)  Competition  
(d)  Specialization 
6.   Which one of the following countries does not follow Capitalist economic system? 
(a)  USA 
(b)  UK 
(c)  Germany 
(d)  India 
7.  The price which a consumer would be willing to pay for a commodity equals to his-. 
(a)  Total utility 
2 
(b)  Marginal utility 
(c)  Average utility 
(d)  Does not have any relation to any of these 
8.   Diminishing marginal utility implies that the 
(a)  marginal utility of a good diminishes over time. 
(b)  total utility is negative. 
(c)  last unit of a good consumed will contribute most to the consumer’s satisfaction.  
(d)  first unit of a good consumed will contribute most to the consumer’s satisfaction. 
9.  The buyers in the market include 
(a)  Consumers  
(b)  Businesses 
(c)  Government 
(d)  All of the above 
10.  “The increase in demand of a commodity due to the fact that others are also consuming the same 
commodity” is known as___________ 
(a)  Veblen effect  
(b)  Bandwagon effect 
(c)  Snob effect 
(d)  Demonstration effect 
11.  A rise in price of a good ___________________ consumer surplus. 
(a)  Reduces  
(b)  Increases 
(c)  Either (a) and (b)  
(d)  Doesn’t affect 
12.  All desires, tastes and motives of human beings are called ______________ in economics. 
(a)  Willingness 
(b)  Demand 
(c)  Wants 
(d)  None of these 
13.  Match the following 
LIST-I                                                                            LIST- II 
(a)  Two perfect substitute goods 1.  Linear Indifference Curve 
(b) Two perfect complementary goods 2.  Monotonic Preference 
(c)  Indifference curve is always 3. L-Shape Indifference Curve 
(d) Higher IC gives higher level of satisfaction 4.  Convex to the origin 
Codes:                       a               b                      c                 d 
(a)                             1                2                     3                 4 
(b)                             3                1                     4                 2 
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1 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER 4: BUSINESS ECONOMICS AND BUSINESS AND COMMERCIAL KNOWLEDGE 
PART- I: BUSINESS ECONOMICS 
1.  Which of the following statements is true? 
(a)  The study of economics ensures that all problems will be appropriately tackled.  
(b)  The study of economics cannot ensure that all problems will be appropriately tackled. 
(c)  The study of economics does not enable a student to examine a problem in its ri ght perspective. 
(d)  None of these 
2.  Business economics is____ 
(a)  A science  
(b)  An art 
(c)  Both science and art  
(d)  None of these 
3. A rational person does not act unless___ 
(a)  The action is ethical. 
(b)  The action produces marginal cost that exceeds marginal revenue. 
(c)  The action produces marginal benefits that exceed marginal costs.  
(d)  The action makes money for the person. 
4.  Opportunity cost is ____________. 
(a)  A cost that cannot be avoided. 
(b)  The cost incurred in the past before we make a decision about what to do in the future. 
(c)  That which we forgo or give up when we make a choice or a decision. 
(d)  The additional benefit of buying an additional unit of a product. 
5. The regulatory mechanism of the market system is- 
(a)  Self-interest  
(b)  Private property 
(c)  Competition  
(d)  Specialization 
6.   Which one of the following countries does not follow Capitalist economic system? 
(a)  USA 
(b)  UK 
(c)  Germany 
(d)  India 
7.  The price which a consumer would be willing to pay for a commodity equals to his-. 
(a)  Total utility 
2 
(b)  Marginal utility 
(c)  Average utility 
(d)  Does not have any relation to any of these 
8.   Diminishing marginal utility implies that the 
(a)  marginal utility of a good diminishes over time. 
(b)  total utility is negative. 
(c)  last unit of a good consumed will contribute most to the consumer’s satisfaction.  
(d)  first unit of a good consumed will contribute most to the consumer’s satisfaction. 
9.  The buyers in the market include 
(a)  Consumers  
(b)  Businesses 
(c)  Government 
(d)  All of the above 
10.  “The increase in demand of a commodity due to the fact that others are also consuming the same 
commodity” is known as___________ 
(a)  Veblen effect  
(b)  Bandwagon effect 
(c)  Snob effect 
(d)  Demonstration effect 
11.  A rise in price of a good ___________________ consumer surplus. 
(a)  Reduces  
(b)  Increases 
(c)  Either (a) and (b)  
(d)  Doesn’t affect 
12.  All desires, tastes and motives of human beings are called ______________ in economics. 
(a)  Willingness 
(b)  Demand 
(c)  Wants 
(d)  None of these 
13.  Match the following 
LIST-I                                                                            LIST- II 
(a)  Two perfect substitute goods 1.  Linear Indifference Curve 
(b) Two perfect complementary goods 2.  Monotonic Preference 
(c)  Indifference curve is always 3. L-Shape Indifference Curve 
(d) Higher IC gives higher level of satisfaction 4.  Convex to the origin 
Codes:                       a               b                      c                 d 
(a)                             1                2                     3                 4 
(b)                             3                1                     4                 2 
3 
(c)                             1                3                     4                 2 
(d)                             1               3                      2                 4 
14. In the Cobb-Douglas production function given as: Q = ALa k1-the share of labour in total production is 
(a)  a  
(b)  1 - a 
(c)  A 
(d)  a L 
15.  Match the following 
LIST-I                                                                    LIST- II 
(a)  Tea and Coffee                                              1.  Veblen goods 
(b)  Car and Petrol                                                2.  Substitutes 
(c)  Gold & Diamond                                            3.  Giffen goods 
(d)  Ragi and Bajara                                             4.  Complementary 
Codes:                             a                   b                   c                      d 
(a)                                   1                   2                   3                       4 
(b)                                   2                    4                   1                      3 
(c)                                   1                    3                   4                      2 
(d)                                   1                    3                   2                      4 
16.  “Returns to a factor” refers to the effect on total output of changes in: 
(a)  One factor only  
(b)  Various inputs separately 
(c)  All the inputs simultaneously  
(d)  None of the above 
17.  Which one of the following cost curve is not in U-shape? 
(a)  AC  
(b)  MC 
(c)  AFC 
(d)  AVC 
18.  Given TC = 2000 + 15Q – 6Q2 + Q3, How much is TFC at Q = 2000? 
(a)  2000  
(b)  975 
(c)  30,000  
(d)  Can’t be determined 
19.  A point of ‘Kink’ in the kinked demand curve indicates 
I.  Price rigidity 
II.  Quantity rigidity 
III.  Price flexibility 
IV.  Quantity flexibility 
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1 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER 4: BUSINESS ECONOMICS AND BUSINESS AND COMMERCIAL KNOWLEDGE 
PART- I: BUSINESS ECONOMICS 
1.  Which of the following statements is true? 
(a)  The study of economics ensures that all problems will be appropriately tackled.  
(b)  The study of economics cannot ensure that all problems will be appropriately tackled. 
(c)  The study of economics does not enable a student to examine a problem in its ri ght perspective. 
(d)  None of these 
2.  Business economics is____ 
(a)  A science  
(b)  An art 
(c)  Both science and art  
(d)  None of these 
3. A rational person does not act unless___ 
(a)  The action is ethical. 
(b)  The action produces marginal cost that exceeds marginal revenue. 
(c)  The action produces marginal benefits that exceed marginal costs.  
(d)  The action makes money for the person. 
4.  Opportunity cost is ____________. 
(a)  A cost that cannot be avoided. 
(b)  The cost incurred in the past before we make a decision about what to do in the future. 
(c)  That which we forgo or give up when we make a choice or a decision. 
(d)  The additional benefit of buying an additional unit of a product. 
5. The regulatory mechanism of the market system is- 
(a)  Self-interest  
(b)  Private property 
(c)  Competition  
(d)  Specialization 
6.   Which one of the following countries does not follow Capitalist economic system? 
(a)  USA 
(b)  UK 
(c)  Germany 
(d)  India 
7.  The price which a consumer would be willing to pay for a commodity equals to his-. 
(a)  Total utility 
2 
(b)  Marginal utility 
(c)  Average utility 
(d)  Does not have any relation to any of these 
8.   Diminishing marginal utility implies that the 
(a)  marginal utility of a good diminishes over time. 
(b)  total utility is negative. 
(c)  last unit of a good consumed will contribute most to the consumer’s satisfaction.  
(d)  first unit of a good consumed will contribute most to the consumer’s satisfaction. 
9.  The buyers in the market include 
(a)  Consumers  
(b)  Businesses 
(c)  Government 
(d)  All of the above 
10.  “The increase in demand of a commodity due to the fact that others are also consuming the same 
commodity” is known as___________ 
(a)  Veblen effect  
(b)  Bandwagon effect 
(c)  Snob effect 
(d)  Demonstration effect 
11.  A rise in price of a good ___________________ consumer surplus. 
(a)  Reduces  
(b)  Increases 
(c)  Either (a) and (b)  
(d)  Doesn’t affect 
12.  All desires, tastes and motives of human beings are called ______________ in economics. 
(a)  Willingness 
(b)  Demand 
(c)  Wants 
(d)  None of these 
13.  Match the following 
LIST-I                                                                            LIST- II 
(a)  Two perfect substitute goods 1.  Linear Indifference Curve 
(b) Two perfect complementary goods 2.  Monotonic Preference 
(c)  Indifference curve is always 3. L-Shape Indifference Curve 
(d) Higher IC gives higher level of satisfaction 4.  Convex to the origin 
Codes:                       a               b                      c                 d 
(a)                             1                2                     3                 4 
(b)                             3                1                     4                 2 
3 
(c)                             1                3                     4                 2 
(d)                             1               3                      2                 4 
14. In the Cobb-Douglas production function given as: Q = ALa k1-the share of labour in total production is 
(a)  a  
(b)  1 - a 
(c)  A 
(d)  a L 
15.  Match the following 
LIST-I                                                                    LIST- II 
(a)  Tea and Coffee                                              1.  Veblen goods 
(b)  Car and Petrol                                                2.  Substitutes 
(c)  Gold & Diamond                                            3.  Giffen goods 
(d)  Ragi and Bajara                                             4.  Complementary 
Codes:                             a                   b                   c                      d 
(a)                                   1                   2                   3                       4 
(b)                                   2                    4                   1                      3 
(c)                                   1                    3                   4                      2 
(d)                                   1                    3                   2                      4 
16.  “Returns to a factor” refers to the effect on total output of changes in: 
(a)  One factor only  
(b)  Various inputs separately 
(c)  All the inputs simultaneously  
(d)  None of the above 
17.  Which one of the following cost curve is not in U-shape? 
(a)  AC  
(b)  MC 
(c)  AFC 
(d)  AVC 
18.  Given TC = 2000 + 15Q – 6Q2 + Q3, How much is TFC at Q = 2000? 
(a)  2000  
(b)  975 
(c)  30,000  
(d)  Can’t be determined 
19.  A point of ‘Kink’ in the kinked demand curve indicates 
I.  Price rigidity 
II.  Quantity rigidity 
III.  Price flexibility 
IV.  Quantity flexibility 
4 
(a)  I & II are correct  
(b)  II & III are correct 
(c)  III & IV are correct 
(d)  I & IV are correct 
20. When total revenue is increasing : 
(a)  Marginal revenue may be either positive or negative. 
(b)  The demand curve is relatively inelastic. 
(c)  Marginal revenue is positive. 
(d)  Marginal revenue is negative. 
21.  Value in exchange is also known as 
(a)  Value in use 
(b)  Economic value 
(c)  Both (a) and (b) 
(d)  None of these 
22.  Which one of the following features of the term market is incorrect? 
(a)  Market is the collection of buyers and sellers with the potential to trade. 
(b)  A market need not be a formal. 
(c)  A market need not to be held in a particular place. 
(d)  A market must be formal or to be held in a particular place. 
23.  If a firm’s total revenue is not enough to make good even the ___________, it is better for firm to shut 
down. 
(a)  Total fixed cost 
(b)  Marginal cost 
(c)  Average fixed cost  
(d)  Total variable cost 
24. The study of demand and supply model is useful in explaining 
(a)  How government works 
(b)  How markets work 
(c)  How consumers behave 
(d)  None of these 
25. A monopolized market is in long run equilibrium when 
(a)  Zero economic profit is earned by the monopolist 
(b)  Production takes place where price is equal to long run MC and AC 
(c)  Production takes place where long run MC is equal to MR and price is not below the long run 
average cost. 
(d)  All of the above are correct 
26.  If a firm sells its output on a market that is characterized by few sellers and many buyers and limited 
long run resource mobility, then the firm is 
(a)  A monopolist 
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1 
MOCK TEST PAPER 1 
FOUNDATION COURSE 
PAPER 4: BUSINESS ECONOMICS AND BUSINESS AND COMMERCIAL KNOWLEDGE 
PART- I: BUSINESS ECONOMICS 
1.  Which of the following statements is true? 
(a)  The study of economics ensures that all problems will be appropriately tackled.  
(b)  The study of economics cannot ensure that all problems will be appropriately tackled. 
(c)  The study of economics does not enable a student to examine a problem in its ri ght perspective. 
(d)  None of these 
2.  Business economics is____ 
(a)  A science  
(b)  An art 
(c)  Both science and art  
(d)  None of these 
3. A rational person does not act unless___ 
(a)  The action is ethical. 
(b)  The action produces marginal cost that exceeds marginal revenue. 
(c)  The action produces marginal benefits that exceed marginal costs.  
(d)  The action makes money for the person. 
4.  Opportunity cost is ____________. 
(a)  A cost that cannot be avoided. 
(b)  The cost incurred in the past before we make a decision about what to do in the future. 
(c)  That which we forgo or give up when we make a choice or a decision. 
(d)  The additional benefit of buying an additional unit of a product. 
5. The regulatory mechanism of the market system is- 
(a)  Self-interest  
(b)  Private property 
(c)  Competition  
(d)  Specialization 
6.   Which one of the following countries does not follow Capitalist economic system? 
(a)  USA 
(b)  UK 
(c)  Germany 
(d)  India 
7.  The price which a consumer would be willing to pay for a commodity equals to his-. 
(a)  Total utility 
2 
(b)  Marginal utility 
(c)  Average utility 
(d)  Does not have any relation to any of these 
8.   Diminishing marginal utility implies that the 
(a)  marginal utility of a good diminishes over time. 
(b)  total utility is negative. 
(c)  last unit of a good consumed will contribute most to the consumer’s satisfaction.  
(d)  first unit of a good consumed will contribute most to the consumer’s satisfaction. 
9.  The buyers in the market include 
(a)  Consumers  
(b)  Businesses 
(c)  Government 
(d)  All of the above 
10.  “The increase in demand of a commodity due to the fact that others are also consuming the same 
commodity” is known as___________ 
(a)  Veblen effect  
(b)  Bandwagon effect 
(c)  Snob effect 
(d)  Demonstration effect 
11.  A rise in price of a good ___________________ consumer surplus. 
(a)  Reduces  
(b)  Increases 
(c)  Either (a) and (b)  
(d)  Doesn’t affect 
12.  All desires, tastes and motives of human beings are called ______________ in economics. 
(a)  Willingness 
(b)  Demand 
(c)  Wants 
(d)  None of these 
13.  Match the following 
LIST-I                                                                            LIST- II 
(a)  Two perfect substitute goods 1.  Linear Indifference Curve 
(b) Two perfect complementary goods 2.  Monotonic Preference 
(c)  Indifference curve is always 3. L-Shape Indifference Curve 
(d) Higher IC gives higher level of satisfaction 4.  Convex to the origin 
Codes:                       a               b                      c                 d 
(a)                             1                2                     3                 4 
(b)                             3                1                     4                 2 
3 
(c)                             1                3                     4                 2 
(d)                             1               3                      2                 4 
14. In the Cobb-Douglas production function given as: Q = ALa k1-the share of labour in total production is 
(a)  a  
(b)  1 - a 
(c)  A 
(d)  a L 
15.  Match the following 
LIST-I                                                                    LIST- II 
(a)  Tea and Coffee                                              1.  Veblen goods 
(b)  Car and Petrol                                                2.  Substitutes 
(c)  Gold & Diamond                                            3.  Giffen goods 
(d)  Ragi and Bajara                                             4.  Complementary 
Codes:                             a                   b                   c                      d 
(a)                                   1                   2                   3                       4 
(b)                                   2                    4                   1                      3 
(c)                                   1                    3                   4                      2 
(d)                                   1                    3                   2                      4 
16.  “Returns to a factor” refers to the effect on total output of changes in: 
(a)  One factor only  
(b)  Various inputs separately 
(c)  All the inputs simultaneously  
(d)  None of the above 
17.  Which one of the following cost curve is not in U-shape? 
(a)  AC  
(b)  MC 
(c)  AFC 
(d)  AVC 
18.  Given TC = 2000 + 15Q – 6Q2 + Q3, How much is TFC at Q = 2000? 
(a)  2000  
(b)  975 
(c)  30,000  
(d)  Can’t be determined 
19.  A point of ‘Kink’ in the kinked demand curve indicates 
I.  Price rigidity 
II.  Quantity rigidity 
III.  Price flexibility 
IV.  Quantity flexibility 
4 
(a)  I & II are correct  
(b)  II & III are correct 
(c)  III & IV are correct 
(d)  I & IV are correct 
20. When total revenue is increasing : 
(a)  Marginal revenue may be either positive or negative. 
(b)  The demand curve is relatively inelastic. 
(c)  Marginal revenue is positive. 
(d)  Marginal revenue is negative. 
21.  Value in exchange is also known as 
(a)  Value in use 
(b)  Economic value 
(c)  Both (a) and (b) 
(d)  None of these 
22.  Which one of the following features of the term market is incorrect? 
(a)  Market is the collection of buyers and sellers with the potential to trade. 
(b)  A market need not be a formal. 
(c)  A market need not to be held in a particular place. 
(d)  A market must be formal or to be held in a particular place. 
23.  If a firm’s total revenue is not enough to make good even the ___________, it is better for firm to shut 
down. 
(a)  Total fixed cost 
(b)  Marginal cost 
(c)  Average fixed cost  
(d)  Total variable cost 
24. The study of demand and supply model is useful in explaining 
(a)  How government works 
(b)  How markets work 
(c)  How consumers behave 
(d)  None of these 
25. A monopolized market is in long run equilibrium when 
(a)  Zero economic profit is earned by the monopolist 
(b)  Production takes place where price is equal to long run MC and AC 
(c)  Production takes place where long run MC is equal to MR and price is not below the long run 
average cost. 
(d)  All of the above are correct 
26.  If a firm sells its output on a market that is characterized by few sellers and many buyers and limited 
long run resource mobility, then the firm is 
(a)  A monopolist 
5 
(b)  An oligopolist 
(c)  A perfect competitor 
(d)  A monopolistic competitor 
27. Which of the following is a differentiated product? 
(a)  A hamburger 
(b)  A shirt 
(c)  An automobile 
(d)  All of the above 
28.  Decrease in input demand _____ 
(a)  Doesn’t affect inputs prices 
(b)  Pushes inputs prices up 
(c)  Pulls inputs prices down  
(d)  Either (b) or (c) 
29.  Different business cycles _____________ in duration and intensity. 
(a)  differ  
(b)  similar 
(c)  consistent  
(d)  Can’t say 
30.  In order to influence spending on the goods and services in the short run, _______ is directed at 
directly influencing interest rate. 
(a)  fiscal policy  
(b)  budgetary policy 
(c)  monetary policy 
(d)  economic policy 
31. _________ is concerned with welfare proposition. 
(a)  Normative Economics 
(b)  Positive Economics 
(c)  Both (a) and (b) 
(d)  None of these 
32.  The greater the inequalities in the distribution of money incomes, the ______________ the inequalities 
in the distribution of national output. 
(a) greater 
(b)  lesser 
(c)  (a) or (b) 
(d)  None of these 
33. A consumer’s preferences are monotonic if and only if between two bundles, the consumer prefers the 
bundle which has _______________________  
(a)  more of one of the goods  
(b) less of at least one of the goods