Mock Test: Business Economics and Business & Commercial Knowledge(Paper-4) - May 2022 - Notes | Study Mock Tests & Past Year Papers for CA Foundation - CA Foundation

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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.  Which of the following are the characteristics of Business Economics: 
(a)  It is a normative Science 
(b)  It is inter disciplinary 
(c)  Pragmatic in Nature 
(d)  All of the above 
2.  Which branch of economic theory deals with allocation of resources: 
(a)  Macro economic 
(b)  Micro economic 
(c)  Economic Growth 
(d)  None of these 
3.  Under which system Freedom of choice is an advantage:- 
(a)  Capitalism 
(b)  Mixed economy 
(c)  Socialism 
(d)  None of these 
4.  Taxation involves which aspects of normative economics: 
(a)  Incidence 
(b)  Fairness 
(c)  Incentive to work 
(d)  All of the above 
5.  Suppose we are drawing a supply curve of a farmer which of the following will be held constant. : 
(a)  Price of Inputs 
(b)  Weather Conditions 
(c)  Technology 
(d)  The price of the Commodity under consideration 
6.  A fall in the price of a commodity where everything else is held constant is referred to as: 
(a)  An increase in quantity demand 
(b)  A decrease in demand 
(c)  An increase in demand 
(d)  None of these 
 
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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.  Which of the following are the characteristics of Business Economics: 
(a)  It is a normative Science 
(b)  It is inter disciplinary 
(c)  Pragmatic in Nature 
(d)  All of the above 
2.  Which branch of economic theory deals with allocation of resources: 
(a)  Macro economic 
(b)  Micro economic 
(c)  Economic Growth 
(d)  None of these 
3.  Under which system Freedom of choice is an advantage:- 
(a)  Capitalism 
(b)  Mixed economy 
(c)  Socialism 
(d)  None of these 
4.  Taxation involves which aspects of normative economics: 
(a)  Incidence 
(b)  Fairness 
(c)  Incentive to work 
(d)  All of the above 
5.  Suppose we are drawing a supply curve of a farmer which of the following will be held constant. : 
(a)  Price of Inputs 
(b)  Weather Conditions 
(c)  Technology 
(d)  The price of the Commodity under consideration 
6.  A fall in the price of a commodity where everything else is held constant is referred to as: 
(a)  An increase in quantity demand 
(b)  A decrease in demand 
(c)  An increase in demand 
(d)  None of these 
 
2 
7.  For Giffen good the Engel curve is: 
(a)  Positive sloped 
(b)  Vertical 
(c)  horizontal 
(d)  Negative sloped 
8.  A theory is : 
(a)  An assumption 
(b)  A hypothesis 
(c)  A validated hypothesis 
(d)  None of these 
9.  The Coefficient of Price elasticity of demand between two points on a demand curve is _____ 
(a)  Arc elasticity 
(b)  Point elasticity 
(c)  Price elasticity 
(d)  None of these 
10.  When the demand curve is a rectangular hyperbola an increase in the price of the commodity causes 
the total expenditure of consumers of the commodity to: 
(a)  Remain unchanged 
(b)  Increase 
(c)  Decrease 
(d)  Any of the above 
11.  A movement along a curve rather than a shift in the curve can be measured by:- 
(a)  Cross elasticity of demand 
(b)  Income elasticity of demand 
(c)  Price elasticity of demand & Price elasticity of Supply 
(d)  None of these 
12.  The most important function of an entrepreneur is to _________ 
(a)  Bear the sense of responsibility 
(b)  Finance 
(c)  Innovate 
(d)  None of these 
13.  How do the TVC curve behaves when the law of diminishing return begins to operate- 
(a)  Rise at a decreasing rate 
(b)  Fall at an increasing rate 
(c)  Fall at a decreasing rate 
(d)  Rise at an increasing rate 
14.  In the Short run level of output the firm at the optimum will be: 
(a)  Minimizing total losses 
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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.  Which of the following are the characteristics of Business Economics: 
(a)  It is a normative Science 
(b)  It is inter disciplinary 
(c)  Pragmatic in Nature 
(d)  All of the above 
2.  Which branch of economic theory deals with allocation of resources: 
(a)  Macro economic 
(b)  Micro economic 
(c)  Economic Growth 
(d)  None of these 
3.  Under which system Freedom of choice is an advantage:- 
(a)  Capitalism 
(b)  Mixed economy 
(c)  Socialism 
(d)  None of these 
4.  Taxation involves which aspects of normative economics: 
(a)  Incidence 
(b)  Fairness 
(c)  Incentive to work 
(d)  All of the above 
5.  Suppose we are drawing a supply curve of a farmer which of the following will be held constant. : 
(a)  Price of Inputs 
(b)  Weather Conditions 
(c)  Technology 
(d)  The price of the Commodity under consideration 
6.  A fall in the price of a commodity where everything else is held constant is referred to as: 
(a)  An increase in quantity demand 
(b)  A decrease in demand 
(c)  An increase in demand 
(d)  None of these 
 
2 
7.  For Giffen good the Engel curve is: 
(a)  Positive sloped 
(b)  Vertical 
(c)  horizontal 
(d)  Negative sloped 
8.  A theory is : 
(a)  An assumption 
(b)  A hypothesis 
(c)  A validated hypothesis 
(d)  None of these 
9.  The Coefficient of Price elasticity of demand between two points on a demand curve is _____ 
(a)  Arc elasticity 
(b)  Point elasticity 
(c)  Price elasticity 
(d)  None of these 
10.  When the demand curve is a rectangular hyperbola an increase in the price of the commodity causes 
the total expenditure of consumers of the commodity to: 
(a)  Remain unchanged 
(b)  Increase 
(c)  Decrease 
(d)  Any of the above 
11.  A movement along a curve rather than a shift in the curve can be measured by:- 
(a)  Cross elasticity of demand 
(b)  Income elasticity of demand 
(c)  Price elasticity of demand & Price elasticity of Supply 
(d)  None of these 
12.  The most important function of an entrepreneur is to _________ 
(a)  Bear the sense of responsibility 
(b)  Finance 
(c)  Innovate 
(d)  None of these 
13.  How do the TVC curve behaves when the law of diminishing return begins to operate- 
(a)  Rise at a decreasing rate 
(b)  Fall at an increasing rate 
(c)  Fall at a decreasing rate 
(d)  Rise at an increasing rate 
14.  In the Short run level of output the firm at the optimum will be: 
(a)  Minimizing total losses 
3 
(b)  Maximizing total profit 
(c)  Either maximizing total profit or minimizing total losses 
(d)  None of these 
15. If both factor prices and quantity moves in the same direction then it is called _______ 
(a)  Decreasing Cost Industry 
(b)  Increasing Cost Industry 
(c)  Constant Cost Industry 
(d)  None of these 
16.  If the monopolist incur losses in the short run then in the long run: 
(a)  It will stay in the business 
(b)  Go out of business 
(c)  Will break even 
(d)  Any of the above is possible 
17.  A cartel which is market sharing will reach the monopoly situation : 
(a)  Always when the product is homogenous  
(b)  Always when the product is differentiated 
(c)  Sometime 
(d)  None of these 
18.  The Substitution effect will be stronger when- 
(a)  The goods are closer substitutes 
(b)  There is lower cost of switching to the substitute good 
(c)  There is lower inconvenience while switching to the substitute good. 
(d)  All of these 
19.  Increasing return to scale applies to:  
(a)  Long run 
(b)  Short run 
(c)  Either (a) or (b) 
(d)  None of these 
20.  Isoquant are also called: 
(a)  Equal product curves 
(b)  Production Indifference curves 
(c)  ISO product curves 
(d)  All of the above 
21.  Who describes production function as the relationship between the maximum amount of output can b e 
produced and the input required to make that output : 
(a)  Samuelson 
(b)  Malthas 
(c)  Hicks 
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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.  Which of the following are the characteristics of Business Economics: 
(a)  It is a normative Science 
(b)  It is inter disciplinary 
(c)  Pragmatic in Nature 
(d)  All of the above 
2.  Which branch of economic theory deals with allocation of resources: 
(a)  Macro economic 
(b)  Micro economic 
(c)  Economic Growth 
(d)  None of these 
3.  Under which system Freedom of choice is an advantage:- 
(a)  Capitalism 
(b)  Mixed economy 
(c)  Socialism 
(d)  None of these 
4.  Taxation involves which aspects of normative economics: 
(a)  Incidence 
(b)  Fairness 
(c)  Incentive to work 
(d)  All of the above 
5.  Suppose we are drawing a supply curve of a farmer which of the following will be held constant. : 
(a)  Price of Inputs 
(b)  Weather Conditions 
(c)  Technology 
(d)  The price of the Commodity under consideration 
6.  A fall in the price of a commodity where everything else is held constant is referred to as: 
(a)  An increase in quantity demand 
(b)  A decrease in demand 
(c)  An increase in demand 
(d)  None of these 
 
2 
7.  For Giffen good the Engel curve is: 
(a)  Positive sloped 
(b)  Vertical 
(c)  horizontal 
(d)  Negative sloped 
8.  A theory is : 
(a)  An assumption 
(b)  A hypothesis 
(c)  A validated hypothesis 
(d)  None of these 
9.  The Coefficient of Price elasticity of demand between two points on a demand curve is _____ 
(a)  Arc elasticity 
(b)  Point elasticity 
(c)  Price elasticity 
(d)  None of these 
10.  When the demand curve is a rectangular hyperbola an increase in the price of the commodity causes 
the total expenditure of consumers of the commodity to: 
(a)  Remain unchanged 
(b)  Increase 
(c)  Decrease 
(d)  Any of the above 
11.  A movement along a curve rather than a shift in the curve can be measured by:- 
(a)  Cross elasticity of demand 
(b)  Income elasticity of demand 
(c)  Price elasticity of demand & Price elasticity of Supply 
(d)  None of these 
12.  The most important function of an entrepreneur is to _________ 
(a)  Bear the sense of responsibility 
(b)  Finance 
(c)  Innovate 
(d)  None of these 
13.  How do the TVC curve behaves when the law of diminishing return begins to operate- 
(a)  Rise at a decreasing rate 
(b)  Fall at an increasing rate 
(c)  Fall at a decreasing rate 
(d)  Rise at an increasing rate 
14.  In the Short run level of output the firm at the optimum will be: 
(a)  Minimizing total losses 
3 
(b)  Maximizing total profit 
(c)  Either maximizing total profit or minimizing total losses 
(d)  None of these 
15. If both factor prices and quantity moves in the same direction then it is called _______ 
(a)  Decreasing Cost Industry 
(b)  Increasing Cost Industry 
(c)  Constant Cost Industry 
(d)  None of these 
16.  If the monopolist incur losses in the short run then in the long run: 
(a)  It will stay in the business 
(b)  Go out of business 
(c)  Will break even 
(d)  Any of the above is possible 
17.  A cartel which is market sharing will reach the monopoly situation : 
(a)  Always when the product is homogenous  
(b)  Always when the product is differentiated 
(c)  Sometime 
(d)  None of these 
18.  The Substitution effect will be stronger when- 
(a)  The goods are closer substitutes 
(b)  There is lower cost of switching to the substitute good 
(c)  There is lower inconvenience while switching to the substitute good. 
(d)  All of these 
19.  Increasing return to scale applies to:  
(a)  Long run 
(b)  Short run 
(c)  Either (a) or (b) 
(d)  None of these 
20.  Isoquant are also called: 
(a)  Equal product curves 
(b)  Production Indifference curves 
(c)  ISO product curves 
(d)  All of the above 
21.  Who describes production function as the relationship between the maximum amount of output can b e 
produced and the input required to make that output : 
(a)  Samuelson 
(b)  Malthas 
(c)  Hicks 
4 
(d)  None of these 
22.  The concept of marginal cost is closely related with- 
(a)  Variable Cost 
(b)  Fixed Cost 
(c)  Opportunity Cost 
(d)  Economic Cost 
23.  When the average product of labour is maximized the marginal product of labour: 
(a)  Equal zero 
(b)  is maximized 
(c)  Equal AP L 
(d)  None of these 
24.  ‘Time’ element in market was conceived by : 
(a)  Alfred Marshall 
(b)  Pigou 
(c)  Allen 
(d)  None of these 
25.  Cross elasticity of demand for the monopolist’s product or any other product is _______ 
(a)  Zero 
(b)  Very small 
(c)  High 
(d)  Either (a) or (b) 
26.  In a monopolistically competitive market:  
(a)  Firm face a perfectly elastic demand for its product  
(b)  Does not face a perfectly elastic demand for its product 
(c)  Cannot be determined 
(d)  None of these 
27.  Price discrimination to be profitable elasticity of demand in different sub market will be _____ 
(a)  Different 
(b)  Uniform 
(c)  Zero 
(d)  None of these 
28.  Supply Schedule in a purely competitive firm in the short run is determined by : 
(a)  Marginal revenue 
(b)  Average revenue 
(c)  Marginal cost curve 
(d)  None of these 
29.  The Turning point of business cycle is predicted by : 
(a)  Lagging Indictor 
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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.  Which of the following are the characteristics of Business Economics: 
(a)  It is a normative Science 
(b)  It is inter disciplinary 
(c)  Pragmatic in Nature 
(d)  All of the above 
2.  Which branch of economic theory deals with allocation of resources: 
(a)  Macro economic 
(b)  Micro economic 
(c)  Economic Growth 
(d)  None of these 
3.  Under which system Freedom of choice is an advantage:- 
(a)  Capitalism 
(b)  Mixed economy 
(c)  Socialism 
(d)  None of these 
4.  Taxation involves which aspects of normative economics: 
(a)  Incidence 
(b)  Fairness 
(c)  Incentive to work 
(d)  All of the above 
5.  Suppose we are drawing a supply curve of a farmer which of the following will be held constant. : 
(a)  Price of Inputs 
(b)  Weather Conditions 
(c)  Technology 
(d)  The price of the Commodity under consideration 
6.  A fall in the price of a commodity where everything else is held constant is referred to as: 
(a)  An increase in quantity demand 
(b)  A decrease in demand 
(c)  An increase in demand 
(d)  None of these 
 
2 
7.  For Giffen good the Engel curve is: 
(a)  Positive sloped 
(b)  Vertical 
(c)  horizontal 
(d)  Negative sloped 
8.  A theory is : 
(a)  An assumption 
(b)  A hypothesis 
(c)  A validated hypothesis 
(d)  None of these 
9.  The Coefficient of Price elasticity of demand between two points on a demand curve is _____ 
(a)  Arc elasticity 
(b)  Point elasticity 
(c)  Price elasticity 
(d)  None of these 
10.  When the demand curve is a rectangular hyperbola an increase in the price of the commodity causes 
the total expenditure of consumers of the commodity to: 
(a)  Remain unchanged 
(b)  Increase 
(c)  Decrease 
(d)  Any of the above 
11.  A movement along a curve rather than a shift in the curve can be measured by:- 
(a)  Cross elasticity of demand 
(b)  Income elasticity of demand 
(c)  Price elasticity of demand & Price elasticity of Supply 
(d)  None of these 
12.  The most important function of an entrepreneur is to _________ 
(a)  Bear the sense of responsibility 
(b)  Finance 
(c)  Innovate 
(d)  None of these 
13.  How do the TVC curve behaves when the law of diminishing return begins to operate- 
(a)  Rise at a decreasing rate 
(b)  Fall at an increasing rate 
(c)  Fall at a decreasing rate 
(d)  Rise at an increasing rate 
14.  In the Short run level of output the firm at the optimum will be: 
(a)  Minimizing total losses 
3 
(b)  Maximizing total profit 
(c)  Either maximizing total profit or minimizing total losses 
(d)  None of these 
15. If both factor prices and quantity moves in the same direction then it is called _______ 
(a)  Decreasing Cost Industry 
(b)  Increasing Cost Industry 
(c)  Constant Cost Industry 
(d)  None of these 
16.  If the monopolist incur losses in the short run then in the long run: 
(a)  It will stay in the business 
(b)  Go out of business 
(c)  Will break even 
(d)  Any of the above is possible 
17.  A cartel which is market sharing will reach the monopoly situation : 
(a)  Always when the product is homogenous  
(b)  Always when the product is differentiated 
(c)  Sometime 
(d)  None of these 
18.  The Substitution effect will be stronger when- 
(a)  The goods are closer substitutes 
(b)  There is lower cost of switching to the substitute good 
(c)  There is lower inconvenience while switching to the substitute good. 
(d)  All of these 
19.  Increasing return to scale applies to:  
(a)  Long run 
(b)  Short run 
(c)  Either (a) or (b) 
(d)  None of these 
20.  Isoquant are also called: 
(a)  Equal product curves 
(b)  Production Indifference curves 
(c)  ISO product curves 
(d)  All of the above 
21.  Who describes production function as the relationship between the maximum amount of output can b e 
produced and the input required to make that output : 
(a)  Samuelson 
(b)  Malthas 
(c)  Hicks 
4 
(d)  None of these 
22.  The concept of marginal cost is closely related with- 
(a)  Variable Cost 
(b)  Fixed Cost 
(c)  Opportunity Cost 
(d)  Economic Cost 
23.  When the average product of labour is maximized the marginal product of labour: 
(a)  Equal zero 
(b)  is maximized 
(c)  Equal AP L 
(d)  None of these 
24.  ‘Time’ element in market was conceived by : 
(a)  Alfred Marshall 
(b)  Pigou 
(c)  Allen 
(d)  None of these 
25.  Cross elasticity of demand for the monopolist’s product or any other product is _______ 
(a)  Zero 
(b)  Very small 
(c)  High 
(d)  Either (a) or (b) 
26.  In a monopolistically competitive market:  
(a)  Firm face a perfectly elastic demand for its product  
(b)  Does not face a perfectly elastic demand for its product 
(c)  Cannot be determined 
(d)  None of these 
27.  Price discrimination to be profitable elasticity of demand in different sub market will be _____ 
(a)  Different 
(b)  Uniform 
(c)  Zero 
(d)  None of these 
28.  Supply Schedule in a purely competitive firm in the short run is determined by : 
(a)  Marginal revenue 
(b)  Average revenue 
(c)  Marginal cost curve 
(d)  None of these 
29.  The Turning point of business cycle is predicted by : 
(a)  Lagging Indictor 
5 
(b)  Leading Indicator 
(c)  Coincident 
(d)  All of the above 
30.  Fluctuation in Economic activities are due to : 
(a)  Change in money supply 
(b)  Profitability 
(c)  Fluctuation in aggregate demand 
(d)  None of these 
31.  Between two perfect substitute the elasticity of Substitution is ______ 
(a)  < Zero 
(b)  >Zero 
(c)  < Infinity 
(d)  Infinity 
32.  Variable that change after real output change are: 
(a)  Leading Indicator 
(b)  Lagging Indicator 
(c)  Concurrent Indicator 
(d)  None of these 
33.  Modern business activities are based on the anticipations of business community and are affected by 
waves of optimism or pessimism is opined by___ 
(a)  Pigou 
(b) Keynes 
(c)  Hawtrey 
(d)  None of these 
34.  Businesses whose fortunes are closely linked to the rate of economic growth is referred to as : 
(a)  Cyclical 
(b)  Counter Cyclical 
(c)  Fiscal Policy 
(d)  None of these  
35.  The Concept of Price rigidity in market is explained in which form of market: 
(a)  Monopolistic Market 
(b)  Perfect Competition 
(c)  Oligopoly 
(d)  Monopoly 
36.  Globalization indicate rapid ___ between Countries : 
(a)  Competition 
(b)  Investment 
(c)  Integration