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Business Economics Mock Test - 1 - CA Foundation MCQ


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30 Questions MCQ Test - Business Economics Mock Test - 1

Business Economics Mock Test - 1 for CA Foundation 2024 is part of CA Foundation preparation. The Business Economics Mock Test - 1 questions and answers have been prepared according to the CA Foundation exam syllabus.The Business Economics Mock Test - 1 MCQs are made for CA Foundation 2024 Exam. Find important definitions, questions, notes, meanings, examples, exercises, MCQs and online tests for Business Economics Mock Test - 1 below.
Solutions of Business Economics Mock Test - 1 questions in English are available as part of our course for CA Foundation & Business Economics Mock Test - 1 solutions in Hindi for CA Foundation course. Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free. Attempt Business Economics Mock Test - 1 | 100 questions in 100 minutes | Mock test for CA Foundation preparation | Free important questions MCQ to study for CA Foundation Exam | Download free PDF with solutions
Business Economics Mock Test - 1 - Question 1

Average income increases from INR 20,000 p.m. to INR 22,000 p.m. Quantity demanded per month increases from 5000 to 6000 units. Which of the following is correct?

Detailed Solution for Business Economics Mock Test - 1 - Question 1

The percentage change in demand is +20%; the percentage change in income is +10%. This means the product is normal because demand rises with more income and has an income elasticity of +2.

Business Economics Mock Test - 1 - Question 2

If the marginal product of labor is 2, the marginal product of capital is 4, the wage rate is INR 3, the rental price of capital is INR 6, and the price of output is INR 1.50, then the firm should

Detailed Solution for Business Economics Mock Test - 1 - Question 2

Cost of hiring one additional unit of labour = Rs 3
Revenue from hiring an additional unit of labour = MP of labour x price = Rs 3
Cost of renting one additional unit of capital = Rs 6
Revenue from renting an additional unit of capital = MP of capital x price = Rs 6
Hence, there is no benefit in increasing labour or capital.

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Business Economics Mock Test - 1 - Question 3

The supply curve of a firm is given by the equation q=250p−250. If the price decreases by 2 units, ______

Detailed Solution for Business Economics Mock Test - 1 - Question 3

Business Economics Mock Test - 1 - Question 4

Vysakh is selling samosas. He already sold 250 samosas. His decision on whether or not to sell the 251st samosa is based on the ___

Detailed Solution for Business Economics Mock Test - 1 - Question 4

On taking any economic decisions, only the marginal quantities are important. In this case, the relevant decision variable is the marginal quantity of the 251st samosa.

Business Economics Mock Test - 1 - Question 5

When the no.of uses of the purchase goods is less price elasticity of demand is

Detailed Solution for Business Economics Mock Test - 1 - Question 5

When goods whose uses less will have less price elastic because the products can be used for a specific purpose i.e it has no substitutes. The products which have more substitutes will have high elastic demand.

Business Economics Mock Test - 1 - Question 6

For an inferior good with a downward sloping demand curve:

Detailed Solution for Business Economics Mock Test - 1 - Question 6

For an inferior good demand falls as income increases. The quantity demanded falls as price increases; this means the income elasticity and the price elasticity will both be negative.

Business Economics Mock Test - 1 - Question 7

For a firm operating in a perfectly competitive market, the slope of the TR curve is

Detailed Solution for Business Economics Mock Test - 1 - Question 7

For a firm operating in a perfectly competitive market, the slope of the TR curve is equal to the price and is constant.

Business Economics Mock Test - 1 - Question 8

Which of the following is an alternate measure of well-being currently used that incorporates GDP, but does not rely exclusively on income as a measure of well-being?

Detailed Solution for Business Economics Mock Test - 1 - Question 8

HDI is a measure of well-being that includes health (measured with life expectancy), wealth (measured with GDP per capita), and education (measured with an education index), that can be used to compare countries' social and economic development, as well as track this development over time.

Business Economics Mock Test - 1 - Question 9

When the money value of money exceeds the commodity value of money, it is called:

Detailed Solution for Business Economics Mock Test - 1 - Question 9

Credit money has a face value which is much higher than the commodity value. Credit money consists of credit cards, demand deposits, among others. 

Business Economics Mock Test - 1 - Question 10

Reeta buys only compact discs and tapes and spends all her income. The marginal utility from a compact disc is 30 and the marginal utility from a tape is 20. The price of a compact disc is INR 15 and the price of a tape is INR 10. To maximize her utility, Reeta should

Detailed Solution for Business Economics Mock Test - 1 - Question 10

MCCDs/PCDs=MUtape/Ptape. Reeta is already maximizing her utility.

Business Economics Mock Test - 1 - Question 11

If the demand is price inelastic:

Detailed Solution for Business Economics Mock Test - 1 - Question 11

This means that the percentage change in quantity demanded is less than the percentage change in price; this means a price increase will increase revenue.

Business Economics Mock Test - 1 - Question 12

The direct tax is collected directly from

Detailed Solution for Business Economics Mock Test - 1 - Question 12

The direct tax is collected directly from the income earners.

Business Economics Mock Test - 1 - Question 13

Convex indifferent curve is explained by

Detailed Solution for Business Economics Mock Test - 1 - Question 13

Convexity means slope is decreasing as the marginal rate of substitution goes on diminishing.

Business Economics Mock Test - 1 - Question 14

If the marginal propensity to save decreases, the value of the multiplier will

Detailed Solution for Business Economics Mock Test - 1 - Question 14

If the marginal propensity to save decreases, the value of the multiplier will increase.

Business Economics Mock Test - 1 - Question 15

Service tax is an example of

Detailed Solution for Business Economics Mock Test - 1 - Question 15

Service tax which is applied to the sales of services is an indirect tax.

Business Economics Mock Test - 1 - Question 16

If there is no change in quantity demanded to any charge in price then elasticity of demand is & shape of demand curve is

Detailed Solution for Business Economics Mock Test - 1 - Question 16

When demand does not respond to the given change in price it is known as Perfectly Inelastic demand where elasticity of demand is zero & demand curve is parallel to Y axis i.e. it is vertical.

Business Economics Mock Test - 1 - Question 17

There are 20 identical firms in a market. At a price of Rs 20, firm 1 supplies 25 units of a good, What is the total supply at that price?

Detailed Solution for Business Economics Mock Test - 1 - Question 17

Since the firms are identical, we can assume that their supply curves are identical. Hence, each firm would supply 25 units.
∴Qs=20×25=500

Business Economics Mock Test - 1 - Question 18

The fact that rubies are more expensive than milk reflects the fact that for most consumers

Detailed Solution for Business Economics Mock Test - 1 - Question 18

Because more milk is consumed, the MU from milk is lower than the MU from rubies.

Business Economics Mock Test - 1 - Question 19

Study the supply curve given below and answer the following question.

Q. If the market price is $4, the producer surplus is ________.

Detailed Solution for Business Economics Mock Test - 1 - Question 19

Business Economics Mock Test - 1 - Question 20

The other names for capital formation is

Detailed Solution for Business Economics Mock Test - 1 - Question 20

The other names for capital formation is investments

Business Economics Mock Test - 1 - Question 21

MRS is determined by

Detailed Solution for Business Economics Mock Test - 1 - Question 21

MRS is always related to the choice and preferences of the consumer.

Business Economics Mock Test - 1 - Question 22

A firm should shut down temporarily if

Detailed Solution for Business Economics Mock Test - 1 - Question 22

In the short run, fixed costs are treated as sunk costs. Hence, a firm should shut down temporarily if P<AVC. If AVC<P<SAC, the firm should remain operational.

Business Economics Mock Test - 1 - Question 23

The supply curves of two firms 1 and 2 are given below.
q1=3p−5, p≥5
q2=6p−1, p≥2
​Q. Choose the correct option(s) about the market supply. All prices are in rupees.

Detailed Solution for Business Economics Mock Test - 1 - Question 23

Let q be the market supply.
p<2⇒q=0
2≤p<5⇒q=q1=6p−1
p≥5⇒q=q1+q2=9p−6
Hence, p=6⇒q=9×6−6=48
p=4⇒q=6×4−1=23

Business Economics Mock Test - 1 - Question 24

Commercial banks accept deposits from the public in the form of:

Detailed Solution for Business Economics Mock Test - 1 - Question 24

Banks accept deposits as chequeable deposits and non-chequeable deposits. 

Business Economics Mock Test - 1 - Question 25

Forward market is that market which:

Detailed Solution for Business Economics Mock Test - 1 - Question 25

Forward market deals with foreign exchange transactions that are meant for future delivery.

Business Economics Mock Test - 1 - Question 26

Given the following four possibilities ,which one results in an increase in total consumer expenditure?

Detailed Solution for Business Economics Mock Test - 1 - Question 26

Increase in total expenditure will have two effect on price. if the price rises than the demand is inelastic and if the price falls than the demand is elastic. Thus in the given example we observe that total expenditure increases then the demand will inelastic with rise in price because there is a direct relationship between the price and total expenditure.

Business Economics Mock Test - 1 - Question 27

Shalini sells lemonades at Rs 10 per glass. If she sells 300 glasses, what is her total revenue?

Detailed Solution for Business Economics Mock Test - 1 - Question 27

TR=P×Q=300×10
=Rs  3000

Business Economics Mock Test - 1 - Question 28

If people with higher incomes pay higher taxes, the system is called:

Detailed Solution for Business Economics Mock Test - 1 - Question 28

A progressive tax is a tax in which the average tax rate (taxes paid ÷ personal income) increases as the taxable amount increases. The term "progressive" refers to the way the tax rate progresses from low to high, with the result that a taxpayer's average tax rate is less than the person's marginal tax rate.

Business Economics Mock Test - 1 - Question 29

In which of the following systems was the rent fixed and a revenue collector was appointed by the government who was responsible for rent collection?

Detailed Solution for Business Economics Mock Test - 1 - Question 29

In the Zamindari system the rent was fixed and a revenue collector was appointed by the government who was responsible for rent collection.

Business Economics Mock Test - 1 - Question 30

What kind of goods has elastic demand

Detailed Solution for Business Economics Mock Test - 1 - Question 30

Luxary goods elastic demand as a small change in price of it can lead to large change in quantity demanded.

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