Business Economics Mock Test - 2

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?

Accepted Answer

The product has a positive income elasticity of demand

Answer

Demand is price inelastic

Answer

The good is inferior

Answer

Income elasticity is -2

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

Accepted Answer

None of the above

Answer

Increase output by hiring more labor, more capital, or both

Answer

Hold output constant, but hire more labor and less capital

Answer

Decrease output by reducing the quantity of capital, reducing the number of units of labor, or both

Question 3

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

Accepted Answer

quantity decreases by 500

Answer

quantity increases by 250

Answer

quantity decreases by 250

Answer

quantity increases by 500

Question 4

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

Accepted Answer

MC of the 251st samosa

Answer

TC of the 251 samosas

Answer

ATC of 251 samosas

Answer

AVC of 251 samosas

Question 5

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

Accepted Answer

low

Answer

High

Answer

infinity

Answer

zero

Question 6

For an inferior good with a downward sloping demand curve:

Accepted Answer

The price elasticity of demand is negative; the income elasticity of demand is negative.

Answer

The price elasticity of demand is positive; the income elasticity of demand is negative.

Answer

The price elasticity of demand is negative; the income elasticity of demand is positive.

Answer

The price elasticity of demand is positive; the income elasticity of demand is positive.

Question 7

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

Accepted Answer

constant

Answer

increasing

Answer

decreasing

Answer

zero

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?

Accepted Answer

Human Development Index (HDI)

Answer

Real GDP per capita

Answer

National Income per capita

Answer

All of these

Question 9

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

Accepted Answer

credit money

Answer

full bodied money

Answer

fiat money

Answer

fiduciary money

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

Accepted Answer

not change her consumption of compact discs and tapes

Answer

increase her consumption of compact discs

Answer

Increase her consumption of tapes

Answer

lower the price of a tape

Question 11

If the demand is price inelastic:

Accepted Answer

An increase in price increases revenue

Answer

An increase in price must raise profits

Answer

An increase in price decreases revenue

Answer

A decrease in price reduces sales

Question 12

The direct tax is collected directly from

Accepted Answer

The income earners

Answer

The producers on goods produced

Answer

The sellers on good sold

Answer

The buyers of goods

Question 13

Convex indifferent curve is explained by

Accepted Answer

diminishing MRS

Answer

increasing MRS

Answer

constant MRS

Answer

None of these

Question 14

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

Accepted Answer

Increase

Answer

Decrease

Answer

Remain constant

Answer

Decrease as much as the decrease in MPS

Question 15

Service tax is an example of

Accepted Answer

Indirect tax

Answer

Direct tax

Answer

Corporate tax

Answer

None of the above

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

Accepted Answer

zero, vertical demand curve

Answer

infinity elastic; horizontal demand curve

Answer

less than one, downward sloping demand curve

Answer

zero than one horizontal downward sloping demand curve

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?

Accepted Answer

500

Answer

25

Answer

125

Answer

26

Question 18

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

Accepted Answer

more milk is consumed than rubies

Answer

the total utility from rubies exceeds that from milk

Answer

the marginal utility from rubies equals that from milk

Answer

a quart of rubies is prettier than a quart of milk

Question 19

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

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

Accepted Answer

$16

Answer

$8

Answer

$12

Answer

$32

Question 20

The other names for capital formation is

Accepted Answer

investments

Answer

capital output ratio

Answer

saving

Answer

wealth formation

Question 21

MRS is determined by

Accepted Answer

preferences of the consumer

Answer

satisfaction level of the consumer

Answer

income of the consumer

Answer

tastes of the consumer

Question 22

A firm should shut down temporarily if

Accepted Answer

P < AVC

Answer

SAC < P

Answer

AVC < P < SAC

Answer

None of these

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.

Accepted Answer

both (a) and (c)

Answer

Market supply is 48 at a price of Rs 6

Answer

Market supply is 13 at a price of Rs 6

Answer

Market supply is 23 at a price of Rs 4

Question 24

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

Accepted Answer

Both (a) and (b)

Answer

Chequeable deposits

Answer

Non-chequeable deposits

Answer

Gold deposits

Question 25

Forward market is that market which:

Accepted Answer

handles transactions of foreign exchange meant for future delivery

Answer

handles current as well as future transactions.

Answer

handles current transactions.

Answer

None of these

Question 26

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

Accepted Answer

Demand is inelastic & price rises

Answer

Demand is unitary elastic & price falls

Answer

Demand is elastic & price rises

Answer

Demand is inelastic & price falls

Question 27

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

Accepted Answer

Rs 3000

Answer

Rs 1000

Answer

Rs 1500

Answer

Rs 2000

Question 28

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

Accepted Answer

Progressive Tax

Answer

Value Added Tax

Answer

Sales Tax

Answer

Regressive Tax

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?

Accepted Answer

Zamindari system

Answer

Ryotwari system

Answer

Mahalwari system

Answer

None of these

Question 30

What kind of goods has elastic demand

Accepted Answer

luxury goods

Answer

inferior goods

Answer

normal goods

Answer

necessity goods

Business Economics Mock Test - 2 Free Online Test 2026

Full Mock Test & Solutions: Business Economics Mock Test - 2 (60 Questions)

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?

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

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

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

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

For an inferior good with a downward sloping demand curve:

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

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?

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

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

If the demand is price inelastic:

The direct tax is collected directly from

Convex indifferent curve is explained by

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

Service tax is an example of

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

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?

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

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

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

The other names for capital formation is

MRS is determined by

A firm should shut down temporarily if

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.

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

Forward market is that market which:

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

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

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

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?

What kind of goods has elastic demand

Mock Tests & Past Year Papers for CA Foundation

Mock Tests & Past Year Papers for CA Foundation

Top Courses for CA Foundation

About this CA Foundation Mock Test

Explore more CA Foundation Resources

Business Economics Mock Test - 2 Free Online Test 2026

Full Mock Test & Solutions: Business Economics Mock Test - 2 (60 Questions)

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?

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

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

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

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

For an inferior good with a downward sloping demand curve:

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

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?

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

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

If the demand is price inelastic:

The direct tax is collected directly from

Convex indifferent curve is explained by

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

Service tax is an example of

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

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?

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

Study the supply curve given below and answer the following question. Q. If the market price is $4, the producer surplus is ________.

The other names for capital formation is

MRS is determined by

A firm should shut down temporarily if

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.

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

Forward market is that market which:

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

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

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

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?

What kind of goods has elastic demand

Mock Tests & Past Year Papers for CA Foundation

Mock Tests & Past Year Papers for CA Foundation

Top Courses for CA Foundation

About this CA Foundation Mock Test

Explore more CA Foundation Resources

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

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

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

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.