Entrepreneurship : CUET Mock Test - 1 - CUET Commerce MCQ

(a) Customary pricing: Customary pricing is a pricing method where the price of a good or service is based on consumers' collective perception of its value.
(b) Skimming : Price skimming is a pricing strategy in which a marketer sets a relatively high initial price for a product or service at first, then lowers the price over time. It is a temporal version of price discrimination/yield management.
(c) Penetration pricing: Penetration pricing is a pricing strategy where the price of a product is initially set low to rapidly reach a wide fraction of the market and initiate word of mouth. The strategy works on the expectation that customers will switch to the new brand because of the lower price.
(d) Psychological pricing: It is a pricing and marketing strategy based on the theory that certain prices have a psychological impact. For example, ending a price with 99 paise.

Evergreening is extending the life span of a patent for a very long duration of time even after it has expired. This is specially done in case of pharma patents. The therapeutic value of drugs are enhanced before the term of the patent expires. This makes it eligible to get patent for another term, thereby maintaining the monopoly over the product. Evergreening is referred to the practice whereby pharmaceutical firms extend the patent life of a drug by obtaining additional 20-year patents for minor reformulations or other iterations of the drug, without necessarily increasing the therapeutic efficacy.

Planning is deciding in advance what to do and how to do. Before doing something, the manager must formulate an idea of how to work on a particular task according to the task and situation. Thus, planning is closely connected with creativity and innovation as a plan has to be formulated for every task according to the situation.

Under the Hindu Law, the 'coparcener' is a term to indicate those male members of a Hindu family who have an undivided interest over the ancestral property by birth. They are the head of the family or Karta and the three subsequent generations of the Karta which include his sons, grandsons, and great-grandsons.

It would be Rs. 155 per unit. Total Cost of 20,000 units @ Rs. 50 per unit = Rs. 10,00,000

Total = Rs. 10,00,000 + Rs. 21,00, 000 = Rs. 31,00,000
Price per unit = Rs. 31,00,000/20,000 = Rs. 155

Demographic trends are concerned with population, so they are related to social environment. Social Environment includes all the social and cultural forces within which the business firms operate. Size and distribution of population, age compositions, male-female ratio etc. are all related to social environment. Hence, option 3 is correct.

Mergers, amalgamations and acquisitions in India are regulated by the Competition Commission of India (CCI).
CCI is the statutory authority responsible for reviewing combinations and assessing whether or not they cause or are likely to cause an appreciable adverse effect on competition within the relevant market(s) in India.

Consolidate (or consolidating) is to merge two or more entities, assets, liabilities, and other financial items into one. Consolidation also applies to mergers and acquisitions (M&A) that unify smaller companies into more substantial corporations.

Public relations (PR) is the process of maintaining a favorable image and building beneficial relationships between an organization and the public communities, groups, and people it serves. The main motive of Public Relations is to generate goodwill among consumers, the media, and other target audiences by raising the organization's profile. Therefore, option 2 is correct.

The concept is diversification. It is a process of adding new products or markets to the existing by an enterprise. Here, the enterprise thus is able to produce more types of products, e.g. not only washing soap but shampoos and detergents are also produced.
A product extension merger takes place between two business organisations that deal in products that are related to each other and operate in the same market. The product extension merger allows the merging companies to group together their products and get access to a bigger set of consumers. This ensures that they earn higher profits, e.g. the acquisition of Mobilink Telecom Inc. by Broadcom.

AIDA stands for Attention, Interest, Desire and Action. This is the model widely used for marketing and advertising the products that covers the stages from making aware the customers about the products to urging them to choose the particular brand or make purchase decision.

A product extension merger takes place between two business organisations that deal in products that are related to each other and operate in the same market. The product extension merger allows the merging companies to group together their products and get access to a bigger set of consumers. This ensures that they earn higher profits, e.g. the acquisition of Mobilink Telecom Inc. by Broadcom.
A horizontal merger is a merger between firms that produce and sell same products, i.e. between competing firms.
A vertical merger is a merger between firms operating at different stages of production, e.g. from raw materials to finished products to distribution. An example would be a steel manufacturer merging with an iron ore producer.
A conglomerate merger is a merger between firms that are involved in totally unrelated business activities.

The executive summary of business plan should be prepared after the entire business plan has been written. The executive summary should include important details that are relevant to the reader based on the purpose of business plan. For example, if the goal of the business plan is to secure an investor, then one should emphasise the financial requirements and how he or she will use the funding.

EOQ = 
C = cost = Rs. 10
A = monthly demand = 100 units
O = ordering cost = Rs. 20
I = carrying charge = 3 per cent

A business plan is a document that summarises the operational and financial objectives of a business and contains the detailed plans and budgets showing how the objectives are to be realised. Business plan include the overall budget, current and projected financing needs, a market analysis, growth path and the company's marketing strategy.

Entrepreneurs identify business opportunities and assemble the resources and capabilities needed to create value. Entrepreneurs are both owners and managers of the business, so they are more likely to take calculated risks to pursue business opportunities. Entrepreneurs have the capability and motivation to pursue innovative commercial opportunities that are riskier and more radical than normal. Hence, option 2 is the right answer.

Cash Flow Statement, like Balance Sheet and Income Statement, deals with the past. It does not help in managing the current, day to day requirement. Cash Flow Projection, on the other hand, is a very critical management tool for the successful operation of the business. Cash Flow Projection shows how cash is expected to flow in and out of your business. Hence, option 2 is the answer.

The financial asset which is indicated in the given case is 'Treasury Bill'. The RBI issues this instrument on the behalf of the Government of India. The instrument is called Zero Coupon Bond because the interest rate given by the bank is not given openly. The interest in fact comes in the form of discount which is given on the face value. The instrument is redeemed at par (on the written face value). So, the instrument is issued at discount. T-91 here denotes the maturity period of the Treasury Bill which is 91 days in this case.

A Non-Banking Financial Company (NBFC) is a company engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance etc. Hence, option 2 is the correct answer.

Quantity demanded (D) for 6 months = 2400
Quantity demanded (D) for 1 year = 2400 × 2 = 4800
Order Cost (CO) is Rs. 8.
Carrying Cost (CC) = 25% of 12 = 3
EOQ = 
= 

Human resource planning ensures the best fit between employees and jobs while avoiding manpower shortages or surpluses. There are four key steps of the HRP process. They include analysing present labour supply, forecasting labour demand, balancing projected labour demand with supply, and supporting organisational goals.

William Wetzel, the founder of the Center for Venture Research, coined the term Angel Investors after completing his research at the University of New Hampshire on how entrepreneurs raise capital. An individual who invests in small start-ups or entrepreneurships is called an Angel Investor.

Customer Relationship Management is a process in which a business or other organisation administers its interactions with customers, typically using data analysis to study large amounts of information.

A brand (or marque for car model) is a name, term, design, symbol or other feature that distinguishes one seller's product from those of others. Brands are used in business, marketing and advertising. Initially, livestock branding was adopted to differentiate one person's cattle from another's by means of a distinctive symbol burned into the animal's skin with a hot branding iron.

Capital markets consist of the primary market, where new securities are issued and sold, and the secondary market, where already-issued securities are traded between investors. The most common capital markets are the stock market and the bond market.

The method of floatation used by the company is 'Rights Issue'. Ragini Auto manufacturers have decided to give a special privilege to the existing shareholders to subscribe to the new issue of shares where they will be given shares according to the proportion of shares held by them.
In the 'Rights Issue' method of floatation, the company issues new shares that are available only to a group of existing investors, who are given the opportunity to purchase new shares before the shares officially get offered to the public.

Section 7 of Indian Partnership Act, 1932, defines "PARTNERSHIP-AT-WILL". According to it, where no provision is made by contract between the partners for the duration of their partnership, or for the determination of their partnership, the partnership is "partnership-at-will".

Limited Liability Partnership is a partnership in which some or all partners (depending on the jurisdiction) have limited liability. It therefore exhibits elements of partnerships and corporations. In an LLP, one partner is not responsible or liable for another partner's misconduct or negligence. In an LLP, some partners have a form of limited liability similar to that of the shareholders of a corporation. Its major features are:

1. The partners have the right to manage the business directly.
2. Minimum 2 partners are required and there is no limit on maximum.
3. It encourages smaller business entities to undertake larger ventures.

Hence, all the three statements are correct.

The term 'arbitrage' refers to the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset. It is a trade that profits by exploiting the price differences of identical or similar financial instruments on different markets or in different forms.

SWOT analysis is a framework for identifying and analyzing an organization's strengths, weaknesses, opportunities and threats. The primary goal of SWOT analysis is to increase awareness of the factors that go into making a business decision or establishing a business strategy. To do this, SWOT analyzes the internal and external environment and the factors that can impact the viability of a decision. Hence, option 2 is correct.