FOUNDATION EXAMINATION SET 1

MODEL QUESTION PAPER TERM – JUNE 2023

PAPER - 4
FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT

Time Allowed: 1 Hour Full Marks: 100

Answer all questions. Each question carries 2 marks.

1. The term ‘T’ in SWOT Analysis is

(a) Transparency О
(b) Total revenue O
(c) Threat O
(d) Transaction O

2. A Monopoly demand curve is

(a) Same as its average revenue curve О
(b) Same as its supply curve O
(c) Same as its average cost curve O
(d) Same as its marginal cost curve O

3. Which one of the following oligopolistic model insists on co-operation?

(a) Cournot’s model О
(b) Bertrand model O
(c) Collusive oligopoly model O
(d) Edgeworth model O

4. If the price elasticity of demand for wine is estimated to be -6, then a 20%
increase in price of wine will lead to ……. in quantity demanded of wine at that
price
(a) 12% increase О
(b) 12% decrease O
(c) 19.6% increase O
(d) 20.6% decrease O

5. The market state that satisfy all the essential features of a perfect competitive
market except identity of product is known as
(a) Oligopoly О
(b) Duopoly O
(c) Monopoly O
(d) Monopolistic competition O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET 1
MODEL QUESTION PAPER TERM – JUNE 2023
PAPER - 4
FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT

6. Which of the following is an objective of business?

(a) Sales maximization О
(b) Customer Satisfaction O
(c) Financial Solvency O
(d) All of the above O

7. Which is the apex bank for agricultural credit in India?

(a) RBI О
(b) SIDBI O
(c) NABARD O
(d) IDBI O

8. The components of micro business environment are

(a) Firms and consumers О
(b) Market & competitors O
(c) Organization O
(d) All O

9. Modes of production was propounded by

(a) Adam Smith О
(b) Karl Marx O
(c) David Ricardo O
(d) Alfred Marshall O

10. Reverse Repo transaction means

(a) Sale of securities by the holder to the investor with the agreement to О
purchase them at a predetermined rate and date
(b) Sale or purchase of securities by the holder to the investor with the O
commitment to sell or purchase them at a predetermined rate and date
(c) Sale and purchase of securities by the holder to the investor with the O
agreement to purchase them at the prevailing rate and date
(d) Sale of securities by the holder to the investor with the agreement to O
purchase them at market driven rate

11. The supply function of a product x is as Sx = 5px+3. Where px stand for price.
The quantity supplied corresponding to price of ` 2 will be ……… .
(a) 18 О
(b) 13 O
(c) 15 O
(d) 23 O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET 1
MODEL QUESTION PAPER TERM – JUNE 2023
PAPER - 4
FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT

12. Which of the following is not a dimension of VUCAFU?

(a) Versatility О
(b) Ambiguity O
(c) Uncertainty O
(d) Complexity O

13. Profit is the difference between………

(a) Total cost and total revenue О
(b) Total revenue and total cost O
(c) both A & B O
(d) None O

14. RBI was nationalized in

(a) June 1947 О
(b) Jan. 1949 O
(c) March 1954 O
(d) April 1936 O
15. If the price of burger rises from ` 12 per piece to ` 20 per piece as a result of
which the daily sales decrease from 300 to 200 pieces per day. The price
elasticity of demand can be estimated as:
(a) 0.5 О
(b) 0.8 O
(c) 0.25 O
(d) 2.10 O
16. FERA has been replaced by
(a) FINA О
(b) FEMA O
(c) FENA O
(d) MRTP O
17. An increase in price will result in an increase in total revenue if
(a) percentage change in quantity demanded in greater than the percentage О
change in price
(b) percentage change in quantity demanded is less than the percentage O
change in price
(c) percentage change in quantity demanded is equal to the percentage change O
in price
(d) none O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET 1
MODEL QUESTION PAPER TERM – JUNE 2023
PAPER - 4
FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT

18. RBI check inflation by

(a) Increasing bank rate О
(b) Increasing CRR O
(c) Both O
(d) None O

19. A U-shaped long-run average cost curve represents?

(a) economies and diseconomies of scale О
(b) average fixed costs and average variable costs O
(c) increasing and decreasing marginal product O
(d) fixed costs and variable costs O

20. Commercial papers, as money market instruments, are issued by

(a) RBI О
(b) SBI O
(c) Highly rated corporate bodies O
(d) None of the above O

21. In the long run price is governed by ………….

(a) Cost of Production О
(b) Demand supply forces O
(c) Marginal utility O
(d) None O

22. Assuming two markets where the price discriminating monopolist sells his
product, the equilibrium condition in such a situation will be
(a) MR1 = MR2 > MC О
(b) MR1 < MC > MR2 O
(c) MR1 = MR2 = MC O
(d) MC = MR1 > MR2 O

23. Which of these will have highly inelastic supply?

(a) Perishable goods О
(b) Consumer durables goods O
(c) Items of elite class consumption O
(d) All the three O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET 1
MODEL QUESTION PAPER TERM – JUNE 2023
PAPER - 4
FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT

24. In a competitive market ………. is the price maker

(a) Firm O
(b) Industry O
(c) Consumer O
(d) Trade Association O

25. Manipulation in CRR enables the RBI to …….

(a) Influence the lending ability of the commercial banks O
(b) Check unemployment growth O
(c) Check poverty O
(d) Increase GDP O

26. The term ‘S’ in PESTEL stands for-

(a) Strength О
(b) Socio-economic O
(c) Sustainability O
(d) None O

27. Perfect competition and monopolistic competition are having a common

assumption. Find out which one of the following is the appropriate common
assumption
(a) The product is homogeneous О
(b) Perfect knowledge O
(c) Existence of selling cost O
(d) Free entry and free exit O

28. Repo transaction means

(a) Sale of securities by the bolder to the investor with the agreement to О
purchase them at a predetermined rate and date.
(b) Sale of securities by the holder to the investor with the agreement to O
resell them at a predetermined rate and date.
(c) Sale and purchase of securities by the holder to the investor with the O
agreement to purchase them at the prevailing rate and date
(d) Sale of securities by the holder to the investor with the agreement to O
purchase them at market driven rate.

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET 1
MODEL QUESTION PAPER TERM – JUNE 2023
PAPER - 4
FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT

29. A firm that makes profit in excess of normal profit is earning

(a) Economic profit О
(b) Costing profit O
(c) Normal profit O
(d) Super normal profit O

30. Given a reserve ratio of 20% in initial deposit of ₹ 1000 in a banking system
would create secondary deposit of `…………..
(a) ₹ 3,000 О
(b) ₹ 5,000 O
(c) ₹ 4,000 O
(d) ₹ 6,000 O

31. Which of these is associated with a monopolistic competitive market –

(a) Product differentiation О
(b) Homogeneous Product O
(c) Normal in short run O
(d) Single buyer O

32. The internal business environment includes factors such as

(a) business philosophy & business priorities О
(b) management structure O
(c) capital structure O
(d) All O

33. Who was the father of Economics

(a) Marshall О
(b) Adam smith O
(c) Robbins O
(d) Keynes O

34. In the long run a firm in perfect competition earns

(a) Normal Profit only О
(b) Abnormal profit O
(c) Average profit of past five years O
(d) 12.33% profits on capital employed O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET 1
MODEL QUESTION PAPER TERM – JUNE 2023
PAPER - 4
FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT

35. EXIM Bank is authorized to raise loan from

(a) Staffing О
(b) Selection O
(c) Recruitment O
(d) Training O

36. Who conducted an extensive survey of management style and patterns in large
number of organizations?
(a) Rensis Likert and his associates О
(b) George Terry O
(c) Prof. Bernard O
(d) F.W. Taylor O

37. What strategic factors should a manager has to consider while evaluating the
alternatives?
(a) Tangible О
(b) Intangible O
(c) Both (a) and (b) O
(d) Either (a) or (b) O

38. PERT represents which of the following term?

(a) Project Execution Review Technique О
(b) Planning Execution Response Technique O
(c) Program Enhancement Report Technique O
(d) Program Evaluation Review Technique O

39. The first step in the decision making process is -

(a) The analysis of the problem О
(b) Selecting the alternative course of action O
(c) The evaluation of each alternative O
(d) The identification of the problem O

40. The __________ relate to policy matters and so require a thorough fact finding
and analysis of the possible alternatives.
(a) Strategic decisions О
(b) Basic decisions O
(c) Tactical or Routine decisions O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET 1
MODEL QUESTION PAPER TERM – JUNE 2023
PAPER - 4
FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT

(d) (A) or (B) O

41. The technique for observing the behaviour of a system under several alternative
conditions in an artificial setting is known as
(a) Game theory О
(b) Simulation O
(c) Probability Decision Theory O
(d) None of the above O

42. Which of the following is not a function of managers?

(a) Designing О
(b) Organizing O
(c) Leading O
(d) Planning O

43. A systematic evaluation of the functioning, performance and effectiveness of

management of organization is known as:
(a) Management Information System О
(b) Management Audit O
(c) Internal Audit O
(d) None of the above O

44. The technique that involves use of the brain to find different ideas which can
solve a critical problem is
(a) Participative technique О
(b) Heuristic technique O
(c) Creative technique O
(d) All of the above O

45. A ______ organizational structure is the simplest form and has clear lines of
authority and ease of decision making
(a) Horizontal О
(b) Line O
(c) Vertical O
(d) Staff O

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Directorate of Studies, The Institute of Cost Accountants of India
 FOUNDATION EXAMINATION SET 1
MODEL QUESTION PAPER TERM – JUNE 2023
PAPER - 4
FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT

46. Decisions into programmed decisions and non-programmed decisions is

adopted by
(a) Peter Drucker О
(b) Herbert Simon O
(c) M. Lopez O
(d) John Mc Donald O

47. Which of the following is not an external source of recruitment?

(a) advertisement О
(b) casual callers O
(c) promotions O
(d) recommendations of employees O

48. _____ means dispersal of authority throughout the organization.

(a) Centralisation О
(b) Delegation of Authority O
(c) Decentralisation O
(d) None of the above O

49. ____ developed a continuum of four system of management.

(a) George Terry О
(b) Prof. Bernard O
(c) F.W. Taylor O
(d) Rensis Likert O

50. ____ Leadership Style may be appropriate when subordinates are uneducated,
unskilled and submissive.
(a) Participative Leadership О
(b) Autocratic Leadership O
(c) Free-rein Leadership O
(d) None of the above O

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Directorate of Studies, The Institute of Cost Accountants of India