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CA Foundation – June 2019
Question Paper ( Based on Memory)
Marks 100 Time : 2 Hours

"BUSINESS ECONOMICS"

01. Applied economics includes __________

(a) Regression analysis and mathematical linear programming
(b) Capital budgeting
(c) Both a and b
(d) None

02. Macroeconomics include __________

(a) Product pricing (b) Consumer Behavior
(c) External value of money (d) Location of industry

m
03. Shyam : This year due to heavy rainfall my onion crop was damaged

co
Krishna : Climate affects crop yields. Some years are bad, others are good

s.
Hari : Don’t worry. Price increase will compensate for the fall in quantity supplied.

te
Radhe : The Government ought to guarantee that our income will not fall.

no
In this conversion, the normative statement is made by dy
(a) Shyam (b) Krishna
tu
(c) Hari (d) Radhe
as

04. Socialism Ensures

.c
w

(a) Rapid growth and balanced development

w

(b) Right to work

w

(c) Incentives for efficient economic decisions

m

(d) Both a and b

o
Fr

05. A capitalist economy consists of __________

d

(a) Central planning authority

de

(b) A mechanism to decide as what, how and for whom to produce

oa

(c) Both a & b

nl

(d) None of the above

ow

06. Freedom of choice is the advantage of _________

D

(a) Socialism (b) Capitalism

(c) Mixed Economy (d) None of the above

07. Socialist economy is _________

(a) Self regulating
(b) Profit oriented
(c) Command economy
(d) Allocation of resources as per market requirements

08. Exploitation and inequality will be more in __________

(a) Socialism (b) Capitalism
(c) Mixed (d) All of the above

09. Business Economics is

(a) Normative in nature (b) Interdisciplinary in nature
(c) Both (d) None

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10. If price decreases from Rs. 80 to Rs. 60 and elasticity of demand is 1.25 then
(a) demand increase by 25% (b) Demand decreases by 25%
(c) Remains Constant (d) None of the above

11. Which of the following is correct?

(a) Elasticity on lower segment of demand curve is greater than unity
(b) Elasticity on upper segment of demand curve is lesser than unity
(c) Elasticity at the middle of demand curve is equal to unity
(d) Elasticity decreases as one move from lower part of demand curve to upper part.

12. If maize has –0.30 as income elasticity of demand, then maize will be considered as _____
(a) Necessity (b) Inferior good
(c) Superior good (d) None

13. Contraction of supply implies ________

(a) Decrease in cost of production
(b) Decrease in price of the good concerned
(c) Decrease in price of related good

m
(d) Increase in price of the good concerned

co
s.
14. Perishable commodities will have ______

te
(a) Perfectly elastic curve (b) Perfectly inelastic curve

no
(c) Elastic (d) Inelastic
dy
tu
15. Which of the following statement is correct?
as

(a) Supply is inversely related to its cost of production

.c

(b) Price and quantity demand of a good have direct relation ship
w

(c) Taxes and subsidy has no impact on the supply of the product
w

(d) Seasonal changes have no impact on the supply of the commodity

w
m

16. In case of _______ goods, there is an inverse relationship between income and demand for a
o

product.
Fr

(a) substitute goods (b) Complementary Goods

d

(c) Giffen Goods (d) None of the above

de
oa

17. Which of the following will affect the demand for non-durable goods?
nl

(a) Disposable Income (b) Price

ow

(c) Demography (d) All of the above

D

18. When the price of tea decreases, people reduces the consumption of coffee. Then the goods
are
(a) Complementaries (b) Substitutes
(c) Inferior goods (d) Normal goods

19. The price elasticity of demand at the midpoint of the straight line demand curve under point
method is _________
(a) 0 (b) 1
(c) >1 (d) <1

20. Which of the following relation is true with MU?

(a) When MU is positive, Total utility rises at a diminishing rate
(b) When marginal utility is zero, total utility is maximum.
(c) When marginal utility is negative, total utility is diminishing
(d) All of the above

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21. Which of the following is/ are the condition/s of theory of consumer surplus if price is same
for all units he purchased?
(a) Consumer gains extra utility or surplus
(b) Consumer surplus for the last commodity is zero
(c) Both
(d) None

22. When the supply of a product is perfectly inelastic then the curve will be
(a) Parallel to y – axis (b) parallel to x – axis
(c) At the angle of 45 o (d) Sloping upwards

23. The consumer is in equilibrium when the following condition is satisfied:

MU X MUY MU z
(a) Budget line is the tangent to the IC Curve (b)  
PX PY Pz
(c) Both a & B (d) None of the above

24. Which of the following is not the property of indifference curve?

m
(a) Slopes downwards to the right (b) Always convex to the orgin

co
(c) Intersects each other (d) Will not touch either of the axis

s.
te
25. Marginal average and total product of a firm in the short run will not comprise with ______

no
(a) When marginal product is at a maximum, average product is equal to marginal product,
and total product is rising dy
(b) When average product is maximum,. Average product is equal to marginal product, and total
tu
product is rising
as

(c) When marginal product is negative, total product and average product are falling.
.c

(d) When total product is increasing, average product and marginal product may be either rising or
w

falling.
w
w

26. When increase in demand is equal to increase in supply and equilibrium price remains
m

constant, then what about equilibrium quantity?

o
Fr

(a) Increases (b) Decreases

(c) Remains constant (d) None of the above
d
de

27. When price is Rs. 20, Quantity demand is 10 units and price is decreased by 5% then quantity
oa

demand increased by 10% then Marginal revenue is ____________

nl

(a) Rs. 10 (b) Rs. 11

ow

(c) Rs. 9 (d) Rs. 20

D

28. A firm producing 15 units of output has average cost of Rs. 250 and Rs. 125 as per unit cost for
fixed factors of production. Then average variable cost will be ________
(a) 180 (b) 150
(c) 125 (d) None of the above

29. Opportunity cost is _________

(a) Recorded in the books of accounts (b) Sacrificed alternative
(c) Both a & B (d) None of the above

30. Which of the following is considered as production in economics ?

(a) Helping a blind person in crossing the road
(b) Group dance performance in a college annual function
(c) Holding a child who is falling from a wall
(d) Performing an art in a theatre

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31. Diminishing marginal returns implies__________
(a) Decreasing average fixed cost (b) Decreasing average variable cost
(c) Decreasing marginal cost (d) Increasing marginal cost

 e – 1
33. Given the relation MR = P  if the demand for a product is unitary elastic then _____
 e 
(a) MR = 0 (b) MR >0
(c) MR < 0 (d) None of the above

34. Which of the following is true, when the firm is at a equilibrium ?

(a) MC < MR (b) MC Curve cuts the MR curve from below
(c) Both a & b (d) None of the above

35. If a Perfectly competitive firm earns supernormal profits then_______

(a) AR > MR (b) AR < MR
(c) AR = MR (d) None of the above

m
36. Kinked demand curve is _________

co
(a) Highly elastic at above the prevailing price

s.
(b) Inelastic at below the prevailing price

te
(c) both a & b

no
(d) None of the above
dy
37. Which is the characteristic feature of monopoly ?
tu
(a) Homogeneous goods (b) Strong barriers to entry
as

(c) Perfect Competition (d) Perfectly elastic demand curve

.c
w

38. Price discrimination is possible only in________

w

(a) Monopoly (b) Perfect competition

w

(c) Oligopoly (d) Monopolistic competition

o m
Fr

39. What is the characteristic of monopolistic competition?

(a) Price elasticity is low for the product concerned
d
de

(b) Large number of sellers

(c) No degree of control over price
oa

(d) One buyer

nl
ow

40. When TR is at its peak then MR is equal to ______

D

(a) Zero (b) Positive

(c) Negative (d) None of the above

41. Market consists of _________

(a) Buyer and seller (b) One Price for one product at a given time
(c) Both a and b (d) None

26. According to behavioral Principles.

(a) A firm should not produce at all its total variable costs are not met.
(b) A firm will be making maximum profits by expanding output to the level where marginal
revenue is equal to marginal cost.
(c) Both (a) and (b)
(d) None of these

42. Monopsony means

(a) Where there are large firms (b) There is a single buyer
(c) Small number of large buyers (d) Single seller and single buyer

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43. A discriminating monopolist to reach equilibrium position, his decision on total output
depends upon ________
(a) How much total output should be produce
(b) How the total output should be distributed between the two sub-lmarkets?
(c) Both a & b
(d) None of these

44. Demand curve is horizontal in the case of _______

(a) Monopoly (b) Perfect competition
(c) Imperfect competition (d) Monopolistic Competition

45. Which is not the characteristic feature of expansion phase in business cycle?
(a) Increase in national output (b) Unemployment
(c) Rise in price and costs (d) Boost in business confidence

46. Business Cycle occurs

(a) Periodically (b) In different phases
(c) Both a & b (d) None of the above

m
co
47. Which of the following is not the phase of business cycles?

s.
(a) Prosperity (b) Upswing

te
(c) Reconstruction (d) Depression

no
dy
48. “Modern business activities are based on the anticipations of business community and are
tu
affected by waves of optimism or pessimism”, according to __________________
as

(a) Pigou (b) Keynes

.c

(c) Hawtrey (d) Schumpeter

w
w

49. Economic activities will be declining in the phase of ________

w

(a) Expansion (b) Depression

m

(c) Contraction (d) Peak

o
Fr

50. Due to recession, employment rate ________ and output _________ .

d

(a) Rises; rises (b) Falls; falls

de

(c) Rises ; falls (d) Falls; rises

oa
nl

51. The internal causes of business cycle is

ow

(a) Fluctuation in effective demand (b) Technology shocks

(c) Both a & b (d) None
D

52. According to some economists, ______ are the prime causes of business cycles.
(a) Fluctuations in aggregate demand (b) Fluctuations in investments
(c) Macroeconomic policies (d) All of the above

53. Boom and depression in business cycle are _______

(a) Turning points (b) Equilibrium points
(c) Both a & b (d) None of the above

54. Which is not related to great depression of 1930?

(a) It started in USA
(b) John Maynard Keynes regarded lower aggregate expenditure as the cause
(c) Excess Money supply
(d) Both a & b

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55. Economic goods are considered as scarce resources because _______
(a) Inadequate quantity to satisfy the needs of the society
(b) Not Possible to increase in quantity
(c) Limited hands to make goods
(d) Primary importance in satisfying social requirements

56. Which of the following is true about leading indicators?

(a) Measurable economic factors (b) Changes after real output
(c) Both (a) and (b) (d) None

57.
58.
59.
60.

"BUSINESS & COMMERCIAL KNOWLEDGE"

m
co
61. The attribute of a profession does not include

s.
(a) Rendering of specialized nature of services

te
(b) Certificate of service from government

no
(c) Self imposed code of conduct dy
(d) All of the above
tu
as

62. The Companies Act, 2013 provides registration for

.c

(a) One person Company (b) Small Company

w

(c) Defunct Company (d) All of the above

w
w

63. Which of the following is not a feature of LLP

m

(a) Legal entity separate from its partners

o
Fr

(b) No limit on maximum no of partners

(c) Every Partner is agent of LLP
d

(d) Register of firm is the administering authority

de
oa

64. Which of the following is organic objective of business

nl

(a) Economic Value added (b) Fitness of Human resource

ow

(c) Community Service (d) Effective waste handling and disposal

D

65. Business as institution is ________

(a) Job Creator (b) Job seeker
(c) Both (d) None of the above

66. Which of the following is part of HUF?

(a) Hindu and Sikh family (b) Parsi Family
(c) Both a & b (d) None of the above

67. Which of the following statement is correct with respect to HUF

(a) HUF earns income from salary
(b) Four successive generations of an undivided
(c) HUF enjoys a separate entity status under Income tax act –1961
(d) All of the above

68. PESTLE analysis does not include

(a) Policy (b) Technology
(c) Legal (d) Economic
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69. What is not a characteristic of business environment
(a) Complex (b) Static
(c) Multi-faced (d) Far reaching

70. Macro Environment includes ______

(a) Strength (b) Weakness
(c) Opportunity (d) All of the above

71. Internal Environment includes______

(a) Customer (b) Economic
(c) Demography (d) Mission & Objectives

72. Cost Structure of an industry is effected by ________own bargaining power.

(a) Consumer (b) Intermediary
(c) Suppliers (d) Organizations

73. Opportunity is
(a) Inherent capacity (b) Strategic disadvantage

m
(c) Favourable condition (d) None of the above

co
s.
74. Competition brings direct benefit to

te
(a) Customers (b) Suppliers

no
(c) Intermediaries (d) Government
dy
tu
75. Which of the following is not related to ITC Limited
as

(a) Vishal Sikha (b) 1910

.c

(c) Kolkata (d) Yogesh Chander Deveshwar

w
w

76. Walmart slogan

w

(a) Save money. Live better (b) Happy life. Good food
m

(c) Better food. Low cost (d) Good Food. Good life
o
Fr

77. What happened in Microsoft in the year 2014

d

(a) Satya Nadella succeded on Steve Ballmer (b) Acquired Hardware division of NOKIA
de

(c) Both (a) & (b) (d) None of the above

oa
nl

78. The Headquarter of Nestle is in

ow

(a) Vevey, Switzerland (b) Basel, Switzerland

(c) Zurich, Switzerland (d) Interlaken, Switzerland
D

79. Who is chairman of Infosys?

(a) Nandan Nilakeni (b) Vishal Sikha
(c) K.V. Kamanth (d) Sudha Murthy

80. Who is the present MD & CEO of ICICI Bank

(a) Chanda Kochar (b) Shika Sharma
(c) M.K. Sharma (d) Sandeep Bakshi

81. The first appeal of Securities Exchange Board of India

(a) Supreme Court (b) High Court
(c) Securities Appellate Tribunal (d) RBI

82. Which of the following body has been dissolved recently

(a) Planning Commission
(b) National Statistics Commission
(c) Competition Commission of India
(d) Foreign Institution Promotion board
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83. Which of the following is not a function of RBI
(a) Monetary Policy
(b) Fiscal Policy
(c) Custodian of Foreign Exchange reserves
(d) Controller of Credit

84. Who was the regulatory body for controlling financial affairs before SEBI
(a) Controller of Capital Issues
(b) Reserve Bank of India
(c) Insurance Regulatory and Development authority of India
(d) Government of India

85. Which of the following is not a subsidiary of Indian Oil Corporation Ltd.
(a) Chennai Petroleum Ltd.
(b) Brahamputra Cracker and Polymer Ltd.
(c) Indian Oil – CREDA Biofuels Ltd.
(d) Indian Catalyst Private Ltd.

m
co
86. Which of the following is Return on investment

s.
(a) Dividend (b) Interest

te
(c) Yield (d) None of the above

no
87. The opposite of bid is________
dy
tu
(a) Ask/Offer (b) Call
as

(c) Purchase (d) None of the above

.c
w

88. Personal selling is done through

w

(a) Oral communication (b) Written communication

w

(c) Social media (d) Sign language

om

89. Carry forward of a transaction from one settlement period to other is

Fr

(a) Badla (b) Repo

d

(c) open Interest (d) None of the above

de
oa

90. Bull Market is Called __________

nl

(a) A market in which stock price is increasing consistently

ow

(b) A market in which stock price is decreasing consistently

(c) Both a & b
D

(d) None of the above

91. When two companies come together to expand their business operation in a newly created
entity.
(a) Joint Venture (b) Acquisition
(c) Partnership (d) Merger

92. SEBI, RBI & IRDA are

(a) Regulatory Bodies (b) Cluster Bodies
(c) Goal Sector bodies (d) None of the above

93. SEBI function consists of

(a) Quasi Legislative (b) Quasi judicial
(c) both a & B (d) None of the above

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"BUSINESS ECONOMICS AND
BUSINESS & COMMERCIAL KNOWLEDGE"

1 C 21 C 41 C 61 B 81 C
2 C 22 A 42 B 62 D 82 A
3 D 23 C 43 C 63 D 83 B
4 B 24 C 44 B 64 B 84 A
5 B 25 A 45 B 65 A 85 B
6 B 26 A 46 C 66 C 86 C
7 C 27 A 47 C 67 C 87 A
8 B 28 C 48 A 68 A 88 A
9 C 29 B 49 C 69 B 89 A
10 A 30 D 50 B 70 C 90 A
C D A D D

m
11 31 51 71 91

co
12 B 32 A 52 D 72 C 92 A

s.
13 B 33 B 53 A 73 C 93 C

te
B D C A

no
14 34 54 74 94
15 A 35 C 55 A dy 75 A 95
tu
16 D 36 B 56 A 76 A 96
as

17 D 37 A 57 77 C 97
.c

18 B 38 B 58 78 A 98
w
w

19 B 39 A 59 79 A 99
w

20 D 40 C 60 80 D 100
mo
Fr
d
de
oa
nl
ow
D

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