Business Economics & Business & Commercial Knowledge (MCQ)
Time: 2 Hours | Maximum Marks: 100 | Negative Marking: 0.25 per wrong answer
Instructions:
- All questions are MCQs.
- Each question carries 1 mark.
- Negative marking: 0.25 marks for each incorrect answer.
- Choose the most appropriate option.
Section A – Business Economics (Q1–15)
- The law of demand states that, ceteris paribus:
A. Price and quantity demanded move in the same direction
B. Price and quantity demanded move in opposite directions
C. Demand curve is vertical
D. Demand is perfectly elastic - Cross elasticity of demand is negative for:
A. Substitutes
B. Complements
C. Luxury goods
D. Inferior goods - If price elasticity of demand = 0.5, demand is:
A. Elastic
B. Unit elastic
C. Inelastic
D. Perfectly elastic - Marginal Cost (MC) is minimum when:
A. Average Cost is maximum
B. Average Variable Cost is minimum
C. Average Total Cost is minimum
D. Price = Marginal Revenue - Which of the following is a non-price determinant of demand?
A. Price of the commodity
B. Consumer income
C. Tax on commodity
D. Supply - Total revenue is maximum when:
A. Demand is elastic
B. Demand is inelastic
C. Demand is unit elastic
D. Demand is perfectly inelastic - Which market structure has price makers?
A. Perfect competition
B. Monopoly
C. Monopolistic competition
D. Oligopoly - Opportunity cost is:
A. Accounting cost minus depreciation
B. Cost of next best alternative forgone
C. Explicit cost only
D. Fixed cost only - Law of variable proportion applies in:
A. Long run only
B. Short run only
C. Both short run and long run
D. Neither - Indifference curve slopes downward because:
A. Marginal rate of substitution is positive
B. Marginal utility diminishes
C. Consumer prefers more to less
D. Prices increase - If the supply curve is perfectly inelastic, its slope is:
A. Vertical
B. Horizontal
C. Upward sloping
D. Downward sloping - A Giffen good:
A. Has negative income effect
B. Violates the law of demand
C. Has positive substitution effect
D. Is a luxury good - Producer surplus is:
A. Total revenue – Total cost
B. Total revenue – Variable cost
C. Difference between price received and minimum supply price
D. Total cost – Fixed cost - Isoquants are:
A. Curves showing combinations of two inputs giving same output
B. Curves showing consumer satisfaction
C. Curves showing supply of firms
D. None of the above - In monopoly, marginal revenue curve:
A. Coincides with demand curve
B. Lies below demand curve
C. Lies above demand curve
D. Is vertical
Section B – Business & Commercial Knowledge (Q16–30)
- GST was implemented in India in:
A. 2016 B. 2017 C. 2018 D. 2015 - RBI’s main objective is:
A. Control inflation
B. Issue currency
C. Regulate money supply
D. All of the above - NPA stands for:
A. Non-Performing Asset
B. Non-Paying Account
C. Net Profit Asset
D. Non-Participatory Asset - SEBI regulates:
A. Stock exchanges
B. Mutual funds
C. Corporate securities
D. All of the above - Balance of Payments includes:
A. Current account
B. Capital account
C. Errors & omissions
D. All of the above - Budget deficit occurs when:
A. Revenue > Expenditure
B. Expenditure > Revenue
C. Expenditure = Revenue
D. None - Monetary policy tools include:
A. Open market operations
B. Cash reserve ratio
C. Repo rate
D. All of the above - Demonetization in India occurred in:
A. 2015 B. 2016 C. 2017 D. 2014 - The major function of insurance companies is:
A. Credit creation
B. Risk pooling and risk transfer
C. Issuing currency
D. Regulating stock exchange - IMF stands for:
A. International Monetary Fund
B. Indian Monetary Fund
C. International Market Fund
D. International Money Federation - A float in banking refers to:
A. Deposits with RBI
B. Time lag between payment and credit
C. Liquid assets
D. Bank reserves - Commercial paper is:
A. Long-term debt instrument
B. Short-term unsecured debt instrument
C. Equity instrument
D. Share certificate - Inflation occurs due to:
A. Excess demand in the economy
B. Excess supply of goods
C. Stable prices
D. Fixed money supply - Unemployment due to technological change is called:
A. Frictional unemployment
B. Structural unemployment
C. Seasonal unemployment
D. Cyclical unemployment - Demography studies:
A. Population size and composition
B. Economic growth
C. National income
D. Price trends
| Q. No | Answer | Explanation (Short) |
|---|---|---|
| 1 | B | Price and quantity demanded move in opposite directions (Law of Demand). |
| 2 | B | Negative cross elasticity occurs for complements. |
| 3 | C | Elasticity < 1 → demand is inelastic. |
| 4 | C | MC is minimum when ATC is minimum. |
| 5 | B | Consumer income is a non-price determinant of demand. |
| 6 | C | Total revenue is maximum when demand is unit elastic. |
| 7 | B | Monopoly is a price maker. |
| 8 | B | Opportunity cost = cost of next best alternative forgone. |
| 9 | B | Law of variable proportion applies in short run only. |
| 10 | C | Downward slope of IC due to preference for more and diminishing MRS. |
| 11 | A | Perfectly inelastic supply → vertical supply curve. |
| 12 | B | Giffen good violates the law of demand. |
| 13 | C | Producer surplus = price received – minimum supply price. |
| 14 | A | Isoquants show combinations of inputs giving same output. |
| 15 | B | In monopoly, MR curve lies below demand curve. |
| 16 | B | GST implemented in India on 1 July 2017. |
| 17 | D | RBI objectives: inflation control, currency issuance, money supply regulation. |
| 18 | A | NPA = Non-Performing Asset. |
| 19 | D | SEBI regulates stock exchanges, mutual funds, corporate securities. |
| 20 | D | BOP includes current account, capital account, errors & omissions. |
| 21 | B | Budget deficit occurs when expenditure > revenue. |
| 22 | D | Monetary policy tools: OMOs, CRR, repo rate. |
| 23 | B | Demonetization in India occurred in November 2016. |
| 24 | B | Insurance companies pool and transfer risk. |
| 25 | A | IMF = International Monetary Fund. |
| 26 | B | Float = time lag between payment and credit. |
| 27 | B | Commercial paper = short-term unsecured debt instrument. |
| 28 | A | Inflation occurs due to excess demand (demand-pull). |
| 29 | B | Technological unemployment = structural unemployment. |
| 30 | A | Demography studies population size and composition. |
Disclaimer:
This mock test paper is an original educational resource created for practice purposes only. The questions and solutions are inspired by the CA Foundation exam pattern and previous year trends, but are not taken from or affiliated with the Institute of Chartered Accountants of India (ICAI). This content is intended solely for academic practice and learning.