CA Foundation Business Economics Question Paper

These CA Foundation Economics MCQ with Answers CA Foundation Economics Question Paper is designed strictly as per the latest syllabus and exam pattern.

CA Foundation Business Economics Question Paper

1. When a firm produces 7 units of production and the TR is ₹ 42 after raising the production to 8 units TR reached ₹ 46 marginal revenue will be __________.
(a) ₹ 5
(b) ₹ 6
(c) ₹ 4
(d) ₹ 8
Answer:
(c) ₹ 4

2. When output increases more than the increase in input, it occurs due to __________.
(a) External and internal disecono-mies
(b) External and internal economies
(c) External diseconomies and internal economics
(d) External economies and internal diseconomies
Answer:
(b) External and internal economies

3. Micro Economics is also known as __________.
(a) Public Economics
(b) Income Theory
(c) Demand Theory
(d) Price Theory
Answer:
(d) Price Theory

CA Foundation Business Economics Question Paper

4. If Indifference curve is L shaped, means two goods will be __________.
(a) Perfect Substitute goods
(b) Perfect inferior goods
(c) Perfect superior goods
(d) Perfect Complementary Goods
Answer:
(d) Perfect Complementary Goods

5. Purushotham wanted to buy laptop by paying ₹ 60,000 but the actual price is ₹ 55,000, then consumer surplus is __________.
(a) 6,500
(b) 55,000
(c) 5,000
(d) 60,000
Answer:
(c) 5,000

6. On the basis of nature of transaction, a market may be classified into __________
(a) Wholesale and retail market
(b) Cash and forward rate
(c) National and international mar-ket
(d) Regulated and unregulated mar-ket
Answer:
(b) Cash and forward rate

7. Use the table and answer for the following questions __________

Output 0 1 2 3 4 5 6
Total Cost (₹) 100 180 250 310 360 420 490

(a) 350
(5) 80
(c) 90
(d) 25
Answer:
(d) 25

8. The average variable cost of 5 units of output __________
(a) 84
(b) 64
(c) 104
(d) 420
Answer:
(b) 64

9. The marginal cost of 5th unit of output is __________
(a) 60
(b) 70
(c) 90
(d) 540
Answer:
(a) 60

10. The total cost is ₹ 4200 and fixed cost is ₹ 1200 then find the variable cost __________
(a) 1,200
(b) 3,000
(c) 4,200
(d) 5,450
Answer:
(b) 3,000

11. If a seller obtains ₹ 6,000 after selling 50 units and ₹ 6,204 after selling 53 units, then marginal revenue will be __________
(a) 68
(b) 118
(c) 120
(d) 204
Answer:
(a) 68

CA Foundation Business Economics Question Paper

12. If quantity supply changes substantially in response to small changes in price of the good then it is __________
(a) Perfect elastic
(b) Unitary elastic
(c) Relatively less elastic supply
(d) Relatively greater elastic supply
Answer:
(d) Relatively greater elastic supply

13. Smart phones market is an example of __________
(a) Perfect competition
(b) Monopoly
(c) Monopolistic competition
(d) Oligopoly
Answer:
(d) Oligopoly

14. The price elasticity of demand for X is 1 and the original quantity demand of X is 90 units, if the price of X decreases from ₹ 300 to ₹ 180 per unit, calculate the new quantity demand of X __________
(a) 36 units
(b) 120 unit
(c) 126 units
(d) 144 units
Answer:
(c) 126 units

15. The concept of “innovative entrepreneurship” was given by __________
(a) Adam smith
(b) Marshall
(c) J K Mehta
(d) Schumpeter
Answer:
(d) Schumpeter

16. Positive Science only explains __________
(a) What is?
(b) What ought to be?
(c) What is right or wrong?
(d) None of the above
Answer:
(a) What is?

17. The study of behaviour of different individuals, organisations with in an economic system is known as __________
(a) Micro economics
(b) Macro economics
(c) Welfare economics
(d) None
Answer:

18. External economies can be achieved through __________
(a) External assistance
(b) Development of unskilled labour
(c) Superior managerial efficiency
(d) Technological external economies
Answer:
(d) Technological external economies

19. When price of apple is ₹ 120 per kg. Ram buys one kg of apples at that price. Now it other’things remains the same but the price of apples falls to ₹ 90 per kg. Now Ram buys 2 kg. of apples. It is called as
(a) Demand schedule
(b) Market demand
(c) Contraction of demand
(d) Expansion of demand
Answer:
(d) Expansion of demand

20. To know the base price and quantity, which method of elasticity is used?
(a) Arc elasticity
(b) Point elasticity
(c) Cross elasticity
(d) cannot be measured
Answer:
(a) Arc elasticity

21. Let assume that in OY-axis we have good A and on OX-axis good B. If the price of good B increases by ₹ 1 but the price of good A remains constant and income also remains unchanged, the budget line will shift __________
(a) Left on OY axis
(b) Left on OX axis
(c) Right on OY axis
(d) Right on OX axis
Answer:
(b) Left on OX axis

22. Which activity is the base of all production activities __________
(a) Consumption
(b) Production
(c) Exchange
(d) Investment
Answer:
(a) Consumption

CA Foundation Business Economics Question Paper

23. Among the following statements which is incorrect in relation to isoquants __________
(a) These are negatively sloped
(b) These are concave to origin
(c) These are not intersecting
(d) These are convex to origin
Answer:
(b) These are concave to origin

24. Marginal product will be __________ at the point of inflexion is
(a) Minimum
(b) Maximum
(c) Negative
(d) Zero
Answer:
(b) Maximum

25. Aluminium industry is the example of which type of oligopoly __________
(a) Full oligopoly
(b) Open oligopoly
(c) Pure oligopoly
(d) Syndicated oligopoly
Answer:
(c) Pure oligopoly

26. When ABC Ltd. sells 130 units then total revenue will be __________
(a) 6,000
(b) 6,500
(c) 12,050
(d) 18,550
Answer:
(b) 6,500

27. When the price of petrol decreases, people reduce the consumption of diesel, then the goods are __________
(a) Complementary
(b) Substitutes
(c) Superior
(d) Any of the above
Answer:
(b) Substitutes

28. Kinked demand hypothesis is designed to explain the under oligopolistic market __________
(a) Collusion between firms
(b) Price and output determination
(c) Rigidity of price
(d) Price leadership
Answer:
(c) Rigidity of price

29. A functional relationship between inputs and output Is called __________
(a) Cost function
(b) Revenue function
(c) Production function
(d) Consumption function
Answer:
(c) Production function

30. In which economic system production and distribution of goods and services aim at maximizing the welfare of community as a whole __________
(a) Normative
(b) Mixed
(c) Socialism
(d) Capitalistic economy
Answer:
(c) Socialism

CA Foundation Business Economics Question Paper

31. Which of the following is not an economic activity __________
(a) Online teaching
(b) Consumption of food items
(c) Land owner compensate the tiller of land in form of food grain
(d) Doctor consulting his own family
Answer:
(d) Doctor consulting his own family

32. A market where goods are exchanged for money payable either immediately or within short span of time __________
(a) Forwarded market
(b) Regulate market
(c) Wholesale market
(d) Spot market
Answer:
(d) Spot market

33. Answer the following questions

Units 0 1 2 3 4 5 6
Total Revenue 100 180 250 310 360 400 430

(a) 40
(b) 45
(c) 55
(d) 60
Answer:
(a) 40

34 __________ is the best example of oligopoly
(a) WTO
(b) GATT
(c) OPEC
(d) SAARC
Answer:
(c) OPEC

35. In which market prices are determined by the market forces of demand and supply?
(a) Perfect Competition
(b) Pure Competition
(c) Monopolistic Competition
(d) Oligopoly
Answer:
(a) Perfect Competition

36. Choose the incorrect statement regarding the barometric price leadership __________
(a) Old and experienced firm acts as a leader
(b) Live and let live philosophy is followed
(c) Price decided by assessing market conditions
(d) Price decided by leader is gener-ally accepted by the rest of all
Answer:
(c) Price decided by assessing market conditions

37. During the phase of trough of business cycle, the growth rate became __________
(a) Negative
(b) Zero
(c) High
(d) Low
Answer:
(a) Negative

38. “Competition among few” is described in __________
(a) Monopoly
(b) Monopsony
(c) Oligopoly
(d) Duopoly
Answer:
(c) Oligopoly

39. In which economy, cost benefit analysis is used to answer the fundamental questions of economy __________
(a) Socialistic economy
(b) Capitalistic economy
(c) Regulatory economy
(d) Mixed economy
Answer:
(d) Mixed economy

40. Taxation policy of government is the part of __________
(a) Industry policy
(b) Monetary policy
(c) Fiscal policy
(d) EXIM policy
Answer:
(c) Fiscal policy

41. The nature of business economics is __________
(a) Positive in nature
(b) Pure science
(c) Pragmatic
(d) Independent
Answer:
(c) Pragmatic

CA Foundation Business Economics Question Paper

42. Which of the following phase occurs after threat and before peak?
(a) Boom
(b) Recession
(c) Expansion
(d) Depression
Answer:
(c) Expansion

43. Which indicators coincide or occur simultaneously with the business cycle movements?
(a) Legal
(b) Lagging
(c) Leading
(d) Concurrent
Answer:
(d) Concurrent

44. What is the most visible sign of recession in an economy __________
(a) Fall in the level of employment
(b) Fall in price level
(c) Rise in the inventory cost
(d) Weakening stock market
Answer:
(b) Fall in price level

45. Railways charges comparatively cheaper fares from senior citizens. This is an example of __________
(a) Market analysis
(b) Profit discrimination
(c) Price discrimination
(d) Demand forecasting
Answer:
(c) Price discrimination

46. When the industry is dominated by one large firm it is called __________
(a) Full oligopoly
(b) Partial oligopoly
(c) Organized oligopoly
(d) Closed oligopoly
Answer:
(d) Closed oligopoly

47. __________ is measurable economics factor that changes before economy starts to follow a particular pattern of trend.
(a) Lagging indictors
(b) Leading indicators
(c) Coincident indicators
(d) Concurrent indicator
Answer:
(d) Concurrent indicator

48. A socialistic economy is also called as __________
(a) Profit oriented economy
(b) Centrally planned economy
(c) self-regulatory economy
(d) Unorganized economy
Answer:
(b) Centrally planned economy

49. Phases of business cycles are __________
(a) Bottom, recession, trough and boom
(b) Peak, depression, trough and boom
(c) Peak, depression, bust and boom
(d) Peak, recession, depression and recovery
Answer:
(d) Peak, recession, depression and recovery

50. Which is not an example of coincident indicator __________
(a) Inflation
(b) GDP
(c) Financial market trend
(d) Interest rate
Answer:
(d) Interest rate

51. The most feature of business cycles __________
(a) Pervasive nature
(b) Regular length
(c) Periodic intensity
(d) None of these
Answer:
(a) Pervasive nature

52. ABC Ltd. realizes total revenue of ₹ 6,000 by the sale of 120 units and ₹ 6050 by the sale of 121 units. What is the average revenue when ABC Ltd. sells 121 units
(a) 50
(b) 100
(c) 6,000
(d) 6,050
Answer:
(a) 50

53. Which of the following is not an exampleofsocio-cultural environmen?
(a) Family structure
(b) Educational levels
(c) Role of women in society
(d) Raising income
Answer:
(d) Raising income

CA Foundation Business Economics Question Paper

54. “Modern business activities are based on the anticipations of business community and are affected by waves of optimizing or pessimision” is said by __________
(a) Hawtrey
(b) Pigou
(c) Keynes
(d) Schumpeter
Answer:
(b) Pigou

55. Which of the following is an internal cause of business cycles __________
(a) Population growth
(b) Wars
(c) Natural factors
(d) Fluctuations in the effective demand
Answer:
(d) Fluctuations in the effective demand

56. Economics in terms of Dynamic Growth and development defined by __________
(a) Adam smith
(b) Robbins
(c) Alfred Marshall
(d) Paul A Samuelson
Answer:
(d) Paul A Samuelson

57. During __________ there is fall in level of investment and employment
(a) Boom
(b) Recovery
(c) Contraction
(d) Depression
Answer:
(c) Contraction

58. __________ economics explain economics phenomenon according to their causes and effects
(a) positive
(b) Normative
(c) Empirical
(d) Applied
Answer:
(a) positive

59. In capitalistic economy __________ and __________ will be more
(a) Equalities, non-exploitation
(b) Inequalities, exploitation
(c) Exploitation, equalities
(d) Non-exploitation, inequalities
Answer:
(b) Inequalities, exploitation

60. __________ are responsible for all economic problems
(a) Alternative resources
(b) Unlimited wants
(c) Scarcity of resources
(d) Others
Answer:
(c) Scarcity of resources

61. Demand forecasting by means of asking customer what they are going to buy comes under
(a) Statistical method
(b) Grass roots method
(c) Survey of buyers intention
(d) Experts opinion method
Answer:
(c) Survey of buyers intention

62. Intellectual property rights and copyrights is an example of which of the following key factor of PESTLE Matrix?
(a) Social
(b) Economic
(c) Political
(d) Technological
Answer:
(d) Technological

63. Which of the following is not an important characteristic of business environment?
(a) Image building
(b) Giving direction for shrinking
(c) Continuous learning
(d) Opportunities and threats
Answer:
(b) Giving direction for shrinking

64. The effect of change in price will have on customers is __________
(a) Price Discrimination
(b) Price Skimming
(c) Pre-Emptive Pricing
(d) Price sensitivity
Answer:
(d) Price sensitivity

65. Which of the following is the recently introduced form of business organization in INDIA wide companies Act, 2013?
(a) Sole proprietorship
(b) Private limited company
(c) OPC
(d) LLP
Answer:
(c) OPC

66. The number of units of given currency that can be purchased for one unit of another currency is called as __________.
(a) Current Ratio
(b) Equity Ratio
(c) Exchange Ratio
(d) Dividend
Answer:
(c) Exchange Ratio

CA Foundation Business Economics Question Paper

67. __________ is a framework for macro environmental analysis.
(a) Social
(b) Global
(c) Political
(d) PESTLE
Answer:
(d) PESTLE

68. Factors like Trends, Events of different interest groups are needed to be considered in __________.
(a) Environmental analysis
(b) Environmental inference
(c) Environmental response
(d) Environmental scanning
Answer:
(d) Environmental scanning

69. According to Income-tax Act, which of the following cannot be a source of income for HUF?
(a) Income from salary
(b) Income from house property
(c) Income from business and profession
(d) Income from other sources
Answer:
(a) Income from salary

70. ABC company is aiming towards Joint venture and partnership with other firms to manage uncertainly. This is an example of following type of Organizational response to the environment?
(a) Administrative response
(b) Collective response
(c) Competitive Response
(d) Micro environmental response
Answer:
(b) Collective response

71. Which of the following company ranked first in fortune 500 company list 2019?
(a) Microsoft
(b) Intel
(c) American Express
(d) Walmart
Answer:
(d) Walmart

72. In which of the following FDI is prohibited under both the Government Route as well as the Automatic Route:
(a) Solar energy
(b) Wind energy
(c) Atomic energy
(d) Biomass energy
Answer:
(c) Atomic energy

73. Who has the vision “To attain world class Excellency by demonstrating value added products to customers”?
(a) IBM Corporation
(b) Intel Corporation
(c) Bharti Airtel Limited
(d) Bajaj Auto Limited
Answer:
(d) Bajaj Auto Limited

74. __________ is a measurement of relationship between stock price of any particular stock and the movement of whole market.
(a) Call Option
(b) Bids and Offer
(c) Break-even Point
(d) Beta
Answer:
(d) Beta

75. Perpetual succession indicates __________
(a) Limited scope for rising fund
(b) Registration of partnership firm is compulsory.
(c) Separate legal entity, separate from its members
(d) Liability of the partners is limited to his contribution to capital.
Answer:
(c) Separate legal entity, separate from its members

76. Controller of capital Issues was replaced by which of the following Regulatory authority?
(a) RBI
(b) IRDAI
(c) SEBI
(d) Competition Commission of India (CCI)
Answer:
(c) SEBI

CA Foundation Business Economics Question Paper

77. In 1981, 7 engineers in Pune, Founded the following company:
(a) Infosys
(b) L&T
(c) Wipro
(d) TCS
Answer:
(a) Infosys

78. What is popular psychological motive in case of profession as an economic occupation?
(a) Economic achievement
(b) Service to clients
(c) Source of livelihood
(d) Membership of professional body
Answer:
(b) Service to clients

79. To help individuals and businesses realize their full potential. Is the vision of __________
(a) Cognizant
(b) Walmart
(c) Apple
(d) Microsoft
Answer:
(d) Microsoft

80. Limited liability partnership is __________
(a) Non-mutual agency
(b) Social & environment concern
(c) Public sector
(d) Hybrid form of business organi-zation
Answer:
(d) Hybrid form of business organi-zation

81. A security which has a solid record of dividend payments and offer the dividend higher than the common stock is __________
(a) Hedge
(b) Index
(c) Income Stock
(d) Holding period
Answer:
(c) Income Stock

82. SEBI was setup to regulate the __________
(a) Capital market
(b) Insurance market
(c) Security market
(d) Money market
Answer:
(a) Capital market

83. Bid is the __________
(a) Lowest value the which the seller is willing to sell
(b) Lowest value which the buyer is willing to pay
(c) Highest value which the buyer is willing to pay
(d) Highest value which the seller is willing to sell
Answer:
(c) Highest value which the buyer is willing to pay

84. __________ is the reduction in the price of goods given to encourage sale on cash basis.
(a) Cash Discount
(b) Trade Discount
(c) Both (a) and (b)
(d) None of these
Answer:
(a) Cash Discount

85. Taking of restrictions in exports and imports of goods is __________
(a) Liberalization
(b) Privatization
(c) Globalization
(d) Socialization
Answer:
(a) Liberalization

86. IRDAI full form __________
(a) Industrial Regulatory Develop-ment Authority of India.
(b) Institutional Regulatory Develop¬ment Authority of India.
(c) Insurance Regulatory Develop-ment Authority of India.
(d) Insurance Ruling Development Authority of India.
Answer:
(c) Insurance Regulatory Develop-ment Authority of India.

87. Government keeps hold of responsibility and private enterprise handle fully or partially the delivery of product and services. Such type of concept of privatization is known as __________
(a) Delegation
(b) Divestment
(c) Displacement
(d) Disinvestment
Answer:
(a) Delegation

88. The formation of National Skills Development Corporation (NSDC) is an example of which of the following type of public policy?
(a) Restrictive
(b) Facilitating
(c) Social
(d) Regulatory
Answer:
(b) Facilitating

CA Foundation Business Economics Question Paper

89. Selling of a portion of ownership from public enterprise to private parties is called __________
(a) Divestment
(b) Delegation
(c) Deregulation
(d) Disinvestment
Answer:
(d) Disinvestment

90. Which of the following is not an objective of establishing the Com-petition Commission of India (CCI)?
(a) To preserve and sustain competi¬tion in markets
(b) To Prevent practices having adverse effect on competition
(c) To protect the interests of the customers
(d) To ensure restriction of trade carried on by other participants in markets.
Answer:
(d) To ensure restriction of trade carried on by other participants in markets.

91. Which of the following is not a regulatory body?
(a) EBI
(b) RBI
(c) CCI
(d) IDBI
Answer:
(d) IDBI

92. Which of the following financial institution is known for dealing in SHG bank linkage program?
(a) SBI
(b) NABARD
(c) IRDAI
(d) SEBI
Answer:
(b) NABARD

93. Which of the following is a multi¬national financial service corpo-ration?
(a) IBM corporation
(b) American Express
(c) Walmart
(d) Microsoft Corporation
Answer:
(b) American Express

94. The non or partial realization of expectation is called as __________
(a) Returns
(b) Earnings
(c) Risk
(d) None of these
Answer:
(c) Risk

95. Above the balance available in the account of the payer is called __________
(a) Maturity
(b) Market value
(c) Mortgage
(d) Overdraft
Answer:
(d) Overdraft

CA Foundation Business Economics Question Paper

96. A strongly motivated and long standing decision of the customer to purchase a particular product or service is referred as __________
(a) Brand Recognition
(b) Brand Loyalty
(c) Buying behaviour
(d) Customer satisfaction
Answer:
(b) Brand Loyalty

97. For Call Options, __________ means the stock price is below the strike price.
(a) In the money
(b) Out of the money
(c) With money
(d) Other than money
Answer:
(b) Out of the money

98. Organizing of immunization camps by government is an example of which policy?
(a) Restrictive
(b) Social
(c) Regulatory
(d) Distributive
Answer:
(d) Distributive

99. Gradual decrease in government command and control over economic policies is called __________
(a) Socialization
(b) Globalization
(c) Capitalization
(d) Liberalization
Answer:
(d) Liberalization

100. Collusion is impossible if an industry has __________
(a) Only few number of firms
(b) Only two firms
(c) Limited number of firms
(d) Large number of firms
Answer:
(d) Large number of firms

 

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