GATIK JUNIOR COLLEGE
Stream: 1st Year BIPC CA-FOUNDATION Time: 3 Hrs.
Ex: Dt: 30-11-2021 Marks: 100
Instructions:
Each question carries 1 Marks.
No Negative Marks
Business .Economics
1. The term production in economics means
(a) creation of a physical product only (b) rendering of a service only
(c) creation of economic utilities (d) none of the above
2. Which of the following statements incorrect?
(a) Man cannot create matter.
(b) Production is an activity of making some-thing material only.
(c) Production can be defined as addition of utility.
(d) Production is any economic utility which is directed towards the satisfaction of the wants of the
people.
3. Which of the following is not a feature of land
(a) Free gift (b) Limited in quantity
(c) Mobile factor (d) Indestructible
4. The supply of land is
(a) Unlimited (b) Increased (c) Decreased (d) Limited
5. Labour is
(a) Active factor (b) Passive factor (c) Alternative factor (d) None of the above
6. Income effect when wage rises means
(a) work hours rise (b) work hours fall
(c) work hours remain constant (d) work hours first fall and then rise
7. Tools, machines, etc. are included in
(a) circulating capital (b) fixed capital (c) sunk capital (d) human capital
8. Which capital includes education, training, skill, ability?
(a) Human Capital (b) Individual Capital
(c) Social Capital (d) Real Capital
9. Surplus of production over consumption in an economy in a year is called
(a) Capital (b) Capital formation
(c) Stock (d) Savings
10. With an increase in income
(a) the propensity to consume increases
(b) the propensity to save increases
(c) the propensity to consume remains constant
(d) the propensity to save falls
11. The reward of an entrepreneur for his efforts and risk-taking is
(a) Interest (b) Profit/Loss (c) Rent (d) Wages
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12. The risks like change in demand for a commodity, the cost structure, fashion, technological, etc.
which an entrepreneur has to bear are called
(a) Uncertainties (b) Insurable risks (c) Foreseeable risks (d) Both ‘a’ and ‘c’
13. According to _____ innovations introduced by an entrepreneur give rise to profits.
(a) Prof. F.H. Knight (b) Prof. Joseph A. Schumpeter
(c) Prof. Paul Samuelson (d) Dr. Alfred Marshall
14. Leather in a shoe factory is
(a) Fixed capital (b) Sunk capital (c) Floating Capital (d) Circulating capital
15. Capital that can be used for several purposes or by several industries is
(a) Working capital (b) Social capital (c) Floating capital (d) Human capital
16. Technically efficient combinations of inputs of those which
(a) minimizes wastage(b) maximizes profits
(c) minimises cost (d) maximises revenue
17. In its original for Cobb-Douglas production function applies to
(a) individual manufacturing firm (b) individual firm
(c) whole of manufacturing in US (d) None of the above
18. Cobb-Douglas production
(a) is linear (b) is homogeneous
(c) shows constant returns to scale (d) all the above
19. The main difference between the short period/ run and the long period/run is that
(a) in the short period all inputs are fixed, while in the long period all inputs are variable.
(b) in the short run at least one input is fixed
(c) in the short run firm varies the quantities of all inputs
(d) in the long run, the firm uses the existing plant capacity
20. All but one are the assumptions of the law of variable proportions. Which one is not?
(a) There is only one factor which is variable
(b) All units of variable factor are homogeneous
(c) State of technology remains constant
(d) Applies in long run
21. The total quantity of goods and services produced by a firm with the given inputs during a
specified period of time is called
(a) Total Product (b) Average Product (c) Marginal Product (d) Labour Product
22. The change in TP resulting from the employment of an additional unit of a variable factor is called
(a) Total Product (b) Marginal Product (c) Average Product (d) All the above
23. Initially TP curve increases at an
(a) increasing rate (b) diminishing rate (c) constant rate (d) maximum rate
24. AP curve is
(a) U-Shaped (b) S-Shaped (c) inverted U-Shaped (d) inverted S-Shaped
25. MP curve is
(a) U – shaped (b) S- shaped (c) inverted U – shaped (d) inverted S – shaped
26. When MP is at a maximum
(a) AP = MP and TP is rising (b) AP < MP and TP is rising
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(c) AP > MP and TP is rising . (d) AP and TP are falling
27. Which of the following statements reveal the diminishing returns?
(a) The MP of a factor is constant
(b) The MP of a factor is positive and rising
(c) The MP of a factor is falling and negative
(d) The MP of a factor is positive but falling
28. Reason for rise in both AP and MP curves is
(a) under utilization of the fixed factor
(b) under utilization of the variable factor
(c) over utilization of the fixed factor
(d) over utilization of the variable factor
29. When AP and MP curves are falling, MP curve falls
(a) at a faster rate (b) at a lower rate (c) at normal rate (d) at constant rate
30. AP increases so long as
(a) MP > AP (b) MP < AP (c) MP = AP (d) MP is zero
31. TP starts declining only when
(a) MP is rising (b) MP is falling (c) MP is negative (d) MP is constant
32. In the equation (i) the AP of the variable factor is
(a) 12 units (b) 14 (c) 10 (d) 16
33. Find the odd one out
(a) law of diminishing returns to factor (b) law of returns to scale
(c) cost function (d) production function
34. The behaviour of output in response to a change in the scale is studied in the
(a) Market Period (b) Short Period (c) Long Period (d) Very Short Period
35. Internal economies accrue when
(a) an industry develops (b) an economy grows
(c) foreign trade develops (d) a firm expands production in long run
36. Economies of scale means
(a) reduction in per unit cost of production (b) reduction in per unit cost of distribution
(c) addition to the per unit cost of production(d) reduction in the total cost of production
37. _____ shows all the input combinations that will produce the same level of output.
(a) Isoquant (b) Isocost line (c) Expansion Path (d) None of the above
38. The MRTSxy is constant if two factors are _____ of each other
(a) perfect substitutes (b) perfect complements
(c) imperfect substitutes (d) imperfect complements
39. In order to increase output, if both inputs mustbe increased in fixed proportion, it follows that both
the inputs are ____ of each other.
(a) perfect substitutes (b) perfect complements
(c) imperfect substitutes (d) imperfect complements
40. Condition for the producer’s equilibrium is
(a) Isoquant should be tangent to the isocost line
(b) At tangency point, isoquant should be convex to origin
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MPx MPy
c (d) all the above
Px Py
41. Internal economies and diseconomies of scale occur due to _____ causes.
(i) endogenous (ii) exogenous (iii) internal (iv) external
(a) i and ii (b) iii and iv (c) i and iii (d) ii and iv
42. When a large firm takes up advertising and grants higher margin to retailers, it is called
(a) technical economies (b) managerial economies
(c) marketing economies (d) financial economies
43. From the following find out AP and MP of 4th unit of Labour.
(a) 15 ; 15 (b) 10 ; 15 (c) 10 ; -15 (d) 10 ; -10
44. _____ costs relate to those costs which involve cash payments by the entrepreneur of the firm.
(a) Accounting (b) Marginal (c) Economic (d) Implicit
45. Economic costs includes
(a) Accounting cost + Explicit cost (b) Accounting cost + Implicit cot
(c) Fixed cost + Variable cost (d) Accounting cost + Direct cost
46. Opportunity cost refers to
(a) money expenses incurred on purchasing or hiring factor, services
(b) the next best alternative (c) involving cash payment
(d) all the above
47. _____ refers to the functional relationship between cost of a product and the various determinants
of cost.
(a) Cost function (b) Isoquant function (c) Production function (d) Supply function
48. Which one of the following is an independent variable in a cost function?
(a) Cost per unit (b) Total cost (c) Managerial efficiency (d) None of the above
49. Law of Returns to Scale forms the basis of _____ cost function
(a) Long-run (b) Short-run (c) Fixed (d) all the above
50. When a firm operates with a given scale of production it affects the _____
(a) Long-run production function (b) Fixed production function
(c) Short run production function (d) All the above
Business Economics -key
1) C 2) B 3) C 4) D 5) A 6) B 7) B 8) A 9) C 10) B
11) B 12) A 13) B 14) D 15) C 16) C 17) C 18) D 19) B 20) D
21) A 22) B 23) A 24) C 25) C 26) B 27) D 28) A 29) A 30) A
31) C 32) A 33) C 34) C 35) D 36) A 37) A 38) A 39) B 40) D
41) C 42) C 43) D 44) A 45) B 46) B 47) A 48) C 49) A 50) C
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