TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

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TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

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TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 1

TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 2

TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 1

TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 2

TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 1

TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

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TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 1

TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 2

TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

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TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

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TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 1

TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 2

TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 1

TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 2

TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 1

TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

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TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 1

TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 2

TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

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TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

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TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 1

TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 2

TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 1

TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 2

TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 1

TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

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TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 1

TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

****ALL THE BEST ****

www.acc.edu.in LBN | KKP | SBD | HTN | KCG | SRN | WGL 9849222244 2

TEST SERIES

CMA FOUNDATION LT JUNE’2024

PAPER 4 - FUNDAMENTALS OF BUSINESS ECONOMICS AND MANAGEMENT
TEST SERIES – 11
Date: 30th SEP, 2024 Marks: 50 Duration: 30Min.
Syllabus: Markets

Choose the correct option: 25*2M=50M

1. A condition needed for a perfectly competitive industry to exist is that:
(a) Buyers are able to influence the price of the commodity
(b) Any units of commodity are considered by buyers to be different
(c) Buyer discriminates in their purchases based on non-price factors
(d) There are no obstacles to the free mobility of resources:
2. Agricultural goods markets depict characteristics close to
(a) Perfect competition (b) Oligopoly (c) Monopoly (d) Monopolistic Competition
3. Under which market situation demand curve is Horizontal and parallel to X – axis:
(a) Perfect competition (b) Monopoly (c) Monopolistic Competition (d) Oligopoly
4. MR curve = AR = Demand curve is a feature of which kind of market?
(a) Perfect competition (b) Monopoly (c) Monopolistic (d) Oligopoly
5. Which of the following is not a characteristic of a “price taker”?
(a) TR = P × Q (b) AR = Price
(c) Negatively – sloped demand curve (d) Marginal Revenue = price
6. Which of the following statements is incorrect?
(a) Competitive firms are price takers and not price makers
(b) Price discrimination is possible in monopoly only
(c) Duopoly may lead to monopoly
(d) Competitive firms always try to discriminate price
7. A purely competitive firm’s supply curve in the short run is determined by:
(a) Its average revenue (b) Its marginal revenue
(c) Its marginal utility for money curve (d) Its marginal cost curve
8. Price elasticity of demand in perfect competition is
(a) 0 (b) ∞ (c) 1 (d) > 1
9. No seller is large enough to influence price by changing output in market.
(a) Monopoly (b) Perfect competition (c) Duopoly (d) Oligopoly
10. Which is the first order condition for the profit of a firm to be maximum?
(a) AC = MR (b) MC = MR (c) MR = AR (d) AC = AR
11. When AR = Rs.10 and AC = Rs.8 the firm makes:
(a) Normal profit (b) Net profit (c) Gross profit (d) Supernormal profit
12. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) P = AVC (c) P ≤ AVC (d) P ≥ AVC
13. Under perfect competition, price of the product:
(a) Can be controlled by individual firm
(b) Cannot be controlled by individual firm
(c) Can be controlled within certain limits by individual firms
(d) None of the above
14. Which of the following statements is incorrect?
(a) If marginal revenue exceeds marginal cost the firm should increase output
(b) If marginal cost exceeds marginal revenue the firm should decrease output
(c) Economic profits will be maximum when total costs are equal to total revenue

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TEST SERIES

(d) Profits are maximized when marginal revenue equals marginal cost
15. Which of the following is incorrect?
(a) The shape of average cost is U-shaped
(b) MC curve cuts AC curve at the minimum level of AC
(c) The AR and MR curves of the industry under perfect competition are parallel to X-axis
(d) MC curve cuts AVC curve at the minimum level of AVC other things remaining constant
16. When firm derives normal profits, at the equilibrium point Average Revenue Curve will be the
Average Cost Curve, under perfect competition.
(a) Cuts (b) Tangent to (c) Either (a) or (b) above (d) None
17. The unit profit of a firm under perfect competition can be measured by:
(a) MC – AC (b) TR – TC (c) AR – AC (d) AR – Price
18. A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC (b) MC = MR = P (c) P < AVC (d) MC = AC = AR
19. “I am making a loss, but with the rent I have to pay, I can’t afford to shut down at this point of time”.
If this entrepreneur is attempting to maximize profits or minimize losses, his behaviour in the short run is:
(a) Rational, if the firm is covering it s variable cost
(b) Rational, if the is covering its fixed cost
(c) Irrational, since plant closing is necessary to eliminate losses
(d) Irrational, since fixed costs are eliminated if a firm shuts down
20. A firm encounters its “shutdown point” when:
(a) Average total cost equals price at the profit – maximizing level of output
(b) Average variable cost equals price at the profit – maximizing level of output
(c) Average fixed cost equals price at the profit – maximizing level of output
(d) The firm should continue to operate in the short run in order to minimize its losses
21. In the long-run, some firms will exist the market if the price of the good offered for sale is less than
(a) Marginal revenue (b) Marginal cost (c) Average total cost (d) Average revenue
22. Excess capacity is not found under
(a) Monopoly (b) Monopolistic competition
(c) Perfect competition (d) oligopoly
23. The conditions of long-period equilibrium for the firm operative under perfect competition are:
(1) MC = MR (2) AR = MR (3) AC = AR (4) AC = MC
(a) 1 only (b) 1 and 2 only (c) 1, 2 and 3 only (d) 1, 2, 3, and 4
24. What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P (b) SMC = SAC = LMC (c) P = MR (d) None
25. Under monopoly, the degree of control over price is:
(a) Zero (b) Some (c) Very considerable ) None of the above

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