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SUPER SURE MCQs ON
MANAGEMENT/COMMERCE
PART - 21
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7
PLUS COURSE ON REVISION ON MANAGEMENT

Which among the following is added or subtracted in order to
reach the gross national product from gross domestic product?
Options:
(a) Depreciation
(b) Income from abroad
(c) Subsidies
(d) Indirect taxes
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Correct Option/Answer: (b) Income from abroad
Explanation: Gross National Product (GNP) is calculated from the gross domestic
product (GDP) by adding or subtracting the income from abroad. GNP is greater
than GDP when income from abroad is positive while when income from abroad is
negative, GNP would be less than GDP.

Statement I: Stagflation is a type of inflation where the economy faces slower
growth, high unemployment and rising prices.
Statement II: Under stagflation, the GDP rises along with a fall in the prices of
commodities.
Options:
(a) Statement I is correct but statement II is incorrect
(b) Statement II is correct but statement I is incorrect
(c) Both statements are correct
(d) Both statements are incorrect

Correct Option/Answer: (a) Statement I is correct but statement II is incorrect
Explanation: The first statement is correct as stagflation is a type of inflation
where the economy faces slower growth, high unemployment and rising prices.
The second statement is incorrect as under stagflation, the GDP falls with an
increase in the prices of commodities

Question: _____ is known as the average income of a citizen of a country in a
year.
Options:
(a) Personal income
(b) Private income
(c)Per capita income
(d) Real income

Correct Option/Answer: (c) Per capita income
Explanation: Per capita income is the income that is calculated every year in order
to determine the average income of a citizen of a country.
The formula to calculate per capita income is:
National Income/Total Population.

Assertion (A): When marginal utility is increasing, the total utility also keeps
increasing at an increasing rate.
Reason (R): When marginal utility is decreasing, the total utility also keeps
increasing but at a decreasing rate.
Codes:
(a) (A) and (R) are correct and (R) is the correct explanation of (A)
(b) (A) and (R) are correct but (R) is not the correct explanation of (A)
(c) (A) is incorrect but (R) is correct
(d) (A) is correct but (R) is incorrect

Correct Option/Answer:
Explanation: Both the assertion and the reason are correct as they state the
relationship between marginal utility and total utility. Both statements are two
different stages and occur one after the other. When marginal utility is increasing,
the total utility also keeps increasing at an increasing rate. When marginal utility is
decreasing, the total utility also keeps increasing but at a decreasing rate.

Assertion (A): Span of control is affected by the nature of work in the
organisation.
Reason (R): Unskilled, routine and simple work require less span of management
while technical and complex work require more span of control.
Codes:
(a) (A) and (R) are correct and (R) is the correct explanation of (A)
(c) (A) is incorrect but (R) is correct
(d) (A) is correct but (R) is incorrect

Correct Option/Answer: (a) (A) and (R) are correct and (R) is the correct
explanation of (A)
Explanation: Both the reason and the assertion are correct and the reason
explains the assertion correctly. Span of control is affected by the nature of work
in the organisation. Unskilled, routine and simple work require less span of
management while technical and complex work require more span of control.

What is meant by span of control?
The concept of "span of control," also known as management ratio, refers to the
number of subordinates controlled directly by a superior.
Span of Control can be defined as the total number of direct subordinates that a
manager can control or manage. ... For example, a manager can manage 4-6
subordinates when the nature of work is complex, whereas, the number can go up
to 15-20 subordinates for repetitive or fixed work.
Span of management is of two types; Wider span of management and Narrow
span of management. Wider span of management leads to flat organization
whereas narrow span of management result in tall organization structure.

MANAGEMENT CASE STUDY
Mr Kapoor works in a factory of carpet making and holding a post as plant
superintendent. The production manager directs and advises the workers to work
overtime at the time when huge orders need to be exported by the company.
However, the finance minister is against the practice of overtime as it would
increase the cost of production. Mr Kapoor felt that as his company is dealing with
both handmade and machine-made carpets there is lot of overlapping of activities
in the organisation. So, in order to overcome the situation of overlapping of
activities, his advice is to segregate the organisation into two division i.e. hand-
made division and machine-made division.

Question: The given case study shows the violation of _____.
Options:
(a) unity of command
(b) unity of direction
(c) scalar chain
(d) centralisation

Correct Option/Answer: (a) unity of command
Explanation: The principle of management that is violated in the above case is the
unity of command. This is because it states that one boss should give orders to
one individual. In the above case, employees are getting orders from both the
production manager as well as the finance manager.

Question: Which among the following principles of management was tried to be
implemented by Mr Kapoor in the organisation?
Options:
(a) Unity of direction
(b) Unity of command
(c) Both (a) and (b)
(d) Neither (a) nor (b)

Correct Option/Answer: (a) Unity of direction
Explanation: Unity of direction is the principle of management which Mr Kapoor
tried to implement in the organisation. Mr Kapoor is trying to focus the
organisation towards the objective of goal achievement.

Question: Which among the following is the aim of unity of command?
Options:
(a) To motivate the employees
(b) To prevent overlapping of activities
(c) To prevent dual subordination
(d) All of the above

Correct Option/Answer: (c) To prevent dual subordination
Explanation: The aim of the unity of command is to prevent dual subordination.
The unity of command states that one subordinate should receive orders from
only one superior. One subordinate should be accountable and responsible to only
one superior.

Question: What is the aim of the unity of direction?
Options:
(a) To prevent dual subordination
(b) To prevent wastage of material
(c) To motivate the employees
(d) To prevent overlapping of activities

Correct Option/Answer: (d) To prevent overlapping of activities
Explanation: The ultimate aim of the unity of direction is to prevent overlapping of
activities in the organisation which would help the organisation in achieving its
goals. The ultimate aim of the unity of direction is one head and one plan.

Which among the following statements is correct about the implication of the
unity of command and unity of direction?
Options:
(a) Both unity of command and unity of direction affect the organisation.
(b) Both unity of command and unity of direction affect an individual employee.
(c) The unity of command affects the entire organisation while the unity of
direction affects an individual employee.
(d) The unity of command affects an individual employee while the unity of
direction affects the entire organisation.

Correct Option/Answer: (d) The unity of command affects an individual
employee while the unity of direction affects the entire organisation.
Explanation: The difference between the unity of command and unity of direction
on the basis of implication is that the unity of command affects an individual
employee while the unity of direction affects the entire organisation.

Which among the following quadrants of the Johari Window denotes the
expressions, “Not known to others but known to self”?
Options:
(a) Hidden
(b) Unknown
(c) Blind
(d) Open

Correct Option/Answer: (a) Hidden
Explanation: The expression, “Not known to self but known to others” depicts the
quadrant blind in the Johari Window. The details of all the quadrants are as
follows:
1. Open: Known to both self and others
2. Hidden: Not known to others but known to self
3. Blind: Not known to self but known to others
4. Unknown: Not known to both self and others

Statement I: The behaviours and attitudinal features of a group are discussed in
the group dynamics.
Statement II: The group development model comprises three stages which depict
the formation and survival of the group.
Codes:

Correct Option/Answer: (a) Statement I is correct but statement II is incorrect
Explanation: Statement one is correct as the behaviours and attitudinal features of
a group are discussed in the group dynamics. Statement two is incorrect as the
group development model comprises five stages which depict the formation and
survival of the group.

Which of the following is the correct order of the Maslow’s Need Hierarchy
Theory?
1. Security
2. Physiological
3. Social
4. Self-esteem
5. Self-actualisation
Codes:
(a) 1, 2, 3, 4 and 5
(b) 2, 1, 3, 4 and 5
(c) 2, 3, 1, 4 and 5
(d) 2, 3, 1, 5 and 4

Correct Option/Answer: (b) 2, 1, 3, 4 and 5
Explanation: The Maslow’s Need Hierarchy Theory classifies needs in the following
order:
Physiological
Security
Social
Self-esteem
Self-actualisation

Which among the following behaviours is included in Type B behaviour?
Options:
1. Patient and cool
2. Set high standards for themselves
3. Workaholic
4. Guilt of relaxation

Correct Option/Answer: (a) Patient and cool
Explanation: Type B behaviour consists of the following behaviours of individuals:
1. Patient
2. Cool
3. Composed
4. Quality is preferred over quantity
5. Enjoy their life and focus on relaxation
6. Unpredictable behaviour
7. Maintain steadier pace while working

Type A and Type B personality theory
Type A and Type B personality hypothesis describes two contrasting personality
types. In this hypothesis, personalities that are more competitive, highly
organized, ambitious, impatient, highly aware of time management, or aggressive
are labeled Type A, while more relaxed, less "neurotic", "frantic", "explainable"
personalities are labeled Type B.
The two cardiologists who developed this theory came to believe that Type A
personalities had a greater chance of developing coronary heart
disease. Following the results of further studies and considerable controversy
about the role of the tobacco industry funding of early research in this area, some
reject, either partially or completely, the link between Type A personality and
coronary disease. Nevertheless, this research had a significant effect on the
development of the health psychology field, in which psychologists look at how an
individual's mental state affects physical health.

History
Type A personality behavior was first described as a potential risk factor for heart disease in
the 1950s by cardiologists Meyer Friedman and Ray Rosenman. They credit their insight to
an upholsterer who called to their attention the peculiar fact that the chairs in their waiting
rooms were only worn out on the front edge of the seat. After an eight-and-a-half-year-
long study of healthy men between the ages of 35 and 59, Friedman and Rosenman
estimated that Type A behavior more than doubled the risk of coronary heart disease in
otherwise healthy individuals.
The individuals enrolled in this study were followed well beyond the original time frame of
the study. Participants were asked to fill out a questionnaire, that asked questions like "Do
you feel guilty if you use spare time to relax?" and "Do you generally move, walk, and eat
rapidly?"[ Subsequent analysis indicated that although Type A personality is associated with
the incidence of coronary heart disease, it does not seem to be a risk factor for mortality. It
was originally called 'Type A Personality' by Friedman and Roseman, it has now been
conceptualized as the Type A behavior pattern.

Type A
The hypothesis describes Type A individuals as outgoing, ambitious, rigidly organized,
highly status-conscious, impatient, anxious, proactive, and concerned with time
management. People with Type A personalities are often high-achieving "workaholics".
They push themselves with deadlines, and hate both delays and ambivalence. People with
Type A personalities experience more job-related stress and less job satisfaction.
In his 1996 book dealing with extreme Type A behavior, Type A Behavior: Its Diagnosis and
Treatment, Friedman suggests that dangerous Type A behavior is expressed through three
major symptoms: (1) free-floating hostility, which can be triggered by even minor incidents;
(2) time urgency and impatience, which causes irritation and exasperation usually
described as being "short-fused"; and (3) a competitive drive, which causes stress and an
achievement-driven mentality. The first of these symptoms is believed to be covert and
therefore less observable, while the other two are more overt

Type B
Type B is a behavior pattern that is lacking in Type A behaviors. A-B personality is a
continuum where one either leans to be more Type A or Non Type A (Type B).
The hypothesis describes Type B individuals as a contrast to those of Type A. Type
B personality, by definition, are noted to live at lower stress levels. They typically
work steadily and may enjoy achievement, although they have a greater tendency
to disregard physical or mental stress when they do not achieve. When faced with
competition, they may focus less on winning or losing than their Type A
counterparts, and more on enjoying the game regardless of winning or losing.
Unlike the Type A personality's rhythm of multi-tasked careers, Type B individuals
are sometimes attracted to careers of creativity: writer, counselor, therapist, actor,
or actress.

Correct Option/Answer: (d) All of the above
Explanation: Entrepreneurship development helps the entrepreneur in developing
their skills by providing them with training. Entrepreneurship development factors
may include mechanisms for identifying entrepreneurs, training and motivating
systems and economic and business environments.

Which of the following is/are the elements of organisational culture?
1. Innovation and taking risk
2. Team orientation
3. Stability
4. Aggressiveness
Options:
A. 1, 2, 3 and 4
B. 2, 3 and 4
C. 1, 3 and 4
D. 1, 2 and 3

Correct Option/Answer: (a) 1, 2, 3 and 4
Explanation: The elements of organisational culture are as follows:
Innovation and taking risk
Detailed attention
People orientation
Outcome orientation
Aggressiveness
Stability
Team orientation

Statement I: Workforce diversity offers better decision-making as there exists no
discrimination in the organisation.
Statement II: Workforce diversity allows people to maintain their identity while
working with their best potential.
Options:

Correct Option/Answer: (c) Both statements are correct
Explanation: Both the given statements are correct as workforce
diversity offers better decision-making since there exists no
discrimination in the organisation. Workforce diversity allows people
to maintain their identity while working with their best potential.

Question: What type of factors may cause industrial sickness?
Options:
(a) Only external factors
(b) Only internal factors
(c) Both external and internal factors
(d) None of the above

Correct Option/Answer: (c) Both external and internal factors
Explanation: Small scale industries may become sick due to both internal and
external factors. Internal factors include poor management, lack of control, lack of
access to raw material, etc, whereas external factors include industry-specific
factors, government-related factors and other factors related to the external
business environment.

Question: ECGC stands for______.
Options:
(a) Export Credit Guarantee Corporation
(b) Extreme Credit Grant Corporation
(c) Extreme Credit Guarantee Council
(d) Export Credit Grant Corporation

Correct Option/Answer: (a) Export Credit Guarantee Corporation
Explanation: ECGC is the acronym used for Export Credit Guarantee
Corporation, which is an organisation that was founded in the year
1957 to provide export credit insurance to the Indian exporters. It is
regulated by the Ministry of Commerce.

Question: Which of the following is/are the essentials of business
ethics?
Options:
(a) Based on moral values
(b) Code of law of an organisation
(c) It is higher than the social interest

Explanation: Business ethics can be referred to as the right or wrong behaviour of
business in any business decision. Its essentials may include: it is a part of social
responsibility, it is the code of law in an organisation, business ethics are higher
than the social interest, it is based on moral and social-cultural values, etc.

Question: Identify the possible areas in which corporate social
objectives can be found, as per Brummet.
Options:
(a) Net income contribution
(b) Public contribution
(c) Human resource contribution

Explanation: Five possible areas were suggested by Brummet in which corporate
social objectives can be found, namely public contribution, net income
contribution, human resource contribution, environmental contribution and the
product and service contribution

Question: NABARD stands for __________.
Options:
(a) National Bank for Agricultural and Rural Development
(b) Net Banking for Agricultural and Rural Development
(c) Net Balance in Accounts and Reserves in District
(d) Net Banking of Amount and Reserves in Districts

Correct Option/Answer: (a) National Bank for Agricultural and Rural
Development
Explanation: NABARD stands for National Bank for Agricultural and Rural
Development. It was found in 1982 and is situated in Mumbai. The purpose of the
bank is to provide development assistance and reduce the poverty level.

Question: Determine the phases of organisational change.
Options:
(a) Planning
(b) Monitoring
(c) Strategies

Explanation: Organisational change is the change that can be brought about in an
organisation’s activities and operations. It can be done in various ways; some of
them include planning, monitoring, strategies and processes.

Question: Identify the reason/s that may lead to entrepreneurship failure.
Options:
(a) Poor management
(b) High fixed cost
(c) Insufficient sales force

Explanation: An entrepreneur is a person who undertakes the whole business risk
to run the business. However, the efforts of the entrepreneur may lead to failure if
issues related to high fixed cost, poor management, raw material quality, and
insufficient sales force prevail.

Question: Which of the following criteria of small scale industries indicate that it
is an incipient to sickness or potential to sickness?
Options:
(a) Capacity utilisation is less than 50 percent during the preceding 5 years
(b) Capacity utilisation is not more than 10 percent during the preceding 5 years
(c) Capacity utilisation is more than 50 percent during the preceding 5 years
(d) Capacity utilisation is less than 70 percent during the preceding 5 years

Correct Option/Answer: (a) Capacity utilisation is less than 50 percent during the
preceding 5 years
Explanation: SICA is an abbreviation for Sick Industrial Companies Act, which was
established to rehabilitate the sick industries. The potential for sickness is
indicated if the capacity utilisation of a firm is less than 50 percent during the
preceding 5 years.

Question: In MIS, a prototype is developed which refers to______.
Options:
(a) miniature of existing system
(b) working model of existing system
(c) mini model of previous system
(d) none of the above

Correct Option/Answer: (b) working model of existing system
Explanation: Prototype is the working model of the existing system
which is built for the purpose of testing its efficiency in accordance
with the desired outcome from the system. The method used to
build such a system in which the prototype is developed is regarded
as prototyping.

Question: Match the items in list 1 with the items in list 2 and select the code of correct
matching:
Options:
Codes:
A B C D
(a) iv iii ii i
(b) ii i iv iii
(c) iii iv i ii
(d) i ii iii iv
List 1 List 2
(A) APEC (i) 1945
(B) IMF (ii) 1989
(C) NAFTA (iii) 1967
(D) ASEAN (iv) 1994

Correct Option/Answer: (b) ii i iv iii
Explanation:
List 1 contains name of the international organizations whereas list 2 contains the
formation years of these organizations.

Question: When Asia-Pacific Forum was formed?
Options:
(a) 1996
(b) 1969
(c) 1990
(d) 1960

Correct Option/Answer: (a) 1996
Explanation: Asia Pacific Forum was established in the year 1996 with the five
members. Currently it has 25 institutions as members from all over Asia Pacific
region. The purpose of this forum is to build strong national human rights and
safety of all individuals associated with its operations.

Answer the questions from 86 to 90 on the basis of following case study:
North American Free Trade Agreement is a trilateral agreement abbreviation for
which is NAFTA. This agreement took place on 12th August, 1992 between the
three North American states namely the USA, Canada and Mexico. According to
this agreement the North American region was declared a free Trade area. In its
establishment, the USA played a dominant role. Free trade was already allowed
between Canada and the USA before the proposal of this agreement which was
later extended to Mexico.
NAFTA was established to meet the challenges imposed by EEC and the Japanese
policies. During NAFTA rule of origin was established according to which economic
resources will be utilized for the development of the country and welfare of
people belonging to the country where it originated. The NAFTA agreement was
signed on 1st January, 1994 officially.

Question: How many countries were involved signing NAFTA?
1. 3
2. 5
3. 6
4. Not mentioned

Correct Option/Answer: (a) 3
Explanation: NAFTA is a trilateral agreement between the three states of North
America with the purpose of allowing free trade within that specified region.

Question: Which of the following states were not involved in signing the
agreement?
1. USA
2. Canada
3. Geneva
4. Mexico

Correct Option/Answer: (c) Geneva
Explanation: The NAFTA agreement was signed by three states of North America
namely Canada, USA and Mexico. They agreed to join on 12th August 1992.

Question: When NAFTA was officially signed?
Options:
(a) January 12, 1992
(b) August 12, 1992
(c) January 1, 1994
(d) January 12, 1994

Correct Option/Answer: (c) January 1, 1994
Explanation: NAFTA was signed between the USA, Canada and Mexico on 1st
January 1994. It was decided to agree about developing the trade free area on 12
August 1992.

Question: Which of the following countries have opened trade barriers before
the proposal of the NAFTA agreement?
Options:
(a) USA and Mexico
(b) Canada and Mexico
(c) USA and Canada
(d) USA, Canada and Mexico

Correct Option/Answer: (c) USA and Canada
Explanation: USA and Canada had already released their trade barriers for each
other prior to this agreement. Later Mexico joined them and signed an agreement
called NAFTA.

Question: Which of the following was developed as a rule during
NAFTA?
Options:
(a) Barrier rules
(b) Support rules
(c) Rule of origin
(d) Rule of dominance

Correct Option/Answer: (c) Rule of origin
Explanation: Rule of origin was established according to which
economic resources will be utilized for the development of the
country and welfare of people belonging to the country where it
originated.

Question: Business ethics is a _________.
Options:
(a) dynamic philosophy
(b) dynamic principle
(c) dynamic concept
(d) dynamic rule

Correct Option/Answer: (a) dynamic philosophy
Explanation: Business ethics reflects the philosophy of business organization. It
creates the basis for various business principles such as principles of satisfaction,
principles of dual process, principles of aspirit of services, principles of universal
values, etc.

Question: Which of the following is NOT included in the
organization system?
Options:
(a) Reward system
(b) Political status
(c) Cost volume profit

Correct Option/Answer: (d) None of the above
Explanation: Organization system includes all those items or activities which are
the part of business operation. It may include all the activities performed in the
various departments of an organization such as the reward system in HR, cost
volume profit in finance, political status in administration, etc.

Question: Identify the institution which encourages the banks to
lend to SHGs.
Options:
(a) HDFC
(b) NABARD
(c) ICICI
(d) HSBC

Correct Option/Answer: (b) NABARD
Explanation: SHGs are the self help group that provides micro finance. They take
financial support from the banks. NABARD encourages the banks to lend money to
these groups. It is popular for running the SHG Bank Linkage program.

Question: Which of the following is NOT an element of
direction?
Options:
(a) Motivation
(b) Leadership
(c) Supervision
(d) Fundability

Correct Option/Answer: (d) Fundability
Explanation: Direction refers to the process through which employees are directed
towards a right path to achieve desired objectives in an organization. Motivation,
supervision, leadership, and communication are four important elements of
direction.

Question:
Assertion (A): Entrepreneur has contributed to economic development by
developing new markets, identifying new sources of material, discovering new
technologies, creating employment, etc.
Reason (R): Entrepreneur is the person who has developed new markets by using
their innovative skills and identifying the unsaid requirement of customers.
Codes:
(a) (A) and (R) are true and (R) is the correct explanation of (A)
(b) (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is false, but (R) is true
(d) (A) is true, but (R) is false

Correct Option/Answer: (a) (A) and (R) are true and (R) is the correct explanation
of (A)
Explanation: Entrepreneur is the one who brings innovative ideas to conduct
business operations. The entrepreneur has contributed in economic development
by developing new markets, identifying new sources of material, discovering new
technologies, by creating employment

Question: Which of the following does NOT comprise the internal
business environment?
Options:
(a) Organization structure
(b) Employees
(c) Owners
(d) Customers

Correct Option/Answer: (d) Customers
Explanation: Business environment can be categorized into external environment
and internal environment. Components of internal business environments may
include organization’s structure, policies, employees, owners or shareholders,
trade unions, value system etc.

Question: _______ is the financial intermediary which is composed
of _______ number of women and men.
Options:
(a)SHG, 10-20
(b) HDFC, 50-60
(c) RRS, 2-15
(d) Cooperative banks, 15-20

Correct Option/Answer: (a) SHG, 10-20
Explanation: SHG is an abbreviation used for Self help Group which is a financial
intermediary committee composed of 10-20 numbers of members. Members can
be men or women. They provide microfinance facilities.

Question: Which of the following is NOT a type of feasibility study?
Options:
(a) Technical
(b) Operational
(c) Economic
(d) fundamental

Correct Option/Answer: (d) fundamental
Explanation: Feasibility study is conducted to check the viability of the idea, plan
or design whether it makes sense or not. This can be majorly of four types namely
technical feasibility, operational feasibility, scheduling feasibility and the economic
feasibility

Question: Scope of CSR includes all of the following EXCEPT:
Options:
(a) Social responsibility towards employees
(b) Social responsibility towards investors
(c) Social responsibility towards customers
(d) Social responsibility towards orphanage

Correct Option/Answer: (d) Social responsibility towards
orphanage
Explanation: CSR is an abbreviation used for Corporate Social Responsibility which
is considered in an organization to make it more successful. It includes social
responsibility towards shareholders, suppliers, customers, other investors,
employees, and all stakeholders who work in an organization.

Question: Basel III norms are related to _______.
Options:
(a) production
(b) banking
(c) marketing
(d) research

Correct Option/Answer: (b) banking
Explanation: Basel III norms are some measures that are agreed internationally
and developed by the Basel Committee which is a banking supervisory committee
for smooth regulation of banking processes. The norms were introduced in
response to the financial crisis in 2007-2009.

Question: Which of the following is/are the inflation index/indexes?
Options:
(a) Consumer Price index
(b) Wholesale Price Index
(c) Product Price index
(d) Both (a) and (b)

Correct Option/Answer: (d) Both (a) and (b)
Explanation: Inflation is a market situation that results in the rise or increase in
prices of commodities. This happens due to the change in demand and supply.
Inflation indexes are the indicators that tell about the rate at which it is increasing.
Two most common methods used for measuring inflation are CPI and WPI.

Question: Who had first introduced the new term “product service
method” for measuring the national income?
Options:
(a) Simon Kuznets
(b) Robinson
(c) Gilbert
(d) Milton H. Spencer

Correct Option/Answer: (a) Simon Kuznets
Explanation: There are three methods for measuring national income, namely
product method, income method and expenditure method. The new term to
product method was introduced by Simon Kuznets, which he called as the product
and services method.

Question: Identify the characteristics of a monopoly.
Options:
(a) Single seller
(b) No close substitute
(c) Inelastic demand curve

Explanation: Monopoly is a type of market structure that prevails in the market
along with other market structures. Its characteristics may include a single seller,
no close substitute, inelastic demand curve, one firm one industry, complete
control over the supply of a commodity, etc.

matching.
Options:
Codes:
A B C D
(a) iv iii ii i
(b) ii iv i iii
(c) iii i iv ii
(d) i ii iii iv
List 1 List 2
(A) Negotiable Instrument Act (i) 1996
(B) FERA (ii) 2002
(C) Money laundering Act (iii)1973
(D) Arbitration and conciliation Act (iv) 1881

Correct Option/Answer: (a) iv iii ii i
Explanation: In the below table the correct match for the items in list 1 and list 2 is
given, where list 1 contains trade-related regulatory acts and list 2 contains the
year in which these acts were established.

Question: Which of the following should not be included in the national income
while computing the personal income?
Options:
(a) Corporate taxes
(b) Government transfer payment
(c) Business transfer payment
(d) Interest paid by the government

Correct Option/Answer: (a) Corporate taxes
Explanation:
While computing the personal income of an individual, the national income
should include government transfer payment, business transfer payment, interest
paid by the government and exclude corporate taxes, undistributed profits of
corporations and payments for social security provisions.

matching.
Options:
Codes:
A B C D
(a) iv iii ii i
(b) ii iv i iii
(c) iii i iv ii
(d) i ii iii iv
List 1 List 2
(a) Marginal cost (i) The cost that occurs due to one additional unit
(b) Opportunity cost (ii) It is the profit earned from alternative investment options
(c) Break-even point (iii) fixed cost divided by gross profit margin
(d) Total cost (iv) fixed cost plus variable cost

Correct Option/Answer: (d) i ii iii iv
Explanation:
List 1 contains various items that can be computed by using certain formulae,
whereas list 2 contains the formulae. For instance, the marginal cost is the cost
that occurs due to one additional unit. Opportunity cost is equal to the profit
earned from alternative projects, which had been foregone due to limited
resources. Break Even point is calculated by dividing the fixed cost by gross profit
margin. Total cost is the sum of fixed costs and variable costs.

Question: What does β refer to in the given formula?
Options:
(a) Unsystematic risk
(b) Market premium
(c) Systematic risk
 
R R R R
e f m f

  

Correct Option/Answer: (c) Systematic risk
Explanation: This capital asset pricing model is used to compute the expected
return on securities or portfolios. In this, beta measures the volatility of returns in
relation to the entire market. It is also known as the measure of systematic risk.

Question:
Assertion (A): The period in which at least one element of the factor input is in
fixed supply, due to which alteration in the amount of this factor is not possible is
known as the short-run.
Reason (R): Short-run cost is the cost structure of a firm where no factors are
considered to be fixed over a period.
Codes:
(a) (A) and (R) are true and (R) is the correct explanation of (A)
(b) (A) and (R) are true but (R) is not the correct explanation of (A)
(c) (A) is false but (R) is true
(d) (A) is true but (R) is false

Correct Option/Answer: (d) (A) is true but (R) is false
Explanation: Short-run is a period in which at least one element of the factor input
is in fixed supply due to which alteration in the amount of this factor is not
possible. Short-run cost refers to the cost structure of a firm, where it is not
possible to change all the costs associated. In long-run cost, no factors are
considered to be fixed over a period.

Question: What does the graph given below depict?
Options:
(a) Price output competition in perfect market
(b) Demand curve in perfect competition
(c) Supply curve in perfect competition
(d) Market price determination in perfect competition

Correct Option/Answer: (d) Market price determination in perfect competition
Explanation: Perfect competition is a market structure where a large number of
buyers and a large number of sellers exist. The above graph shows how the
market price of the goods based on demand and supply in the perfect market
competition is determined.

Question: Which of the following is/are the types of inflation?
Options:
(a) Demand-pull inflation
(b) Cost-push inflation
(c) Hyperinflation

Correct Option/Answer :( d) All of the above
Explanation: Inflation means a rise in price. It can occur due to various reasons.
The types of inflation are demand-pull inflation, cost-push inflation,
hyperinflation, deflation and so on.

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