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CA FOUNDATION ECONOMICS MCQ'S

500+ MCQs Series For CA FOUNDATION ECONOMICS CHAPTER 1 NATURE AND SCOPE OF ECONOMICS OBJECTIVE QUESTIONS MCQ'S TEST

CA FOUNDATION PAPER - 4 (BUSINESS ECONOMICS) 500+ MCQs

CHAPTER - 1 NATURE AND SCOPE OF ECONOMICS

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Part - 1 Introduction

Part - 2 Basics Problems of an Economy


1. The term Economics owes its origin to the Greek word.
    (a) Aikonomia
    (b) Wikonomia
    (c) Oikonomia
    (d) None of the above.
Answer - (c)




2. Adam Smith published his master- piece "An enquiry into the nature and causes of wealth of nations" in the year
    (a) 1776
    (b) 1786
    (c) 1789
    (d) 1790
Answer - (a)




3. Oikonomia means
    (a) Industry
    (b) Management of household
    (c) Services
    (d) None of these.
Answer - (b)




4. Economists regard decision making as important because:
    (a) The resources required to satisfy our unlimited wants and needs are finite or scarce
    (b) It is crucial to understand how we can best allocate our scarce resources to satisfy society's unlimited wants and needs.
    (c) Resources have alternative uses.
    (d) All of the above.
Answer - (d)




5. 'Economics is the science of choice making. It implies:
    (a) No choice is to be made
    (b) Choice to be made between alternative uses
    (c) Choice to be made between means and ends
    (d) None of the above.
Answer - (b)




6. Which one is the feature of Marshall's definition?
    (a) Limited ends
    (b) Scarce means
    (c) Study of wealth as well as study of man
    (d) Study of allocation of resources
Answer - (c)




7. According to Robbins, 'means' are:
    (a) Scarce
    (b) Unlimited
    (c) Undefined
    (d) All of these
Answer - (a)




8. Economics is the study of:
    (a) How society manages its unlimited resources
    (b) How to reduce our wants until we are satisfied
    (c) How society manages its scarce resources
    (d) How to fully satisfy our unlimited wants.
Answer - (C)




9. In Economics, we use the term scarcity to mean:
    (a) Absolute scarcity and lack of resources in less developed countries
    (b) Relative scarcity Le scarcity in relation to the wants of the society
    (c) Scarcity during times of business failure and natural calamities
    (d) Scarcity caused on account of excessive consumption by the Rich
Answer - (b)




10. What implication(s) does resource scarcity have for the satisfaction of wants?
    (a) Not all wants can be satisfied.
    (b) We will never be faced with the need to make choices.
    (c) We must develop ways to decrease our individual wants
    (d) The discovery of new natural resources is necessary to increase our ability to satisfy wants.
Answer - (a)




11. Adam Smith defined Economics In terms of:
    (a) The Science of welfare
    (b) The Science of scarcity
    (c) The Science of wealth
    (d) The Science of wealth and welfare
Answer - (c)




12. Who defines Economics In terms of Dynamic Growth and Development?
    (a) Robbins
    (b) Paul A Samuelson
    (c) Adam Smith
    (d) None of these
Answer - (b)




13. In every economic system, scarcity Imposes limitations on
    (a) Householdsbusiness firms, governments and the nation as a whole.
    (b) Households and business firms but not the governments.
    (c) Local and state governments, but not the federal government.
    (d) Households and governmentsbut not business firms.
    (e) Business firmsgovernments, and the nation as a whole.
Answer - (a)




14. Economic goods are considered scarce resources because they
    (a) Cannot be increased in quantity.
    (b) Do not exist in adequate quantity to satisfy the requirements of the society.
    (c) Are of primary importance in satisfying social requirements
    (d) Are limited to man made goods
Answer - (b)




15. Economics is the study of mankind in the ordinary business of life' was given by:
    (a) Adam Smith
    (b) Lord Robbins
    (c) Alfred Marshall
    (d) Samuelson
Answer - (c)




16. Consider the following and decide which, if any, economy is without scarcity:
    (a) The pre-independent Indian economy, where most people were farmers
    (b) A mythical economy where everybody is a billionaire.
    (c) Any economy where income is distributed equally among its people.
    (d) None of the above.
Answer - (d)




17. Human wants are______ in response to satisfy their wants?
    (a) Unlimited
    (b) Limited
    (c) Scarce
    (d) Multiple
Answer - (a)




18. Economic goods are considered as scarce resources because _____
    (a) Inadequate quantity to satisfy the needs of the society
    (b) Not possible to increase in quantity
    (c) Limited hands to make goods
    (d) Primary importance in satisfying of social requirements
Answer - (a)




19. The meaning of time element in Economics is:
    (a) Calendar time
    (b) Clock time
    (c) Operational time in which supply adjusts with the market demand
    (d) None of the above
Answer - (c)




20. All wants of an Individual are not of:
    (a) Equal importance
    (b) Immediate importance
    (c) Fixed importance
    (d) All of the above
Answer - (a)




21._______ refers to the alternative that will provide the most efficient means of attaining a desired end, from two or more alterative courses of action.
    (a) Decision making
    (b) Strategy
    (c) Problem Solving
    (d) Effectiveness
Answer - (a)




22. Business Economics is
    (a) Abstract and applies the tools of Microeconomics
    (b) Involves practical application of economic theory in business decision making.
    (c) Incorporates tools from multiple disciplines.
    (d) (b) and (c) above.
Answer - (d)




23. Business Economics is also known as ?
    (a) Applied Economics
    (b) Managerial Economics
    (c) Micro Economics
    (d) All of the above
Answer - (b)




24. The question of choice arises because our productive resources........
    (a) Are limited
    (b) Can be employed in alternatives
    (c) Both (a) & (b)
    (d) None of the above
Answer - (c)




25. The management of a business unit generally needs to make_________
    (a) Strategic Decision
    (b) Tactical Decision
    (c) Operational Decision
    (d) All of the above.
Answer - (d)




26. Concept of Business Economics was given by:
    (a) Joel Dean
    (b) Alfred Marshall
    (c) Adam Smith
    (d) L. Robbins
Answer - (a)




27. Which one of the following is incorrect about Business Economics?
    (a) It is applied economics that fills the gap between economic theory and business practice.
    (b) Business Economics integrates economic theory with business practice.
    (c) Business Economics is also re- ferred to as Managerial Economics.
    (d) Business Economics is more concerned with Macro economics.
Answer - (d)




Definitions of Business Economics



28. _________defined Business Economics in terms of the use of economics analysis in the formulation of business policies.
    (a) Joel Dean
    (b) Karl Marks
    (c) Adam Smith
    (d) Schumpeter
Answer - (a)




29. Business Economics is essentially a component of as it includes application of selected quantitative techniques.
    (a) Pure Economics
    (b) Applies Economics
    (c) Statistical Economics
    (d) None of the above
Answer - (b)




30. Which of the following is not included in Economics?
    (a) Family Structure
    (b) Managerial Economics
    (c) Micro Economics
    (d) Macro Economics
Answer - (a)




31. The heart of Business Economics is
    (a) Micro Economic Theory of the behaviour of consumers and firms in competitive markets.
    (b) Macro-Economic Theory of the national income
    (c) Income Economic analysis to analyze the industry.
    (d) All of the above.
Answer - (a)




32. Which one of the following is not a subject matter of Micro-Economics?
    (a) Behaviour of Firms
    (b) External Value of Currency
    (c) Factor Pricing
    (d) Location of Industry
Answer - (b)




33. Micro economics does not study
    (a) Consumer behaviour
    (b) Factor pricing
    (c) General price level
    (d) Firms equilibrium
Answer - (c)




34. Micro Economics is the study of:
    (a) Individual parts of the economy
    (b) The economy as a whole
    (c) Choice making
    (d) Development of the economy economy
Answer - (a)




35. The branch of economic theory that deals with the problem of allocation of resources is
    (a) Micro-Economic theory.
    (b) Macro-Economic theory.
    (c) Econometrics.
    (d) None of the above.
Answer - (a)




36. Which of the following is not the subject matter of Business Economics?
    (a) Should our firm be in this business?
    (b) How much should be produced and at price should be kept?
    (c) How will the product be placed in the market?
    (d) How should we decrease unemployment in the economy?
Answer - (d)




37.The branch of economic theory that deals with the problem of allocation of resources is:
    (a) Micro Economics
    (b) Macro Economics
    (c) Econometrics
    (d) None of these
Answer - (a)




38. Micro Economics Covers:
    (a) National Income and National Output
    (b) External Value of Currency
    (c) Overall level of Savings and Investment
    (d) Location of Industry
Answer - (d)




39. A study of how Increase in the corporate income tax rate will affect the natural unemployment rate is an example of:
    (a) Micro Economics
    (b) Descriptive Economics
    (c) Micro Economics
    (d) Normative Economics
Answer - (a)




40._______examines how the individual units (Consumers or firms) make decisions as to how to efficiently allocate their scare resources.
    (a) Macro Economics
    (b) Micro Economics
    (c) Mathematical Economics
    (d) Consumer Economics.
Answer - (b)




41. Which of the following falls under micro economics?
    (a) National Income
    (b) General price level
    (c) Factor pricing
    (d) National saving and investment
Answer - (c)




42. Which of these is a part of micro economics?
    (a) Factor pricing
    (b) National Income
    (c) Balance of payment
    (d) None of the above
Answer - (a)




43. Micro economics is also known as
    (a) Public economics
    (b) Price theory
    (c) Income theory
    (d) Demand theory
Answer - (b)




44. Micro Economics is concerned with:
    (a) Consumer Behaviour
    (b) Product pricing
    (c) Factor Pricing
    (d) All of the above
Answer - (d)




45. Macro Economics is also called economics.
    (a) Applied
    (b) Aggregate
    (c) Experimental
    (d) None of the above
Answer - (b)




46. Which of the following does not suggest a macro approach for India?
    (a) Determining the GNP of India.
    (b) Finding the causes of failure of ABC Ltd.
    (c) Identifying the causes of inflation in India.
    (d) Analyse the causes of failure of industry in providing large scale employment
Answer - (b)




47. Macro Economics is the study of
    (a) All aspects of scarcity
    (b) The national economy and the global economy as a whole.
    (c) Big businesses.
    (d) The decisions of individual businesses and people.
Answer - (b)




48. A study of how increases in the corporate income tax rate will affect the national unemployment rate is an example of
    (a) Macro-Economics.
    (b) Descriptive Economics.
    (c) Micro-economics.
    (d) Normative economics.
Answer - (a)




49. Which of these is an example of macro economics:
    (a) Problem of unemployment in India
    (b) Rising price level in the country
    (c) Increase in disparities of income
    (d) All of the above.
Answer - (d)




50. Macro economics include
    (a) Product pricing
    (b) Consumer behaviour
    (c) External value of money
    (d) Location of industry
Answer - (c)




51. Which of the following is not a subject matter of Micro-economies?
    (a) The price of mangoes.
    (b) The cost of producing a fire truck for the fire department of Delhi, India.
    (c) The quantity of mangoes produced for the mangoes market.
    (d) The national economy's annual rate of growth.
Answer - (d)




52. Which of the following would be considered a topic of study In Macro- economics ?
    (a) The effect of increase in wages on the profitability of cotton industry
    (b) The effect on steel prices when more steel is imported
    (c) The effect of an increasing inflation rate on living standards of people in India
    (d) The effect of an increase in the price of coffee on the quantity of tea consumed
Answer - (c)




53. Which of the following is a part of the subject matter of macro economics?
    (a) Study of firms
    (b) Aggregate profits of a firm
    (c) Market demand for a product
    (d) Net national product
Answer - (d)




54. The Macro Economics does not cover the area of on
    (a) General price level and interest rates
    (b) Level of employment and rate of economic growth
    (c) Balance of trade & Balance of payments
    (d) Product Pricing.
Answer - (d)




55. Shyam: This year due to heavy rainfall my option crop was damaged
Krishna: Climates affects crop yields. Some years are bad, other are good
Hari: Don't worry - Price increase will compensate for the fall in quantity supplied
Radhe: The Government ought to guarantee that our income will not fall.
In this conversation, the normative statement is made by
    (a) Shyam
    (b) Krishna
    (c) Hari
    (d) Radhe
Answer - (d)




Nature of Business Economics



56. Business Economics enables application of economic logic and analytical tools to
    (a) Bridge the gap between theory and practice
    (b) Increase the implementation science.
    (c) Increase the effectiveness.
    (d) Apply tools of macro economics.
Answer - (a)




57. Business Economics relies heavily on the techniques of,
    (a) Micro Economics
    (b) Macro Economics
    (c) Normative Science only
    (d) Economics discipline only
Answer - (a)




58 Which of the following is a normative statement?
    (a) Planned economies allocate resources via government departments.
    (b) Most transitional economies have experienced problems of falling output and rising prices over the past decade.
    (c) There is a greater degree of consumer sovereignty in market economies than planned economies.
    (d) Reducing inequality should be a major priority for mixed economies.
Answer - (d)




59. An example of 'positive' economic analysis would be:
    (a) An analysis of the relationship between the price of food and the quantity purchased.
    (b) Determining how much income each person should be guaranteed.
    (c) Determining the 'fair' price for food.
    (d) Deciding how to distribute the output of the economy.
Answer - (a)




60. Business Economics is in its approach as it tackles practical problems which the firm faces in the real world.
    (a) Scientific
    (b) Programmatic
    (c) Theoretical
    (d) Mathematical
Answer - (b)




61. The difference between positive and normative Economics is:
    (a) Positive Economics explains the performance of the economy while normative Economics finds out the reasons for poor performance.
    (b) Positive Economics describes the facts of the economy while normative Economics involves evaluating whether some of these are good or bad for the welfare of the people.
    (c) Normative Economics describes the facts of the economy while positive Economics involves evaluating whether some of these are good or bad for the welfare of the people.
    (d) Positive Economics prescribes while normative Economics describes.
Answer - (b)




62. Normative aspect of Economics is given by:
    (a) Marshall
    (b) Robbins
    (c) Adam Smith
    (d) Samuelson
Answer - (a)




63. Normative Economics is based on:
    (a) Ethical Considerations
    (b) Facts and Generalization
    (c) What is?
    (d) All of the above
Answer - (a)




64. Deductive and Inductive methods are complimentary to each other. It is:
    (a) Absolutely correct
    (b) Absolutely incorrect
    (c) Partially incorrect
    (d) None of the above
Answer - (a)




65. In inductive method, logic proceeds from:
    (a) General to Particular
    (b) Particular to General
    (c) Both (a) and (b)
    (d) None of these
Answer - (b)




66. Which of the following is a normative economic statement?
    (a) Unemployment rate decreases with industrialization
    (b) Economics is a social science that studies human behaviour.
    (c) The minimum wage should be raised to 200 per day
    (d) India spends a huge amount of money on national defence.
Answer - (c)




67. Ram: My corn harvest this year is poor.
Krishan: Don't worry. Price Increases will compensate for the fall in quantity supplied.
Vinod: Climate affects crop yields. Some years are bad, others are good.
Madhu: The Government ought to guarantee that our income will not fall.
In this conversation, the normative statement is made by
    (a) Ram
    (b) Krishan
    (c) Vinod
    (d) Madhu
Answer - (d)




'
68. Positive science only explains
    (a) What is ?
    (b) What ought to be?
    (c) What is right or wrong
    (d) None of the above
Answer - (a)




69. Under Inductive method logic proceeds from:
    (a) General to particular
    (b) Positive to normative
    (c) Normative to positive
    (d) Particular to general
Answer - (d)




70. __________ analyses causes and effect relationship between variables in an objective and scientific manner.
    (a) Positive Science
    (b) Normative Science
    (c) Negative Science
    (d) Analytical Science
Answer - (a)




71. Business Economics is generally .............. In nature.
    (a) Normative
    (b) Prescriptive
    (c) Normative or Prescriptive
    (d) Theoretical
Answer - (c)




72. Which of the following statements is incorrect?
    (a) Business economics is normative in nature
    (b) Business Economics has a close connection with statistics.
    (c) Business Economist need not worry about macro variables.
    (d) Business Economics is also called Managerial Economics
Answer - (c)




73. Under Inductive method, the logic proceeds from:
    (a) General to particulars
    (b) Particular to general
    (c) Both (a) and (b)
    (d) None
Answer - (b)




74. Although business economics combines the essentials of normative and positive economic theory but the emphasis is on:
    (a) Positive
    (b) Normative
    (c) Both Positive and Normative
    (d) Neither Positive nor Normative.
Answer - (b)




75. Business Economics is
    (a) Normative in nature
    (b) Interdisciplinary in nature
    (c) Both
    (d) None
Answer - (a)




76. Find out the correct statement
    (a) Higher the prices, lower the quality demanded of a product are a normative statement
    (b) Micro and macro-economics are interdependent
    (c) In a capitalist economy, the economic problems are solved by planning commission
    (d) In deductive method logic proceeds from particular to the general
Answer - (b)




77. "Economics is neutral between ends" The statement is given by:
    (a) L. Robbins
    (b) Mrs. Joan
    (c) Alfred Marshall
    (d) A.C. Pigou
Answer - (a)




78. Economics which is concerned with welfare propositions is called
    (a) Socialistic economics
    (b) Capitalistic economics
    (c) Positive economics
    (d) Normative economics
Answer - (d)




79. The Business Economics Incorporates tools from other disciplines such as Mathematics, operations Research, Management theory, Accounting, etc. Therefore, Business Economics is
    (a) Intra-disciplinary
    (b) Inter-disciplinary
    (c) Multi-disciplinary
    (d) Flexi-disciplinary
Answer - (b)




80. Under inductive method logic proceeds from:
    (a) General to particular
    (b) Positive to narrative
    (c) Normative to positive
    (d) Particular to general
Answer - (d)




81. Business Economics involves the elements of
    (a) Micro Environment
    (b) Macro Environment
    (c) Both (a) and (b)
    (d) None of the above
Answer - (c)




82. In which of the following methods conclusions are drawn on the basis of collection and analysis of facts?
    (a) Deductive method
    (b) Scientific method
    (c) Inductive method
    (d) Experimental method
Answer - (c)




83. Business economy Involves theory of Business economics with ?
    (a) Normative Economics
    (b) Business practices
    (c) Micro Economics
    (d) Macro Economics
Answer - (b)




Scope of Business Economics



84. The operational or interval issues to which economic theories can be directly applied are related with.
    (a) Micro Economics
    (b) Macro Economics
    (c) Business Economics
    (d) Environmental Economics
Answer - (a)




85. Which factor is included in business Economics?
    (a) Business Economics is an art
    (b) Inter-disciplinary in nature
    (c) Normative in nature
    (d) All of the above
Answer - (d)




86. Applied economics includes
    (a) Regression analysis and mathematical linear programming
    (b) Capital budgeting
    (c) Both (a) and (b)
    (d) None
Answer - (c)




87. Which of the following is not within the scope of Business Economics?)
    (a) Capital Budgeting
    (b) Risk Analysis
    (c) Business Cycles
    (d) Accounting Standards
Answer - (d)




88. explains the relationship between inputs and output.
    (a) Production Theory
    (b) Demand Analysis
    (c) Inventory Management
    (d) None of the above
Answer - (a)




89. Business Economics with the help of advanced tools like enables the firm to arrive at the best course of action for optimum utilisation of available resources.
    (a) Accounting
    (b) Finance
    (c) Linear Programming
    (d) Marketing Mix
Answer - (c)




90. Business Economists use method(s) to maintain optimum stock of inventories.
    (a) ABC Analysis
    (b) Simple simulation exercises
    (c) Mathematical models
    (d) All of the above
Answer - (d)




91. Which of the following Macro- Economic Factor is considered in Business Economics?
    (a) Business Cycles
    (b) Employment, Prices
    (c) Saving & investment
    (d) All of the above
Answer - (d)





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