NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A.

FOUNDATION : – 1 –

CHAPTER – 1
NATURE AND SCOPE OF BUSINESS ECONOMICS
UNIT-1: INTRODUCTION (a) Alfred Marshall

Introduction (b) Join Robinson

(c) Adam Smith
1. The term ‘Economics’ owes its origin to the
Greek word. (d) Robern Malthus

(a) Aikonomia (Jan. 2021)

(b) Wikonomia 7. Economists regard decision making as impor-

tant because :
(c) Oikonomia
(a) The resources required to satisfy our unlim-
(d) None of the above

L
ited wants and needs are finite or Scarce.
2. Economics in terms of Dynamic Growth and

U
(b) It is crucial to understand how we can best
development defined by
allocate our scarce resources to satisfy

H Y
(a) Adam Smith society’s unlimited wants and needs.

A A
(b) Robbins (c) Resourceshave alternative uses

R HY
(c) Alfred Marshall (d) All of the above.
(c) Paul A Samuelson 8. _________ are responsible for all economic
(Nov. 2020) problems
3.

AD
Adam Smith published his masterpiece “An
enquiry into the nature and causes of wealth
(a) Alternative resources
(b) Unlimited wants

P
of nations” in the year
(c) Scarcity of resources

U
(a) 1776
(d) Others
(b) 1786
(Nov. 2020)
(c) 1789
9. ‘Economics is the science of choice making’.
(d) 1790 It implies :
4. Which book of economics is known as first (a) No choice is to be made
book of modern economics ?
(b) Choice to be made between alternative uses
(a) An Inquiry into nation
(c) Choice to be made between means and ends
(b) An inquiry into wealth of nation
(d) None of the above
(c) An inquiry into wealth
(CA CPT Dec. 2012)
(d) Wealth of nation
10. The famous book abbreviated as “The Wealth
(Nov. 2019) of Nation”. which is alos considered as the first
5. Oikonomia means modern work of Economics, was written by
(a) Industry _____________.
(b) Management of household (a) Frederic Engels
(c) Services (b) Karl Marx

(d) None of these (c) David Ricardo

6. The book “Wealth of Nations” was written by (d) Adam Smith
____________. (July 2021)

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 2 –
11. The concept of socialist economy was pro- (b) Relative scarcity i.e. scarcity in relation to
pounded by Karl Marx and Frederic Engels the wants of the society.
in their work. The Communist Manifesto was (c) Scarcity during times of business failure and
published in the year. natural calamities.
(a) 1947 (b) 1848 (d) Scarcity caused on account of excessive con-
(c) 1949 (d) 1950 sumption by the rich.
12. Which one is the feature of Marshall’s defini- (Nov. 2019)
tion? 18. In Economics, we use he term scarcity to
(a) Limited ends mean :
(b) Scarce means (a) Absolute scarcity and lack of recources in
(c) Study of wealth as well as study of man less dveloped countries.

(d) Study of allocation of resources (b) Relative scarcity i.e. scarcity in relation to
the wants of the society.

L
(CA CPT June 2010)
(c) Scarcity during times of business failure and

U
13. According to Robbins ‘means’ are :
natural calamities
(a) Scarce

H Y
(d) Scarcity caused on account of excessive
(b) Unlimited

A A
onsumption by the rich.

R HY
(c) Undefined 19. An economy exists because of two basic facts
(d) All of these i.e. ___________
(CA CPT Nov. 2007) (a) Human wants are limited and resources are

D
14. Scarcity definition of Economics is given by : unlimited.

A
(a) Alfred Marshall (b) Human wants are unlimited and resources

P
are unlimited.
(b) Samuelson

U
(c) Human wants are unlimited and resources
(c) Robinson
are scare
(d) Adam Smith
(d) Human wants are limited and resources are
15. The definition “Science which deals with
abundant
wealth of Nation” was given by :
(Jan. 2021)
(a) Alfred Marshall
20. What implication(s)does resource scarcity
(b) A C Pigou
have for the satisfaction of wants ?
(c) Adam Smith
(a) Not all wants can be satisfied.
(d) J B Say
(b) We will never be faced with the need to make
16. Economics is the study of : choices.
(a) How society manages its unlimited resources (c) We must develop ways to decrease our indi-
(b) How to reduce our wans until we are satis- vidual wants.
fied (d) The discovery of new natural resources is
(c) How society manages its scarce resources necessary to increase our ability to satisfy
(d) How to fully satisfy our unlimited wants wants.

(CA CPT June 2008) 21. Adam Smith defined Economics in terms of :

17. In Economics, we use “scarcity” the term to (a) The Science of welfare
mean : (b) The Science of scarcity
(a) Absolute scarcity and lack of resources in (c) The Science of wealth
less developed countries.
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 3 –
(d) The Science of wealth and welfare (b) Lord Robbins
22. Who defines Economics in terms of Dynamic (c) Alfred Marshall
Growth and Development ? (d) Samuelson
(a) Robbins (CA CPT Nov. 2006)
(b) Paul A Samuelson 27. Consider the following and decide which, if
(c) Adam Smith any, economy is without scarcity :
(d) None of these (a) The pre-independent Indian economy where
(CA CPT Dec. 2008) most people were farmers.

23. Which of the following is not a basic problem (b) A mythical economy where every-body is a
of an economy ? billionaire.

(a) Whether to produce moe of consumer goods (c) Any economy whee income is distributed
or capital goods equal

L
(b) Whether to lay emphasis on labour-intensive (d) None of the above.

U
techniques or on capital intensive tech- 28. Human wants are _______ in response to sat-
niques. isfy their wants ?

poor people

AH AY
(c) Whether to produce for rich people or for (a) Unlimited
(b) Limited

R HY
(d) Whether to accept foreign direct investment (c) Scarce
in the economy.
(d) Multiple

D
24. In every economy system, swarcity imposes
29. There is need of economic study, because—
limitations on

A
(a) The resources are limited
(a) Households, business firms, governments

P
and the nation as a whole (b) The wants are unlimited

U
(b) Households and business firms, but not the (c) The resources are unlimited
governments. (d) Both (a) and (b)
(c) Local and state governments, but not the 30. The benefit of economic study is —
federal government. (a) It ensure that all problems will be appropri-
(d) Households and governments but not busi- ately takled
ness firms. (b) It helps in identifying problems
(e) Business firms, governments and the nation (c) It enable to examine a problem in its right
as a whole. perspective
25. Economic goods are considered scarce re- (d) It gives exact solutions to every problem
sources because they
31. Economics goods are considered as scarce re-
(a) Cannot be increase in quantity sources because
(b) Do not exist in adquate quantity to satisfy (a) Inadequate quantity to satisfying the needs
the requiements of the society. of the scoeity
(c) Are of primary importance in satisfying so- (b) Not possible to increase in quantity
cial requirements
(c) Limited hands o make goods
(d) Are limited to man made goods
(d) Primary importance in satisfying social re-
26. ‘Economics is the study of man-kind in he or- quirements
dinary business of life’
(CA CPT May 2019)
(a) Adam Smith
32. The meaning of time element in Economics is:

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 4 –
(a) Calendar time (c) Micro Economics
(b) Clock time (d) All of the above
(c) Operational time in which supply adjusts (CA CPT Nov. 2018)
with the market demand 38. The question of choice arises because our pro-
(d) None of the above ductive resources ___________.
(CA CPT June 2015) (a) Are limited
33. All wants of an individual are not of : (b) Can be employed in alternatives
(a) Equal importance (c) Both (a) & (b)
(b) Immediate importance (d) None of the above
(c) Fixed importance 39. The management of a business unit generally
(d) All of the above. needs to make __________.

(CA CPT June 2015) (a) Strategic Decision

Meaning of Business Economics

U L (b) Tactical Decision

(c) Operational Decision

H Y
(d) All of the above

A
34. ____________ refers to the process of select-

A
40. Concept of Business Economics was given by :

R HY
ing an appropriate alternative that will pro-
(a) Joel Dean
vide the most efficient means of attaining a
desired end, from two or more alterative (b) Alfred Marshall
courses of action. (c) Adam Smith
(a) Decision making
(b) Strategy

AD (d) L. Robbins
(CA CPT May 2018)
(c) Problem Solving
(d) Effectiveness

UP
35. Which of the following is not within the scope
of Business Economics?
41. Which one of the following is incorrect about
Business Economics ?
(a) It is applied economics that fills the gap be-
tween economic theory and business prac-
tice.
(a) capital Budgeting
(b) Business Economics integrates economic
(b) Risk Analysis
theory with business practice.
(c) Business Cycles
(c) Business Economics is also referred to as
(d) Accounting Standards Managerial Economics
(Nov. 2019) (d) Business Economics is more concerned with
36. Business Economics is Macro Economics.
(a) Abstract and applies the tools of 42. The managerial economics—
Microeconomics. (a) Is Applied Economics that fills the gap be-
(b) Involves practical application of economic tween economic theory and business prac-
theory in business decision making. tice.
(c) Incorporates tools from multiple disciplines. (b) Is just a theory concept
(d) (b) and (c) above. (c) Trains managers how to behave in recession
37. Business Economics is also known as ? (d) Provides the tools which explain various
(a) Applied Economics concepts
(b) Managerial Economics

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 5 –
Definitions of Business Economics 48. Micro-economics does not study

43. __________ defined Business Economics in (a) Consumer behaviour

terms of the use of economics in terms of the (b) Factor pricing
use of economics analysis in the formulation (c) General price level
of business policies.
(d) Firms equilibritum
(a) Joel Dean
(CA CPT Dec. 2015)
(b) Karl Marks
49. Micro Economics is also known as __________
(c) Adam Smith
(a) Public Economics
(d) Schumpeter
(b) Income Theory
44. Business Economics is essentially a component
(c) Demand Theory
of ____________ as it includes application of
selected quantitative techniques. (d) Price Theory

L
(a) Pure Economics (Nov. 2020)
50. Micro Economics is the study of :

U
(b) Applies Economics
(c) Statistical Economics (a) Individual parts of the economy

(d) None of the above

AH AY (b) The economy as a whole

(c) Choice making

R HY
45. Which of the following is not included in Eco-
nomics ? (d) Development of the economy
(a) Family Structure (CA CPT June 2016)

D
(b) Managerial Economics 51. Micro economics is also known as _________:

A
(c) Micro Economics (a) Public Economics

P
(d) Macro Economics (b) Price Theory

U
46. The heart of Business Economics is (c) Income Theory
(a) Micro Economics Theory of the behaviour (d) Demand Theory
of consumers and firms in competive mar- (Jan. 2021)
kets.
52. Economics is classified into_________
(b) Macro-Economic Theory of the national in-
(a) Normative & positive
come
(b) Micro & Macro
(c) Income Economic analysis to analyse the
(c) Internal & External
industry.
(d) None of the above
(d) All of the above
(June 2023)
(CA CPT Nov. 2018)
53. Mrs. Reshma, a CEO of a company had de-
cided to expand the business by introducing a
Micro and Macro Economics new product into market. She hires a
47. Which one of the following is not a subjct mat- consultani to guide her for dedicing the pric-
ter of Micro-Economics ? ing of the new product, study the consumer
behaviour and the staff requirements.
(a) Behaviour of Firms
Approach of consultant will be to-
(b) External Value of Currency
wards__________
(c) Factor Pricing
(a) Applied conomics
(d) Location of Industry
(b) Econometrics

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 6 –
(c) Macro Economics (a) Micro Economics
(d) Micro Econimics (b) Macro Economics
(Dec. 2021) (c) Econometrics
54. The branch of economic theory that deals with (d) None of these
the problem of allocation of resources is (CA CPT Nov. 2006)
(a) Micro-Economic theory 60. Which of the following is not a subject matter
(b) Macro-Economic theory of micro economics ?
(c) Economtrics (a) Behaviour of firms
(d) None of the above (b) Location of industry
55. Which of the following is not the subject mat- (c) Consumer behaviour
ter of micro economics ? (d) Foreign exchange rate
(a) Consumer Behaviour (June 2022)
(b) Foreign Exchange Rate
(c) Behaviour of Firms

U L 61. Micro Economics Covers :

(a) National Income and National Output

H Y
(d) Location of Industry (b) External Value of Currency

A A
(June 2023) (c) Overall level of Savings and Investment.

R HY
56. Micro economics theories deal with _________. (d) Location of Industry
(a) Productions and Cost analysis 62. Which of the following is not an example of
(b) Government Policies Micro-Economics ?
(c) Total Consumption

AD
(d) Social and political environment
(a) The effect of increase in general price on
living standards

UP (Dec. 2021)
57. Which of the following is used for allocation
of resources ?
(a) Micro-Economics
(b) The effect of increase in steel import of a
country on steel prices
(c) The effect of increase in wages on Automo-
bile Industry.
(d) The effect of increase in realestate prices on
(b) Macro-Economics
the location of industry
(c) Econometrics
(Dec. 2021)
(d) Descriptive Economics
63. The study of behaviour of different individu-
(Nov. 2019) als organisations with in an economic system
58. Which of the following is not the subject mat- is known as
ter of Business Economics ? (a) Micro economics
(a) Should our firm be in the business ? (b) Macro economics
(b) How much should be produced and at price (c) Welfare economics
should be kept ?
(d) None
(c) How will the product be placed in the mar-
(Nov. 2020)
ket ?
64. A study of how increase in the corporate in-
(d) How should we decrease unemployment in
come tax rate will effect the natural unemploy-
the economy ?
ment rate is an example of :
59. The branch of economic theory that deals with
(a) Micro Economics
the problem of allocation of resources is :
(b) Descriptive Economics

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 7 –
(c) Macro Economics (c) Factor Pricing
(d) Normative Economics (d) All of the above
(CA CPT Feb. 2007) (CA CPT Dec. 2010)
____________ examines how the individual 71. Macro-economic is also called _________ eco-
units (Consumers or firms) make decisions as nomics
to how to efficiently allocate their scare re- (a) Applied
sources
(b) Aggregate
(a) Macro Economics
(c) Micro
(b) Micro Economics
(d) Experimental
(c) Mathematical Economics
(Jan. 2021)
(d) Consumer Economics
72. Macro Economics is also called ________ eco-
66. Which of the following falls under micro eco- nomics.

L
nomics ?
(a) Applied

U
(a) National Income
(b) Aggregate
(b) General price level

H Y
(c) Experimental
(c) Factor pricing

A A
(d) None of the above

R HY
(d) National saving and investment
73. Study of the behaviour of different individu-
(Ca CPT May 2007) als and organizations within an economic sys-
67. Which of these is a part of micro economics ? tem is called ?

D
(a) Factor pricing (a) Industrial Economics

A
(b) National Income (b) Macro Economics

P
(c) Balance of payment (c) Micro Economics

U
(d) None of the above (d) Welfare Economics
(CA CPT June 2011) (July 2021)
68. Which of the issue is not considered by micro 74. Which of the following does not suggest a
economics ? macro approach for India ?
(a) Production and cost analysis (a) Determining the GNP of India.
(b) Demand analysis and forecasting (b) Finding the causes of failure of ABC Ltd.
(c) Accounting standards (c) Identifying the causes of inflation in India.
(d) Resource allocation Scope of Micro (d) Analyse the causes of failure of industry in
eonomics providing large scale employment
(Dec. 2021) 75. Macro Economics is the study of___________
69. Micro economics is also known as __________ (a) All aspects of scarcity
(a) Public economics (b) The national economy and the global
(b) Price theory economy as a whole.

(c) Income theory (c) Big businesses.

(d) Demand theory (d) The decisions of individual businesses and

people.
(CA CPT June 2010)
76. A study of how increases in the corporate
70. Micro Economics is concerned with :
income tax rate will effect the national unem-
(a) Consumer Behaviour ployment rate is an example of
(b) Product pricing
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 8 –
(a) Macro-Economics visited his factory and suggested some changes
(b) Descriptive Economics with respect to staff appointment, loan avail-
ability and so on. which approach is that con-
(c) Micro-economics
sultant using ?
(d) Normative economics
(a) Micro economics
77. Which of these is an example of macro eco-
(b) Macro economics
nomics :
(c) None of the above
(a) Problem of unemployment in India
(d) Both (a) and (b)
(b) Rising price level in the country
83. Which of the following would be considered a
(c) Increase in disparities of income
topic of study in Macro economics ?
(d) All of the above
(a) The effect of increase in wages on the prof-
(CA CPT June 2011) itability of cotton industry
78. Analysis of impact of Covid-19 on the Indian

L
(b) The effect on steel prices when more steel
economy is a subject matter of ___________ is imported

U
(a) Macro economics (c) The effect of an increasing inflation rate on

H Y
(b) Micro economics living standards of people in India.

A A
(c) Economics of slicing (d) Th effect of an increase in the price of cof-

R HY
(d) Normative economics fee on the quantity of tea consumed.
79. Macro economics include 84. Which of the following is not a study of Macro-
economics ?
(a) Product pricing
(b) Consumer behaviour
(c) External value of money

AD (a) Consumer behaviour

(b) National Income

(d) Location of industry

UP (CA CPT May 2019)

80. Which of the following is not a subject matter
of Micro-economies ?
(c) General price level
(d) Level of employment
(July 2021)
85. Which of the following is a part of the subject
matter of macro economics ?
(a) The price of mangoes
(a) Study of firms
(b) The cost of producing a fire truck for he fire
department of Delhi, India. (b) Aggregate profits of a firm
(c) The quantity of mangores produced for the (c) Market demand for a product
mangoes market. (d) Net national product.
(d) The natonal economy’s annual rate of (CA CPT Dec. 2012)
growth. 86. A study of how increase in the corporate in-
81. Which of the following statements is correct ? come tax rate will affect the national unem-
(a) Microeconomics is important for study of a ployment rate an example of
particular household and a particular firm. (a) Macro-Economics
(b) Macro economics is imprtant for study of (b) Descriptive Economics
economic conditions of a country. (c) Micro-economics
(c) None of the above (d) Normative Econimics
(d) Both (a) and (b) 87. The Macro Economics does not cover the area
82. Mr. Satish hired a business consultant to guide of
him for growth of his business. The consulant (a) General price level and interest rates
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 9 –
(b) Level of employment and rate of economic (c) The general price level and interest rates
growth (d) Economics conditions of a Section of people
(c) Balance of trade & Balance of payments (Jan. 2021)
(d) Product Pricing Nature of Business Economics
88. Normative science suggests which of the fol-
92. Business Economics enables application of
lowing :
economic logic and analytical tools to
(a) What should be
(a) Bridge the gap between theory and practice.
(b) What to produce
(b) Increase the implementation science
(c) How to produce
(c) Increase the effectiveness.
(d) When to produce
(d) Apply tools of macro economics
(June 2022)
93. Business Economics relies heavily on the tech-
89. Shyam : This year due to heavy rainfall my niques of____________.

L
option crop was damaged
(a) Micro Economics

U
Krishna : Climates affects crop yields. Some
(b) Macro Economics

Y
years are bad, other are good Hari : Don’t

H
worry. Price increase will compensate for the (c) Normative Science only

A A
fall in quantity supplied (d) Economics discipline only

R HY
Radhe : The Government ought to guarantee 94. Which one of the following is not the scoe of
that our income will not fall. In this conversa- business economics ?
tion, the normative stateent is made by (a) Cost standards
(a) Shyam
(b) Krishna

AD (b) Cost analysis

(c) Demand analysis
(c) Hari
(d) Radhe

UP (CA CPT May 2019)

90. Which of the following statements is incorrect
(d) Inventory management
(July 2021)
95. Business Economics is pragmatic in approach
because of which of the following cause?
about Macro Economics ? (a) Based on assumptions
(a) Macro-Economics is the branch of Econom- (b) Tackles pratical problems
ics that deals with the study of the behaviour
(c) Considers profit only
and performance of the economy in total.
(d) Considers internal value
(b) Macro-Economics studies the particular
(June 2022)
market segment of the economy.
96. Which of the following is a normative state-
(c) Macro-Economics deals with various issued
ment ?
like national income. distribution, employ-
ment general price level money and more. (a) Planned economies allocate resources via
government departments.
(d) It is applied to environmental and extrnal
issues. (b) Most transitional economies have experi-
enced problems of falling output and rising
(Dec. 2021)
prices over the past decade
91. Which one of the area comes under macro-eco-
(c) There is a greater degree of consumer sov-
nomics ?
ereignty in market economies than planned
(a) Product pricing
economies.
(b) Consumer behaviour
(d) Reducing inequality should be a major pri-
BUSINESS ECONOMICS FOR C.A. FOUNDATION ority for mixed
BY : RAHUL economies
UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 10 –
97. An example of ‘positive’ economic analysis volves evaluating whether some of these are
would be : good or bad for the welfare of the people.
(a) An analysis of the relationship between the (c) Normative Economics describes the facts of
price of food and te qantity purchased. the economy while positive Economics in-
(b) Determining how much income each person volves evaluating whether some of these are
should be guaranteed. good or bad for the welfare of the people.

(c) Determining the ‘fair’ price for food. (d) Positive Economics pescribes while norma-
tive Economics describes.
(d) Deciding how to distribute the output of the
economy, 102. Normative aspect of Economics is given by :

98. Which of the followng is not a correct state- (a) Marshall

ment ? (b) Robbins
(a) Business Economics is a normative science. (c) Adam Smith

L
(b) Business Economics is based largely on (d) Samuelson
Micro Economics (CA CPT Dec. 2008)

Micro Economics

H U
(c) Business Economics is based largely on

Y
103. Normative Economics is based on :
(a) Ethical Considerations

A A
(d) Business Economics does not incorporate
(b) Facts and Generalization

R HY
elements of Macro Economics
(c) What is ?
(June 2023)
(d) All of the above.
99. Which of the following is not a correct state-

D
ment ? (CA CPT Dec. 2008

A
(a) Business economics is a normative science 104. Deductive and Inductive methods are complimen-

P
tary to each other. It is :
(b) Business economics is an art
(a) Absolutely correct

U
(c) Business economics is an art
(b) Absolutely incorrect
(d) Business economics does not incorporae el-
ements of macro economic analysis. (c) Partially incorrect

(June 2022) (d) None of the above

100. Business Economics is __________ in its (CA CPT June 2013)

approah as it tackles practical problems which 105. In inductive method, logic proceeds from :
the firm faces in the real world. (a) General to Particular
(a) Scientific (b) Particular to General
(b) Programmatic (c) Both (a) to and (b)
(c) Theoretical (d) None of these
(d) Mathematical. (CA CPT June 2012)
101. The difference between positive and norma- 106. Which of the following is a normative eco-
tive Economics is : nomic statement ?
(a) Positive Economisexplains the performance (a) Unemployment rate decreases with
of the economy while normative Econom- industrialization
ics finds out the reasons for poor perfor-
(b) Economics is a social science that studies
mance.
human behaviour
(b) Positive Economics describes the facts of the
(c) The minimum wage should be raised to
economy while normative Economics in-
ˆ200 per day

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 11 –
(d) India spends a huge amount of money on 112. _________ analyses causes and effect relation-
national defence.. ship betwn variables in an objective and sci-
107. Ram : My corn harvest this year is poor. entific manner.

Krishan : Don’t worry. Price increases will (a) Positive Science

compensate for the fall in quantity supplied. (b) Normative Science
Vinod : Climate effects crop yields. Some years (c) Negative Science
are bad, others are good. (d) Analytical Science
Madhu : The Government ought to guarantee 113. Business Economics is generally ___________
that our income will not fall. in nature.
In this conversaton, the normative statement (a) Normative
is made by
(b) Prescriptive
(a) Ram
(c) Normative or Prescriptive

L
(b) Krishan
(d) Theoretical
(c) Vinod

U
114. Which of the following statements is incorrect?
(d) Madhu

H Y
(a) Business economics is normative in nature
108. Positive Science only explains __________

A
(b) Business Economics has a close connection

A
(a) What is ?

R HY
with statistics.
(b) What ought to be ? (c) Business Economist need not worry about
(c) What is right or wrong ? macro variables.

D
(d) None of the above (d) Business Economics is also called Manage-

A
(Nov. 2020) rial Economics.

P
109. Positive science only explains 115. Under Inductive method, the logic proceeds
from:

U
(a) What is ?
(a) General to particulars
(b) what ought to be ?
(b) Particular to general
(c) What is right or wrong
(c) Both (a) and (b)
(d) None of the above
(d) None
(CA CPT Dec. 2013)
(CA CPT Nov. 2007)
110. Under Inductive method logic proceeds from
116. Rama : My corn harvest this year is poor.
(a) General to particular
Manoj : Don’t worry Price increase will com-
(b) Positive to normative
pensate for this fall in quantity supplied.
(c) Normative to positive
Meera : climate affects crop yield. Some years
(d) Purticular to general are bad, others are good.
(CA CPT Dec. 2014) Bharti : The Government ought to guarantee
111. __________ economics explain economics phe- that our income will not fall.
nomenon according to their causes and effects. In this conversation, the normative statement
(a) positive is made by :
(b) Normative (a) Rama
(c) Empirical (b) Manoj
(d) Applied (c) Meera
(Nov. 2020) (d) Bharti
(Jan. 2021)
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 12 –
117. Who gave the positive aspect of science ? (c) Positive economics
(a) Alfred Marshall (d) Normative economics
(b) A.C. Pigou (CA CPT Dec. 2013)
(c) Adam Smith 123. The Business Economics incorporates tools
(d) Robbins from other disciplines such as Mathematics,
operations Research, Managements theory,
(CA CPT June 2011)
Accounting, etc. Therefore, Business Economis
118. Althoughbusiness economics combines the es- is ______
sentials of normative and positive economic
(a) Intra-disciplinary
theory but the emphasis is on :
(b) Inter-disciplinary
(a) Positive
(c) Multi disciplinary
(b) Normative
(d) Flexi-disciplinary
(c) Both Positive and Normative

L
124. Under inductive method logic proceeds from :
(d) Neither Positive nor Normative

U
(a) General to particular
119. Business Economics is
(b) Positive to narrative

H Y
(a) Normative in nature
(c) Normative to positive

A A
(b) Interdisciplinary in nature

R HY
(d) Particular to general
(c) Both
(CA CPT May 2018)
(d) None
125. Business Economics involves the elements of
(CA CPT May 2019)

D
(a) Micro Environment
120. Find out the correct statement

A
(b) Macro Environment
(a) Higher the price, lower the quality demanded

P
(c) Both (a) and (b)
of a product are a normative statement

U
(d) None of the above
(b) Micro and macro-economics are interdepen-
dent (CA CPT Nov. 2018)

(c) In a capitalist economy, the economic prob- 126. In which of he following methods conclusions
lems are solved by planning commission ae drawn on the basis of collection and analy-
sis of facts ?
(d) In deductive method logic proceeds from
particular to the general (a) Deductive method

(CA CPT Dec. 2015) (b) Scientific method

121. “Economics is neutral between ends”. The (c) Inductive method

statement is given by : (d) Experimental method
(a) I. Robbins (CA CPT June 2017)
(b) Mrs. Joan 127. Business economy involves ttheory of Business
(c) Alfred Marshall economics with___________

(d) A. C. Pigou (a) Normative Economics

(CA CPT June 2013) (b) Business practices

122. Economics which is concerned with welfare (c) Micro Economics

propositions is called (d) Macro Economics
(a) Socialstic economics (CA CPT Nov. 2018)
(b) Capitalistic economics

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NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 13 –
Scope of Business Economics 133. Which of the below enables application of eco-
nomic logic and analytical tools to bridge the
128. The operational o interval issues to which eco-
gap between theory and practice ?
nomic theories can be directly applied are re-
lated with. (a) Macro economics
(b) Micro economics
(a) Micro Economics
(c) Business economics
(b) Macro Economics
(d) Traditional economics
(c) Business Economics
(June 2023)
(d) Environmental Economics
134. Applied economics includes
129. The scope of business Economics encompasses
all of the following except__________ (a) Regression analysis and mathematical lin-
ear programming
(a) Accounting Standards
(b) Capital budgeting
(b) Resource Allocation

L
(c) Both (a) and (b)
(c) Inventory Management

U
(d) None
(d) Profit Analysis

H Y
(CA CPT May 2019)
(Dec. 2021)

A
135. Which of the following is not within the scope

A
130. Business Economics is essentially a component

R HY
of Business Economics ?
of Applied Economics as it includes applica-
tion of selected quantitative techniques. Which (a) Capital Budgeting
technique is not included in it ? (b) Risk Analysis

D
(a) Regression analysis (c) Business Cycles

A
(b) Capital budgeting (d) Accounting Standards

P
(c) Economic analysis 136. _________ explains therelationship between

U
(d) Linear programming inputs and output.

131. Which factor is included in business Econom- (a) Production Theory

ics ? (b) Demand Analysis
(a) Business Economics is an art (c) Inventory Management
(b) Inter-disciplinary in nature (d) None of the above
(c) Normative in nature 137. Business Economics with the help of advanced
(d) All of the above tools like _________ enables the firm to arrive
at the best course of action for optimum
(CA CPT Nov. 2018)
utilisation of available resources.
132. Business economics is pragmatic in its ap-
(a) Accounting
proach because ?
(b) Finance
(a) It tackles practical problem which he firm
faces in real world. (c) Linear Programming

(b) It tackles practical problem which the firm (d) Marketing Mix
faces due to WTO policies 138. The nature of business economics is
(c) It tackles practical problem which the firm (a) Positive in nature
faces due to lack of directors. (b) Pure science
(d) Business economics is abstracts and purely (c) Pragmatic
theoretical.
(d) Independent
(July 2021)
(Nov. 2020)
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 14 –
139. Business Economists use method(s) _________ (c) Normative
to maintain optimum stock of inventories. (d) Positive as well as Normative
(a) ABC Analysis 146. Business Economics concentrateson ________
(b) Simple simulation exercises aspects of any business problem.
(c) Mathematical models (a) Economic
(d) All of the above (b) Non-Economic
140. Which of the following Macro-Economic Fac- (c) Both Economic as well as Non-Economic
tor is considered in Busines Economics ? (d) Macro Economic
(a) Business Cycles 147. Business Economics makes use of micro-eco-
(b) Employment, Prices nomic analysis. Which of the following is NOT
(c) Saving & investment a part of such analysis ?

(d) All of the above (a) Demand analysis and forecasting

L
(b) Production and Cost Analysis.

U
Difference between Economics and (c) Theory of Capital and Investment decisions

Y
Business Economics

H
(d) National Income

A
141. Which of the following involves the applica- 148. Which of the following is NOT a part of Macro

problems ?
(a) Macro Economics A
R HY
tion of economic principles to solve economic Economics ?
(a) Business Cycles
(b) National Income

D
(b) Economics (c) Saving and Investment

A
(c) Business Economics (d) Demand Analysis and Forecasting

P
(d) Practical Economics 149. Unlimited ends and limited means together

U
142. What is the character of Economics ? present the problem of__________
(a) Micro-economics (a) Scarcity of resources
(b) Macro-economics (b) Choice
(c) Micro as well as Macro Economic (c) Distribution
(d) Positive Economics (d) None of the above
143. What is the character of Business Economics? 150. Which of the following statements is/are cor-
(a) Micro-economics rect regarding business economics ?

(b) Macro-economics (a) Absolute s

(c) Micro as well as Macro Economic (a) business economics attempts to indicate how
business policies are firmly rooted to eco-
(d) Positive Economics
nomic principles.
144. What is the nature of Economics ?
(b) Business economics uses micro economic
(a) Positive analysis of the business unit and macro eco-
(b) Negative nomic analysis of business environment
(c) Normative (c) Business economics takes a pragmatic ap-
(d) Positive as well as Normative proach towards facilitating an integration be-
tween economic theory and business prac-
145. What is the nature of Business Economics ?
tices
(a) Positive
(d) All of the above
(b) Negative

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NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 15 –
UNIT-2: BASIC PROBLEMS OF AN ECONOMY
AND ROLE OF PRICE MECHANISM
Basic Problems of an Economy (a) Scarcity of resources
151. Which of the following statement is false ? (b) Unemployment
(a) The Resources are limited (c) Poverty
(b) The Resources have alternative uses. (d) Inflation
(c) If resources are unlimited, people would be (June 2023)
able to satisfly all their wants. 157. Which of the following is the central problem
(d) The economics problem arises because re- of the economy ?
source has only a single use (a) Unemployment
152. The central economic problem of an economy (b) Poverty
arises due to _________

L
(c) Scarcity of resources
(a) Scarcity of resources relative to the wants
(d) Inflation

H U
(b) Co-existences of private and public sector

Y
(c) Govt. interference in economic activities
(June 2022)
158. The Central problem in every economic soci-

A A
(d) Federal structure of Constitution ety is :

R HY
(July 2021) (a) To ensure a minimum level of income for
153. The basic problem of scarcity give rise to : every individual
(b) To allocate scarce resources in such a man-

D
(a) Technological problems
(b) Social problems ner that societies unlimited wants are satis-

A
fied in the best possible manner.
(c) Cultural problems

P
(c) To ensure that production occurs in the most
(d) Economic problems

U
efficient manner.
154. Which of the following economic system has
(d) To provide job to every job socker.
to deal with the control problem of scarcity of
resources ? (CA CPT June 2017)

(a) Capitalist 159. A developed economy uses __________ tech-

nique in production
(b) Socialist
(a) Labour intensive
(c) Mixed
(b) Capital intensive
(d) All of the above
(c) Home-based
155. In economics, the central economic problem
means : (d) Traditional

(a) Output is restricted to the limited availabil- (Ca CPT June 2010)
ity of resources 160. The ‘Central Economics problem’ does not
(b) Consumer do not have as mch money as they deal with which of the following economic
would wish problems ?

(c) There will always be certain level of unem- (a) What to produce ?
ployment (b) How to produce
(d) Resources are not always allocated in an (c) For whom to produce ?
optimum way. (d) Where to produce ?
156. Which of the following is the central problem (July 2021)
of economy ?
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 16 –
161. The central problem in economics is that of (b) Resources are limited
(a) Comparing the success of command versus (c) Alternative uses of resources
market economies (d) All of the above
(b) Guaranteeing that production occurs in the (CA CPT Dec. 2009)
most efficient manner.
167. Which of the following is not one of the four
(c) Guaranteeing a minimum level of income central questions that the study of economics
for every citizen. is supposed to answer ?
(d) Allocating scarce resources in such a man- (a) Who produces what ?
ner that society’s unlimited needs or wants
(b) When are goods produced ?
are satisfied in the best possible manner.
(c) Who consumes what ?
162. Which of the following refers to the sum total
of arrangements for the product and distribu- (d) How are goods produced ?
tion of goods and services in society ? 168. The classification of economies into Capital-

L
(a) Economic System ist. socialist and Mixed is based on their :

U
(b) Business system (a) Mode of Production, exchange and
distribution.

H Y
(c) Capitalist Economic System
(b) Government’s role in economic activity.

A A
(d) Socialist Economic System

R HY
(c) Both (a) and (b)
163. Capital intensive technique would get chosen
in a (d) Neither (a) and (b)

(a) Labour surplus economy whee the relative 169. The choice between labour and Capital inten-

D
price of capital is lowe. sive techniques is related with.

A
(b) Capital surplus economy where the relative (a) What to Produce ?

P
price of capital is lower (b) How to Produce ?

U
(c) Developed economy where technology is (c) For whom to Produce ?
better (d) All of the above
(d) Developing economy where technology is
poor.
Capitalist Economy
164. Which of the following is not a part of central
170. Which one of the following is not an example
economic Problem ?
of capitalist economy ?
(a) What is Produce ?
(a) Japan
(b) How to Produce ?
(b) Mexico
(c) For whom to Produce ?
(c) Germany
(d) Price fixation of Production.
(d) Cuba
165. ___________ refers to the sum total of arrange-
171. The capitalist Economy uses ___________ as
ments for the production and distribution of
principle means of allocation of resources.
goods and services in a Society.
(a) price
(a) Economic System
(b) Demand
(b) Social System
(c) Supply
(c) Business System
(d) None of he above
(d) Comprehensive System
(Nov. 2019)
166. Economic Problem arises when :
[Link] of choice is the advantage of
(a) Wants are unlimited
___________
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NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 17 –
(a) Socialists (b) Supply
(b) Capitalist (c) Efficiency
(c) Mixed economy (d) Prices
(d) None of the above 179. An economic system is which all means of pro-
(CA CPT May 2019) duction are owned and controlled by rivate in-
dividuals for profit is called as ?
173. A capitalist economy consists of
(a) Free economy
(a) Central planning authority
(b) Capitalist economy
(b) A mechanism to decide as what how and for
whom to produce (c) Normative economy

(c) Both (a) and (b) (d) Socialist economy

(d) None of the above (June 2023)

(CA CPT May 2019) 180. Laissez-faire economy is also known as :

U L
174. Capitalist system offer incentives for :
(a) Efficient business decisions
(a) Capitalist economy
(b) Socialist economy

H Y
(b) Efficient government decisions (c) Mixed economy

A A
(c) Efficient non-government decisions. (d) Communist economy

R HY
(d) Efficient economic decisions (Jan. 2021)

175. In capitalistic economy______ and______will 181 Capitalist system offer incentives for ________
be more (a) Efficient business decisions

AD
(a) Equalities, non-exploitation
(b) Inequalities, exploitation
(b) Efficient goverment decisions
(c) Efficient non government decsions

UP
(c) Explotation, equalities
(d) Non-exploitation, inequalities
(Nov. 2020)
176. In a free market economy the allocation of re-
(d) Efficient economic decisions
(Jan. 2021)
182. One of the demerits of capitalism is that it leads
to formation of ________
sources is determined by (a) Duopoly
(a) Voting done by consumers (b) Oligopoly
(b) A entral planning authority (c) Monopoly
(c) Consumer preferences. (d) Perfect Competition
(d) The level of profits of firms. (Dec. 2021)
177. An economy is called capitalist economy, when 183. Price mechanism is the main feature of which
________ is given. economy
(a) Right to private property (a) Capitalistic Economy
(b) Freedom of Government interference (b) Mixed Economy
(c) Freedom of business choices (c) Socialist Economy
(d) Discrimination (d) All of the above
(Jan. 2021) (CA CPT Nov. 2018)
178. A capitalist economy uses___________as the 184. Profit motive is a merit of
principal means of allocating resources. (a) Socialism
(a) Demand (b) Capitalism
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NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 18 –
(c) Mixed economy 190. Exploitation and inequality will be more
(d) None of the above in_________.

185. Which out of these are the feature of capital- (a) Socialism
ism ? (b) Capitalism
(i) Profit motive (c) Mixed
(ii) Human welfare (c) All of the above
(iii) Work through price mechanism (CA CPT May 2019)
(a) (i) and (ii) 191. ___________ means that buyers ultimately de-
(b) (ii) and (iii) termine which goods and services will be pro-
duced and in what quantities.
(c) (i) and (iii)
(a) Capitalist Economic
(d) All of these
(b) Socialist Economy
(CA CPT Nov. 2018)

L
(c) Mixed Economy
186. Which of the following is not one of the fea-

U
tures of capitalist economy ? (d) Consumer Sovereignty

H Y
(a) Right of private property 192. Consumers’ sovereignty is a typical feature of
___________.

A A
(b) Freedom of choice by the consumers

R HY
(a) Command economy
(c) No profit, No Loss motive
(b) Socialistic economy
(d) Competition
(c) Mixed economy
187. Capitalist economy solve their economic prob-

D
lems through which of the following ? (d) Capitalist economy

A
(a) Central Planning Authority 193. In which type of economy do consumers and

P
producers make their choices based on the
(b) Price mechanism
market forces of demand and supply ?

U
(c) Administered Prices
(a) Open Economy
(d) Voting done by customers
(b) Controlled Economy
(June 2023)
(c) Command Economy
188. ________ is an economic system in which all
(d) Market Economy
means of production are owned and controlled
by private individuals for profit. (CA CPT Feb. 2007)

(a) Capitalist 194. The economy system in which all the means of
production are owned and controlled by pri-
(b) Socialist
vate individuals for profit.
(c) Mixed
(a) Socialism
(d) None of the above
(b) Capitalism
189. Which of the following is considered as a dis-
(c) Mixed economy
advantage of allocating resources using the
market system ? (d) Communism

(a) Income will tend to be unevenly distributed 195. In a free market economy, when consumers
increase their purchase of a good and the level
(b) People do not get goods of their choice
of _______ exceeds ________ then prices tend
(c) Men of Initiative and enterprise are not to rise:
rewarded.
(a) Demand supply
(d) Profits will tend to be low.
(b) Supply demand

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NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 19 –
(c) Prices, demand (a) Profit motive
(d) Profits, supply (b) Income inequality
(CA CPT Aug. 2007) (c) Free employment
196. Capitalistic Economy uses ________ as prin- (d) Collective ownership
cipal means of allocating resources. (CA CPT June 2009)
(a) Demand 202. Consumer sovereignty is found in which
(b) Supply economy ?
(c) Price (a) Capitalist economy
(d) All of the above (b) Socialist Economy
(CA CPT Nov. 2006) (c) Mixed Economy
197. In a capitalist economy alocaton of resources (d) Communist Economy
is done by : (Nov. 2019)
(a) Producers
(b) Government

U L 203. Capitalistic Economy uses ________ as prin-

cipal means of allocating resources.

H Y
(c) Planners (a) Demand

A A
(d) rice mechanism (b) Supply

R HY
(CA CPT June 2012) (c) Price
198. A Free-Market economy solves its Central (d) All of the above
Problems through _________. (CA CPT Dec. 2009)
(a) Planning authority
(b) Market mechanism

AD 204. Which one of the following is not true about

capitalist economy ?
(c) Both
(d) None

UP(CA CPT Dec. 2008)

199. Capitalistic economy uses ________ as princi-
(a) There is freedom of economic choice
(b) Profit motive is the driving force
(c) It is also called as free market economy or
laissez-Faire economy.
pal means of allocating resources (d) Producer is the king under capitalism
(a) Demand 205. The merits of Capitalist economy do not in-
(b) Supply clude:

(c) Price (a) Faster process of economic growth

(d) All of the above (b) Efficient economic decisions and their
implementation
(Nov. 2019)
(c) Incentives for innovation and technological
200. A capatalist economy is by and large _______.
progress
(a) A closed economy
(d) Welfare of labour
(b) A free market economy
206. A free market economy’s driving force is :
(c) A centrally controlled economy
(a) Profit motive
(d) An economy in which a government neither
(b) Welfare of the people
collects any taxes nor incurs any expendi-
ture. (c) Rising income and levels of living

(CA CPT Dec. 2012) (d) None of the above

201. Which one is not the characteristic of capital- (CA CPT June 2013)
istic economy ?
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 20 –
207. Capitalist or Laisser faire economy has which (c) Price
of the following characteristics ? (d) All of the above
(a) Relatively equal income distribution (CA CPT May 2018)
(b) Competition 213. Factors of production are owned by _______
(c) Price mechanism in market economies.
(d) Collective ownership (a) Govt.
(Dec. 2021) (b) Investors
208. An economic system in which all means of pro- (c) Privately
duction are owned and controlled by private (d) None
individuals for profit is called:
(Nov. 2019)
(a) Mixed Economy
214. Which of the following is not demerit of Capi-
(b) Socialist Economy talism ?

L
(c) Capitalist Economy (a) Precedence of property rights over human

U
(d) Developed Economy rights.

H Y
(CA CPT Dec. 2016) (b) Misallocation of resources

A
209. Where does price mechanism exists ? (c) Punishment for inefficient & imprudent men
(a) Capitalist Economy
(b) Socialist Economy
A
R HY
(c) Both type of economies
(d) Environmental degradation due to excessive
materialism
215. Freedom of choice is the advantage of

D
(d) None of the above (a) Socialism

A(CA CPT Dec. 2013) (b) Capitalism

P
210. In which among the following systems the (c) Mixed Economy

U
‘right to property’ exists (d) Communism
(a) Mixed economy (CA CPT Dec. 2016)
(b) Capitalist economy 216. Under a free economy prices are:
(c) Socialist economy (a) Regulated
(d) Traditional economy (b) Determined through free interpplay of de-
(CA CPT Dec. 2013) mand and supply

211. A system of economy in which all the means of (c) Partly regulated
production are owned and controlled by the (d) None of these
private individuals for the purpose of profit, (CA CPT May 2007)
is called :
217. Which of the following statements does not ap-
(a) Socialist Economy ply to a market economy ?
(b) Capitalist Economy (a) Firms decide whom to hire and what to pro-
(c) Mixed Economy duce.
(d) All of the above (b) Firms aim at maximizing profits
(CA CPT June 2013) (c) Households decide which firms to work for
212. Capitaistic Economy user ________ as princi- and what to buy with their incomes.
pal means of allocating resources : (d) Government policies are the primary forces
(a) Demand that guide the decisions of firms and house-
holds.
(b) Supply
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 21 –
218. Economic system is self-regulating and run by Socialist Economy
invisible hands. 224. The Concept of socialist economy was pro-
(a) Mixed pounded by
(b) Socialistic (a) Karl Mark
(c) Capitalistic (b) Frederic Engels
(d) Planned (c) Adam Smith
219. Which of the following is not a feature of a (d) Both (a) & (b)
capitalist economy ?
225. Which of the following is NOT a characteris-
(a) Right to private property tic of a socialist economy ?
(b) Restrictions on consumes Right to choose (a) Absence of consumer choice
(c) Profit motive (b) Central planning
(d) Freedom of enterprise (c) Relatively equal income distribution

L
(CA CPT June 2014) (d) Competition

U
220. Freedom of choice is the advanage of
226. Socialist economy is ___________

Y
(a) Socialism

H
(a) Self regulation

A
(b) Capitalism

A
(b) Profit Oriented

R HY
(c) Communism
(c) Command economy
(d) None of the above
(d) Allocation of resources as per markes re-
221. A Capitalist Economy follows the policy of : quirements.

D
(a) Laissez faire (CA CPT May 2019)

A
(b) Regulated markets
227. Under which of the following economy the con-

P
(c) Promoting public sector sumer has limited freedom of choice ?

U
(d) None of the above (a) Social
(CA CPT Dec. 2012) (b) Mixed
222. In a capitalist economy the allocation of re- (c) Capital
sources is performed by :
(d) Resricted
(a) Producers
(June 2023)
(b) Government
228. The concept of socialist economy was pro-
(c) Planners
pounded by __________
(d) Price mechanism
(a) Alfred Marshall
(CA CPT Dec. 2011)
(b) Joel dean
223. Which of the following statement does not ap-
(c) Albert Einstein
ply to a market economy ?
(d) Karl Marx and Fredric Engles
(a) Firms decide whom to hire and what to
product. (Dec. 2021)

(b) Firms at maximizing profits 229. Exploitation and inequality are minimal
under :
(c) Households decide which firms to work for
and what to buy with their incomes (a) Socialism
(d) Government policies are the primary forces (b) Capitalism
that guide the decisions of firms and house- (c) Mixed economy
holds.
(d) None of the above
(Nov. 2019)
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 22 –
230. Socialist Economy was propounded by : (c) Capitalism
(a) Karl Marx (d) None
(b) Samuelson (CA CPT Dec. 2011)
(c) A.C. Pigou 236. Administered prices refer to:
(d) Adam Smith (a) Prices determined by forces of demand and
(CA CPT May 2018) supply

231. Socialst economy is also called as (b) Prices determined by sellers in the market

(a) Command Economy (c) Prices determined by an exernal authority

which is usually the government
(b) Centrally Planned Economy
(d) None of the above
(c) Free market Economy
237. Socialism ensures
(d) Both (a) & (b)
(a) Rapid growth and balanced development

L
232. The economic system in which production and
distribution of goods are aimed at maximiz- (b) Right to work

U
ing the welfare of the community as a whole is (c) Incentives for efficient economic decisions

H Y
known as ____________ (d) Both (a) and (b)

A
(a) Capitalism

A
(CA CPT May 2019)

R HY
(b) Socialism 238. A socialistic economy is also called as
(c) Mixed economy (a) Profit oriented economy
(d) Communist Economy (b) Centrally planned economy

AD (July 2021)
233. Which of the following statements is not cor-
(c) Self-regulatory economy
(d) Unorganized economy

P
rect?
(Nov. 2020)

U
(a) Scarcity of resources is the key problem of
239. Which of the following is one of the merits of
all economies
socialism ?
(b) Economic inequalities lead to wide differ-
(a) Importance given to personal efficiency
ence in economic opportunities to people
(b) Importance given to productivity
(c) Economic instability very common under
capitalism (c) Incentive for economic decisions

(d) Freedom of enterprise is one of the main (d) Rapid growth and balanced economic
characteristic of command economy development.

(June 2022) (June 2023)

234. Although Price mechanism exists in _______ 240. In a socialistic economy the allocation of re-
but it has only a secondary role. sources is done by

(a) Capitalist economy (a) Market prices

(b) Socialist economy (b) Consumer preferences

(c) Mixed Economy (c) A central planning authority

(d) Price Economy (d) The level of corporate profits

235. Inequalities of income do not perpetuate in (June 2022)

__________. 241. ________ involves the predominance of
(a) Socialism boreaucracy and resulting in inefficiencies and
delays.
(b) Mixed economy
(a) Socialistic economy
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 23 –
(b) Capitalist economy 248. _________ involves the predominance of bu-
(c) Mixed economy reaucracy and resulting inefficiencies and de-
lays
(d) Free market economy
(a) Socialistic economy
242. The estwhile U.S.S.R. is an example of _______
economy. (b) Capitalist economy

(a) Capitalist (c) Mixed economy

(b) Socialist (d) Free market economy

(c) Mixed (June 2022)

(d) Price 249. Under _________ the Consumers have no free-

dom of choice.
243. The concept of Socialist economy was pro-
(a) Capitalist
pounded by ___________
(b) Socialist
(a) Karl Marx and Adam Smith

L
(c) Mixed
(b) Frederic Engels and Adam Smith

U
(d) None of the above
(c) Frederic Engels
250. Socialist Economy is also known as

H Y
(d) Karl Marx and Frederic Engels
(a) Mixed Economy

A A
(July 2021)

R HY
(b) Planned Economy
244. Which one of the following is Not a feature of
(c) Capitalist Economy
socialist economy ?
(d) None of the above
(a) Collective ownership

D
(CA CPT Dec. 2013)
(b) Absence of consumer choice

A
251. Socialist economy is called as _________
(c) Minimum role of Price Mechanism

P
(a) Centrally planned economy
(d) High Competition

U
(b) Mixed economy
245. Which of the following is an example of So-
cialist economy ? (c) Private economy
(d) Consumer economy
(a) Erstwhile U.S.S.R.
252. In which economic system production and dis-
(b) North Korea
tribution of goods and services aim at maxi-
(c) China and Cuba mizing the welfare of community as a whole.
(d) All of the above (a) Normative
246. A socialist economy is called as which of the (b) Mixed
following
(c) Socialism
(a) Command economy
(d) Capitalistic economy
(b) Military economy
(Nov. 2020)
(c) Behaviouralist economy
Mixed Economy
(d) Applied economy
253. In which economy market and government
(June 2022) both play on important role ?
247. The demerits of Socialism do not include :
(a) Mixed economy
(a) Predominance of bureaucracy
(b) Socialistic economy
(b) Red tapism & favouritism
(c) Capitalistic economy
(c) Corruption
(d) Business economy
(d) Consumer Sovereigny
(CA CPT Nov. 2018)
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 24 –
254. Important feature of mixed economy is ______ (c) Co-existence of both rural and urban sec-
(a) Only Public Sector tors in the economy.

(b) Absence of consumer behaviour (d) Co-existence of both large and small indus-
tries in the economy.
(c) Absence of government interferences.
260. In which economy, cost benefit analysis is used
(d) Co-existences of both private and public
to answer the fundamental questions of
enterprises.
economy
(Dec. 2021)
(a) Socialistic economy
255. Which economic system is described by
(b) Capitalistic economy
Schumpeter as capitalism in he oxygen tent ?
(c) Regulatory economy
(a) Laissez-faire Economy
(d) Mixed economy
(b) Command Economy
(Nov. 2020)
(c) Mixed Economy

L
261. Mixed economy means
(d) Agrarian Economy

U
(a) All economic decisions are taken by Cen-
(CA CPT May 2018)
tral Authority

H Y
256. The Government itself must run important
(b) All economic decisions are partly taken by

A
and selected industries and eliminate the free

A
the state and partly by private enterpreneurs

R HY
play of profit motive and self-interest. It is
applicable in case of _________economy. (c) Economy decisions are partly taken by the
state and artly by private enterpreneurs
(a) Capitalist

D
(d) None of these
(b) Socialist
(CA CPT June 2009)

A
(c) Mixed
262. Which of he following are the features of a

P
(d) Price
mixed economy ?

U
257. _________ both are the tools used in the Mixed
(a) Planned economy
economy.
(b) Dual system of pricing exists
(a) Price inechanism and market
(c) Balance regional development
(b) Central planning and bureaucracy
(d) All of the above
(c) Price mechanism and central planning
(CA CPT June 2012)
(d) Administered prices and competition.
263. In a mixed economy
258. Co-existence of public and private sector is the
feature of _________ (a) All economic decisions are taken by the cen-
tral authority
(a) Capitalist Economy
(b) All economic decisions are taken by privae
(b) Mixed Economy
entrepreneurs.
(c) Socialist Economy
(c) Economic decisions ae partly taken by the
(d) Federal Economy state and partly by the private entrepreneurs.
(Jan. 2021) (d) None of the above.
259. The term “Mixed Economy” denotes : 264. _________ is also called as command economy
(a) Absolute s (a) Socialist
(a) Co-existence of both consumers and produc- (b) Capitalist
ers goods’ industries in the economy.
(c) Mixed economy
(b) Co-existence of both private and public sec-
(d) None of the above
tors in the economy.
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 25 –
265. In a mixed economy, there are _________ sec- (b) Socialistic economy is not always a ‘golden
tors of industries. path’ between mixed economy and capital-
(a) Two ism.

(b) Three (c) Capitalistic economy is not always a ‘golden

path’ between mixed economy and social-
(c) Four
ism.
(d) Five
(d) Mixed economy is always a ‘golden path’
(Jan. 2021) between capitalism and socialism.
266. Which of the following statement is correct ? (June 2021)
(a) Mixed economy is not always a ‘golden path’ 271. Mixed economy means :
between capitalistic and socialistic economy.
(a) Co-existence of both private and public
(b) Socialistic economy is not always a ‘golden sector
path’ between mixed economy and capital-
(b) Co-existence of poor and rich people

L
ism
(c) Both (a) and (b)

U
(c) Capitalistic economy is not always a ‘golden
path’ between mixed economy and social- (d) None
ism

AH AY
(d) Local economy is not always a ‘golden path’
(CA CPT June 2011)
272. Which of the following economic system is self

R HY
between internal and international economy. regulating and run by in available hands ?
(June 2022) (a) Mixed economic system

D
267. Dual system of pricing exist in : (b) Socialistic economic system
(a) Free market economy (c) Capitalist economic system
(b) Socialistic economy
(c) Mixed economy

P A (d) Planned economic system

(June 2022)
(d) None of the above

U (CA CPT June 2012)

268. Which Economic System is described by
Schumpeter as ‘capitalism in the oxygen tent?
273. Mixed economy means :
(a) Co-existence of small and large industries
(b) Promoting both agriculture and industries in
the economy
(a) Laissez-Faire Economy (c) Co-existence of rich and poor
(b) Command Economy (d) Co-existence of public and private sectors.
(c) Mixed Economy (CA CPT June 2008)
(d) Agrarian Economy 274. __________ is a sector in which both the gov-
(CA CPT June 2017) ernment and the private enterprises have equal
access and join hands to produce commodi-
269. The existence of three sectors of industries (pri-
ties and services, leading to the establishment
vate, Public and Combine sector) is one of the
of joint sector.
futures of__________.
(a) Private Sector
(a) Capitalist
(b) Public Sector
(b) Socialist
(c) Combined sector
(c) Mixed
(d) Price
(d) Price
275. Indian economy is example of :
270. Which of the following statement is correct ?
(a) Mixed economy
(a) Mixed economy is not always a ‘golden path’
between capitalistic and socialism (b) Socialist economy
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 26 –
(c) Capitalist economy (c) Structural
(d) Price (d) Technological
276. Encourage enterprise & risk taking is consid- (CA CPT May 2019)
ered as a merit of which of the following 280. Which of the following statements is incorrect?
economy :
(a) Alfred marshall propagated the wealth defi-
(a) Social economy nition of Economics
(b) Political (b) I. Robbins introduces the “Scarcity” defini-
(c) Mixed tion of Economics
(d) Managerial economy (c) Samuelson emphasized upon the “growth”
(June 2023) aspect of Economics

277. In India Mixed Economy exists due to : (d) A.C. Pigou believed in “welfare” aspect of
Economics
(a) Co-existence of public sector and private

L
sector. (CA CPT Dec. 2011)

U
(b) Individual forces of demand and supply 281. Who has defined economics as “Science which
deals with wealth”?

H Y
(c) Orders by government
(a) Adam Smith

A
(d) None of these

A
(b) Canon

R HY
(CA CPT May 2016)
(c) J. B. Say
(d) A. C. Pigou
Miscellaneous

D
(CA CPT June 2014)
278. Larger production of ________ goods would

A
282. Who is the author of “The Nature and causes
lead to higher production in future.

P
of wealth of Nation”?
(a) Consumer goods (a) Karl Marx
(b) Capital goods
(c) Agricultural goods
(d) Public goods
U
279. ________ refers to the work area where sur-
(b) Adam Smith
(c) JB Say
(d) A.C. Pigou
(CA CPT Dec. 2015)
plus manpower is employed out of which some 283. “Features of the book wealth of nations”
individuals have zero or almost zero marginal
(a) It was the first book user on economics
productivity, such that if they are removed te
total level of output remains unchanged. (b) It was created in 1776.

(a) Voluntary (c) It was also known as ‘wealth of nations’.

(b) Disguised (d) All of the above

(CA CPT May 2018)

Classical (Smith, Say): Wealth-centric Ignored immaterial aspects.

Neoclassical (Marshall, Pigou): Welfare-centric Narrow/subjective.

Modern (Robbins, Samuelson): Scarcity/growth Overly broad or technical.

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 27 –

ANSWERS
1 (c) 2 (d) 3 (a) 4 (b) 5 (b) 6 (a) 7 (d) 8 (c) 9. (b)

10 (d) 11. (b) 12. (c) 13. (a) 14. (c) 15 (c) 16 (c) 17 (b) 18. (b)

19. (c) 20. (a) 21. (c) 22. (b) 23. (d) 24. (a) 25. (b) 26. (c) 27. (a)

28. (a) 29. (d) 30. (c) 31. (a) 32. (c) 33. (a) 34. (a) 35. (d) 36. (d)

37. (b) 38. (c) 39. (d) 40. (a) 41. (d) 42. (a) 43. (a) 44 (b) 45. (a)

46. (a) 47. (b) 48. (c) 49. (d) 50. (a) 51. (b) 52. (b) 53. (d) 54. (a)

55. (b) 56. (a) 57. (a)

U L
58. (d) 59. (a) 60. (d) 61. (d) 62. (a) 63. (a)

H Y
64. (a) 65. (b) 66. (c) 67. (a) 68. (c) 69. (b) 70. (d) 71. (b) 72. (b)

73. (c)

82. (a)
74.

83.
(b)

(c)
75.

84.
A
(b)

R HY
(a)
76.

85.A (a)

(d)
77.

86.
(d)

(a)
78.

87.
(a)

(d)
79.

88.
(c)

(a)
80.

89.
(d)

(d)
81.

90.
(d)

(b)

D
91. (c) 92. (a) 93. (a) 94. (a) 95. (b) 96. (d) 97. (a) 98. (d) 99. (d)

100. (b) 101. (b) 102. (a)

P A 103. (a) 104. (a) 105. (b) 106. (c) 107. (d) 108. (a)

U
109. (a) 110 (d) 111. (a) 112. (a) 113. (c) 114. (c) 115. (b) 116. (d) 117. (d)

118. (b) 119. (a) 120. (b) 121. (a) 129. (a) 130. (c) 131. (d) 132. (a) 133. (c)

134. (c) 135. (d) 136. (a) 137. (c) 138 (c) 139. (d) 140. (d) 141. (c) 142. (c)

143. (a) 144. (d) 145. (c) 146. (c) 147. (d) 148. (d) 149. (b) 150. (d) 151. (d)

152. (a) 153. (d) 154. (d) 155. (a) 156. (a) 157. (c) 158. (b) 159. (b) 160. (d)

161. (d) 162. (a) 163. (b) 164. (d) 165. (a) 166. (d) 167. (b) 168. (c) 169. (b)

170. (d) 171 (a) 172. (b) 173. (b) 174. (d) 175. (b) 176. (c) 177. (a) 178 (d)

179. (b) 180. (a) 181. (d) 182. (c) 183. (a) 184. (b) 185. (c) 186. (c) 187. (b)

188. (a) 189. (a) 190. (b) 191. (d) 192. (d) 193. (d) 194. (b) 195. (a) 196. (c)

197. (d) 198. (b) 199. (c) 200. (b) 201. (d) 202. (a) 203. ((c) 204. (d) 205. (d)

206. (a) 207. (b) 208. (c) 209. (a) 210. (b) 211. (b) 212. (c) 213. (c) 214. (c)

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NATURE & SCOPE OF BUSINESS ECONOMICS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 28 –

215 (b) 216. (b) 217. (d) 218. (c) 219. (b) 220. (b) 221. (a) 222. (d) 223. (d)

224. (d) 225. (d) 226. ((c) 227. (a) 228. (d) 229. (a) 230. (a) 231. (d) 232. (b)

233. (d) 234. (b) 235. (a) 236. (c) 237. (d) 238. (b) 239. (d) 240. (c) 241. (a)

242. (b) 243. (d) 244. (d) 245. (d) 246. (a) 247. (d) 248. (a) 249. (b) 250. (d)

251. (a) 252. (c) 253. (a) 254. (d) 255 (c) 256. (c) 257. (c) 258. (b) 259. (b)

260. (d) 261. (c) 262. (d) 263. (c) 264. (a) 265. (b) 266. (a) 267. (c) 268. (c)

269. (c) 270. (a) 271. (a) 272. (c) 273. (d) 274. (c) 275. (a) 276. (c) 277. (a)

278. (b) 279. (b) 280. (a)

U L
281. (c) 282. (b) 283. (d)

AH AY
R HY
AD
UP

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY