100+ Most Important MCQs, PYQs of CH - 1 Introduction to Business Economics CA Foundation.

1. "Humans wants have unlimited wants" and "The means are relatively scarce" form

1. Defination of economics
2. Meaning of economics
3. Subject matter of economics
4. None

Answer:- Subject matter of economics

2. Economics not  just deals with how a nation allocates its scarce resources but deals with ________ by which productive capacity of resources can be increased:

1. Principles
2. Laws
3. Decisions
4. Processes

Answer:- Processes

3. The term "Economics" owes its origin to the Greek word

1. Aikonomia
2. Wikonomia
3. Oikonomia
4. None of the above

Answer:- Oikonomia

4. Oikonomia means

1. Industry 
2. Household
3. Services
4. None of these 

Answer:- Household

5. "Economics is a  study of _____in the ordinary business of life." Alfred Marshall

1. Human
2. WealthLL
3. Mankind
4. Agriculture

Answer:- Mankind

6. The meaning of Greek words "OIKOU & NOMOS"

1. Micro and macro economics
2. The rule of economics
3. Household Management
4. The law of Management

Answer:- Household Management

7.Economics is called_____of social sciences

1. Branch
2. Queen 
3. King
4. None

Answer:- Branch

8.Who is the father of Economics?

1. Lionel Robbins
2. Alfred Marshall
3. Adam smith 
4. Paul Samuelson

Answer:- Adam smith

9. Economics is the study of --

1. How society manages its unlimited resources
2. How to reduce our wants until we are satisfied
3. How society manages its scarce resources
4. How to fully satisfy our unlimited wants

Answer:- How society manages its scarce resources

10. Operation Research, Statistics, Mathematics & Theory of decision - Making has close connection with ___________

1. Pure Economics
2. Business Economics
3. Econometrics
4. None 

Answer:- Business Economics

11. Economics provides certain_______which can be used for solving various business problems?

1. Tools
2. Methods
3. Principles
4. Laws

Answer:- Principles

12. Professor __________has defined the concept of business Economics :

1. Alfred Marshall
2. Samuelson
3. Hicks
4. Joel Dean

Answer:- Joel Dean 

13. Application of quantitative technique like, linear programming, Capital budgeting,Breakeven analysis are the components of ___________Economics

1. Pure 
2. Business
3. Micro
4. Neither (a) or (b)

Answer:- Business

14. Business Economics implies:

1. Combination of manufacturing activity & applied economies
2. Combination of business & trading
3. Combination of business &  profit
4. All of the above

Answer:- All of the above

15. Business Economics is :

1. Abstract & applies the tools of micro economics
2. Practical application of economics theory in business decision making
3. Incorporates tools from multiple decisions
4. Both (b) and (c)

Answer:- Both (b) and (c)

16.Which one is not within the scope of Business Economics?

1. Capital budgeting
2. Risk analysis
3. Business Cycle
4. Accounting Standards

Answer:- Accounting Standards

17. Business Economics is ___________as it deals both quantitative tools & practical application for attainment of set objectives:

1. Science & Art
2. Only science
3. Only art
4. None

Anwer:- Science & Art

18. Business Economics is :

1. Branch of general economics
2. Comprising pure Economics
3. Combination of consumption & production units
4. Both (b) and (c)

Answer:- Both (b) and (c)

19. Business Economics comprises of:

1. Micro economics in nature 
2. Pragmatic in nature
3. Quantitative analysis
4. All of the above

Answer:- All of the above

20. Scarcity of resources means?

1. Non-existence of resources
2. Limited resources
3. Both (a) and (b)
4. None

Answer:- Both (a) and (b)

21. The Law of scarcity-

1. Does not apply to rich/developed countries
2. Applies only to the less developed countries
3. Implies that consumer's wants will be satisfied in  a socialistic system
4. Implies that consumer; wants will never be completely satisfied

Answer:- Implies that consumer, wants never be completely satisfied

22. Business Economics is "_________in nature: as it incorporates tools from other disciplines such as Mathematics, Management theory, Accounting, Finance etc

1. Positive
2. Inductive
3. Interdisciplinary
4. Pragmatic

Answer:- Interdisciplinary

23. Business Economics is"_____in approach" as it not only deals with theory but tackles practical problems of firms:

1. Positive 
2. Inductive
3. Realistic
4. Pragmatic

Answer:- Pragmatic

24. Demand analysis, forecasting, production and cost analysis, inventory management are ______Economics applies to operational or internal issues

1. Micro
2. Macro
3. Pure
4. Pragmatic

Answer:- Micro

25. "Work in process", Raw materials, 'finished goods' are the forms of

1. Demand forecasting
2. Inventory management
3. Market research
4. None

Answer:- Inventory management

26. Environmental factors are part of _____Economics.

1.  Pure
2. Macro
3. Micro
4. None

Answer:- Macro

27. The Central Economics problem is- 

1. What to produce?
2. How to produce?
3. For whom to Produce?
4. All of the above

Answer:- All of the above

28. Theory of capital and investment decisions, risk and uncertainty are the parts of ______Economics applied to operational issues:

1. Pure
2. Macro
3. Micro
4. None

Answer:- Micro

29. The Central problem in economics is that of- 

1.  Comparing the success of command versus market economies
2. Guaranteeing that production occurs in the most efficient manner
3. Guaranteeing a minimum level of income for every citizen
4. Allocating scarce resources in such a  manner that a society's unlimited needs or wants are satisfied as well as possible.

Answer:- Allocating scarce resources in sucha  manner that a  society's unlimited needs or wants are satisfied as well possible.

30. Micro  Economics is connected with.........

1. Consumer behavior
2. Product pricing
3. Factor pricing
4. All of these

Answer:- All of these

31.When we are studying how a producer fixes prices of products we deal with:

1. Macro Economics 
2. Micro Economics 
3. Both (a) and (b)
4. None

Answer:- Micro Economics

32.Right of private property is found in -

1. Socialism
2. Capitalism
3. Mixed Economy
4. None of these

Answer:- Capitalism

33. Which of the following is a study of particular units rather than all the units combined?

1. Macro Economics
2. Micro Economics
3. Welfare economics 
4. None

Answer:- Micro Economics

34.Which of the following refer to the micro economics aspects from a national angle:

1. Per capita income of the country
2. Capital- output ratio in steel industry
3. Income from the railways
4. Both (b) and (c)

Answer:- Income from the railways

35. State which refers to micro economics approaches from a national angle:

1. Unemployment among the educated people
2. Inflation in the economy 
3. Lockout in Indian Airlines
4. Distribution of coal in the country 

Answer:- Lockout in Indian Airlines 

36. Which of the following falls under Micro Economics?

1. National Income 
2. General price level
3. Factor Pricing
4. National Saving and Investment 

Answer:- Factor Pricing 

37. Price theory is also known as 

1. Positive Economics
2. Normative Economics
3. Micro Economics 
4. Macro Economics 

Answer:- Micro Economics 

38. Macro Economics is the study of______

1. All aspects of scarcity
2. The national Economics and the global Economy as a whole 
3. Big businesses
4. The decision of individual businesses and people 

Answer:- The national Economics and the global economy as a whole

39. When we study why saving rates are high or low, we are studying

1. Macro Economics
2. Micro economics
3. Econometrics
4. Both (a) and (b)

Answer:- Macro economics 

40. Identify the correct statement -

1. In the deductive method logic proceeds from the particular to the general
2. Micro and macro economics are interdependent 
3. In a capitalist economy economic problem are solved by Planning Commission
4. Higher the prices, lower is the quantity of a product is a normative statement

Answer:- Micro and macro economics are interdependent

41. Economics considered with welfare propositions are called ________economics:

1. Socialist
2. Capitalist
3. Positive 
4. Normative

Answer:- Socialist 

42.An example of positive Economic analysis would be-

1. An analysis of the relationship between the price of food and the quantity
2. Determining how much income each person should be guaranteed
3. Determining the fair price for food
4. Deciding how to distribute the output of the economy

Answer:- An analysis of the relationship between the price of food and the quantity 

43. Economics as a positive sciences should be between ends.

1. Unique
2. Socially responsible
3. Neutral 
4. Inspiring

Answer:- Neutral

44. Normative aspect of economics is given by:

1. Marshall
2. Robbins
3. Adam Smith 
4. Samuelson

Answer:- Marshall

45. Which of the following is an example of normative science

1. Rich people should be taxed more
2. Free education should be given to the poor
3. India should spend more money on defence
4. all of hte above

Answer:- All of the above

46. Normative aspect of economics is given by:

1. Marshall
2. Robbins
3. Adam smith
4. Samuelson

Answer: Marshall

47. Social insurance, sickness benefits, old pension, etc are some social benefits provided by_______

1. State in capitialist economy
2. State in socialist economy
3. State in mixed economy
4. Both b and c

Answer:- Both b and c

48. Which of hte follwoing statements is normative

1. Larger government deficits cause an Economy to grow more slowly
2. People work harder if the wage is higher
3. The unemployment rate should be lower
4. Printing to much money cause inflation

Answer:- The unemployment rate should be lower

49. The difference between positive and normative economics is:

1.  Positive economics explains the performance of the economy while normative economics finds out the reasons for poor performance 
2.  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 
3.  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 
4.  Positive economics prescribes while normative economics describes

Answer:- 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

50.  Exploitation & inequality are minimal under :

1. Socialism
2. Capitalism
3. Mixed Economy
4. None

Answer:- Socialism

51. Who gave the positive aspect of science

1. marhsall
2. robbina
3. adam smith 
4. none

Answer:- Robbins

52. Inequality of income does not perpetuate in:

1. Socialism
2. Capitalism
3. Mixed Economy
4. None

Answer:- Socialism

53. In which economic system all the means of production are owned and controlled by private individuals for profit:

1. Socialism
2. Capitalism
3. Mixed Economy
4. Communism

Answer:- Capitalism

54. Freedom of choice is the advantage of

1. Socialism
2. Capitalism
3. Mixed Economy
4. Communism

Answer:- Capitalism

56. In a free market economy, when consumers increase their purchase of a goods and the level of_______exceeds_________then prices tend to rise:

1. demand
2. supply, demand
3. demand, supply
4. both (a) and (b)

Answer:- demand, supply

57. A Free Market economy solves its central problems through 

1. Planning authority
2. Market mechanish
3. Both
4. None

Answer:- Market Mechanism

58. Find out the correct statement:

1.   Higher the prices the lower the quantity demanded is “Normative statement’ 
2.   Micro & Macroeconomics are independent to each other
3.   In capitalist economy economic problems are solved by Planning Commission 
4.   In deductive method logic proceeds from particular to general

Answer:- Micro & Macroeconomics are independent to each other

59. Under a controlled economy___. 

1.   State plays a major role 
2.   Central authority decides how much will be produced 
3.   Both (a) & (b) 
4.   Neither (a) nor (b)

Answer:- Both (a) and (b)

60. Mixed economy.:-

1.  All economic decisions are taken by the central authority 
2.   All economic are taken by private entrepreneurs 
3.   Economic decisions are partly taken by the state and partly by the private entrepreneurs
4.  None

Answer:- Economic decisions are partly taken by the state and partly by the private entrepreneurs

Previous year Questions and Mock Test Paper

1. The word ‘Economics’ originates from the word ……………… 

(a) Oikomnomikos 

(b) Oikonomia

(c) Eikonomikos 

(d) Ekconomics

Answer:- Oikonomia

2. The word ‘Economics’ originates from the ………… world ‘Oikonomia’

 (a) Roman 

 (b) French 

(c) Greek 

(d) European

Answer:- Greek

3.  The meaning of Greek word ‘oikonomia’ is ……. 

(a) Wealth Management

 (b) House Management 

(c) Business Economics 

(d) Business Management

Answer:- Business Management

4. Human wants are…... and means to satisfy these wants are…... 

(a) Limited, scarce

(b) Unlimited, Unlimited 

(c) Unlimited, scarce

(d) Limited, Unlimited

Answer:- Unlimited, scarce

5. The meaning of the word ‘Economic’ is closely connected with the word- 

(a) Scarce 

(b) Unlimited 

(c) Restricted 

(d) Both (a) and (b)

Answer:- scarce

6. In Business economics ‘ends’ refers to- 

(a) Human wants 

(b) Resources 

(c) Both (a) and (b)

(d) Neither (a) nor (b)

Answer:- Human wants

7. In Business economics ‘Means’ refers to- 

(a) Human wants 

(b) Resources 

(c) Both (a) and (b) 

(d) Neither (a) nor (b) 

Answer:- Resources

8. Which of the following is an economic activity? 

(a) Boy helping his friend to solve puzzle. 

(b) Teams playing friendly football match 

(c) A teacher teaching to class 

(d) Watching Television 

Answer:- A teacher teaching to class

9. Which of the following is not an economic activity?

(a) Housewife doing household duties 

(b) Manufacturing of garments at subsidized rate. 

(c) Medical facility rendered by charitable trust 

(d) A CA doing his own practice. 

Answer:- Housewife doing household duties

10. Which of the following is an economic activity? 

(a) Housewife doing household duties 

(b) Listening to music on radio 

(c) Medical facility rendered by charitable trust 

(d) Teaching one’s own son at home.

Answer:- Medical facility rendered by chartible trust

 11. The law of Scarcity- 

(a) Does not apply to developed and rich countries 

(b) Applies only to less developed countries 

(c) Implies that the consumers’ want will be satisfied in a socialist economy 

 (d) Implies that consumers’ want will never be completely satisfied.

Answer:- applies only to less developed countries

12. Rational decision making requires- 

(a) One’s choice never vary 

(b) One’s choice be consistent with one’s goal 

 (c) One makes choices that do not involve trade-offs 

(d) One must be graduate to make decision 

Answer:- One's choice be consistent with one's goal

13. …….. Defined Business Economics in terms of the use of economic analysis in the formulation of business policies? 

(a) J.B Say 

(b) Alfred Marshall 

(c) Walker 

(d) Joel Dean 

Answer:- Joel dean 

14. Business Economics is also known as………… 

(a) Managerial Economics 

(b) Social Economics 

(c) Environmental Economics 

(d) Money Market Economics 

Answer:- Managerial Economics

15. Which of the following statement is not correct? 

(a) Business Economics refers to the integration of economic theory with business practice 

(b) Business Economics is not only valuable to business decision makers, but also useful for managers of ‘not-for-profit’ organisations 

(c) theories of Economics provide the tools which explain various concepts such as demand, supply, costs, price, competition etc 

(d) Business Economics is concerned only with Micro Economic

Answer:- Business Economics is concerned only with micro economics

16. Economic theories are….…

 (a) Simplistic

 (b) Hypothetical 

(c) Old 

(d) Both (a) and (b) 

Answer:- both a and b 

17. Consider the following and decide, which economy (if any) is without scarcity 

(a) American economy 

(b) Indian economy between 1947- 2000 

(c) Pre independent Indian economy 

(d) None of the above 

Answer:- none of the above

18. Scarcity in Economics is an. 

(a) Relative concept 

(b) Absolute concept 

(c) Irrelevant concept 

(d) Not a concept at all 

Answer:- Relative  concept

19. ………..refers to the process of selecting an appropriate alternative that will provide the most efficient means of attaining a desired end, from two or more alternative courses of action? 

(a) Problem solving

(b) Problem analyzing

(c) Managerial expertise

(d) Decision making 

Answer:- Decision making 

20. Which of the following involves Business decision making?

(a) Continue or shut down decision 

(b) Launching of new product 

(c) Proper debt and equity mix 

(d) All of the above

Answer:- all of the above

21. Which of the following does not involve Business decision making?

(a) Lease or purchaseof an asset 

(b) Deciding which movie to watch on weekend 

(c) In-house production or outsource

 (d) Which production method should be used for manufacturing of goods

Answer:- deciding which movie to watch on weekend

22. Pragmatic approach means - 

(a) Realistic 

(b) Practical.

(c) Both (a) and (b) 

(d) Neither (a) nor (b) 

Answer:- both (a) and (b)

23. Positive Science explains- 

(a) “What is” 

(b) “What was” 

(c) “What ought to be” 

(d) “What will” 

Answer:- "What is"

24. Normative Science explains- 

(a) “What is”

 (b) “What ought to be”.

 (c) “What will”

 (d) Both (a) and (b) 

Answer:- "what ought to be"

25. Positive science is- 

(a) Descriptive 

 (b) Prescriptive 

(c) Explanatory 

(d) Imaginary 

Answer:- Descriptive 

26. Normative science is- 

(a) Descriptive 

 (b) Prescriptive 

(c) Explanatory 

(d) Imaginary 

Answer:- Prescriptive

27. The study of economic behavior of an individual firm or industry in national economy is called as …… 

(a) Micro Economics 

(b) Macro Economics 

(c) Business Economics 

(d) Behavioral Economics 

28. Macro Economics deals with 

(a) External value of money 

(b) Employment and economic growth 

(c) General price level 

(d) All of above 

Answer:-  all of the above

29. We mainly study the following in Micro-Economics: ……………… 

(a) General price level 

(b) National income and output 

(c) Location of industry 

(d) Employment and economic growth

Answer:- Location of industry

30. We mainly study the following in Macro-Economics: ……………… 

(a) External value of money 

(b) Product pricing 

(c) National income and output

(d)  Both (a) and (c) 

Answer:-  both (a) and (c)

31. Micro and macro are not two independent approaches to economic analysis but they are complementary to each other. 

(a) False 

 (b) True 

 (c) Partly true 

 (d) Partly false 

Answer:- True

32. The Central Economic problem is that of- 

(a) Allocating the scarce recourse in such a manner that society’s unlimited wants are satisfied as far as possible 

(b) Giving jobs to poor and backward. 

(c) Guaranteeing that the production occurs in most efficient manner 

(d) All of above

Answer:- (a) Allocating the scarce recourse in such a manner that society’s unlimited wants are satisfied as far as possible 

33. Which of the following is not a central economic problem? 

(a) What to produce? 

(b) When to produce? 

(c) How to produce? 

(d) For whom to produce? 

Answer:-  When to produce? 

34. Adam smith published his masterpiece “An enquiry into the nature and causes of wealth of nation” in the year …………. 

(A) 1776 

(B) 1786 

(C) 1756 

(D) 1766

Answer:-  1776

35. The Problem of ‘What to Produce’ covers the issue relating to- 

(a) What goods are to be produced? 

(b) What quantities of goods are to be produced? 

(c) Both (a) and (b)

(d) Neither (a) nor (b)

Answer:- Both (a) and (b)

36. The economy which uses all its recourses on production of …… goods only, con not provide for future growth prospect. 

(a) Consumer goods only 

(b) Capital goods only 

 (c) Both (a) and (b) 

(d) Neither (a) nor (b)

Answer:- Consumer goods only 

37. Productive efficiency means - 

(a) Recourses are employed in their most valued uses 

(b) Total number of goods produced is more 

(c) Goods and services are produced at least cost without wastage 

(d) Best recourse are employed 

Answer:- Recourses are employed in their most valued uses 

38. In deciding ‘ how to produce’ the economy should decide on- 

(a) Types to goods to be produced 

(b) Consumer goods or capital goods 

(c) Method of production 

(d) Quantity of goods to be produced 

Answer:- Method of production 

39. While solving the question of ’ how to produce’ the economy should consider- 

(a) Labour intensive technique 

(b) Capital intensive technique 

(c) Both (a) and (b) 

(d) Neither (a) nor (b) 

Answer:- Both (a) and (b)  

40. While solving the question of ’ how to produce’ the choice of appropriate method of production depends upon- 

(a) Availability of factor of production 

(b) Price of different factor of production 

(c) Both (a) and (b) 

(d) Neither (a) nor (b)

Answer:-  Both (a) and (b) 

41. Which of the following statement is not true- 

(a) There are various alternative techniques of producing a commodity. 

(b) A society cannot satisfy each and every want of society. 

(c) If society uses all the resources for current consumption and no provision is made for future production, the society’s production capacity would not increase.. 

(d) None of above 

Answer:- None of above 

 42. Capital intensive technique would get chosen in 

(a) Capital surplus economy 

(b) Labour surplus economy 

(c) Developed economy 

(d) Developing economy 

Answer:- Capital surplus economy 

43. Labour intensive technique would get chosen in 

(a) Capital surplus economy 

 (b) Labour surplus economy 

(c) Developed economy 

(d) Developing economy 

Answer:- Labour surplus economy 

44. In deciding ‘what to produce’ economy should consider production of 

(a) Capital Goods 

(b) Consumer goods 

(c) Both (a) and (b) 

(d) Neither (a) not (b) 

Answer:-  Both (a) and (b)  

45. Distribution and sharing of national product relates to the problem of 

(a) How to provide for economic growth 

(b) What to produce 

(c) How to produce 

(d) For whom to produce

Answer:-  For whom to produce 

46. Capitalist economy is also known as- 

(a) Free market economy 

(b) Controlled market economy 

(c) Both (a) and (b) 

(d) Neither (a) nor (b) 

Answer:- Free market economy 

47 . Laissez-faire economy is another term used for 

(a) Mixed economy 

(b) Capitalist economy 

(c) Socialist economy 

(d) None of the above

Answer:- Capitalist economy 

48. Consumer Sovereignty means- 

(A) that buyers ultimately determine which goods and services will be produced and in what quantities. (B) consumer will pay only how much he can. 

(C) consumer will help the producer in manufacture of goods or rendering of services 

(D) consumer have unlimited purchasing power.

Answer:- (A) that buyers ultimately determine which goods and services will be produced and in what quantities.

49 …… determines which goods and services will be produced and in what quantity 

(A) Buyer 

(B) Seller 

(C) Government 

(D) All of the above 

Answer:- Buyer

50.  Capitalist economy uses……… to solve economic problem 

(a) impersonal forces of market demand and supply. 

(b) price mechanism. 

(Fc external reports 

(d) economic theories. 

Answer:- impersonal forces of market demand and supply. 

51. An entrepreneur will produce goods and services choosing that technique of production which renders his cost of production…… 

(A) Minimum. 

(B) Maximum. 

(C) Exactly similar to other competitors. 

(D) Higher compared to other competitor

Answer:- Minimum.