CA Foundation Economics MCQ with Answers PDF

CA Foundation Economics MCQ with Answers PDF Summary

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The full form of CA is the Chartered Accountants. The Chartered Accountants (CA) Foundation Course is the entrance level for the chartered accountancy course. It is offered by the Institute of Chartered Accountants of India which is also known as ICAI in the short form. ICAI is the World’s second-largest professional accounting body and the largest professional accounting body in India.
It is under the ownership of the Ministry of Corporate Affairs, Government of India. After passing secondary school examinations (Class-X) the candidate can register for CA Foundation and after qualifying for the 12th examination appear in the foundation exam. Institute of Chartered Accountants of India has allowed provisional registration for 10th class passed students.

CA Foundation Economics MCQ with Answers PDF

Nature and Scope of Business Economics CA Foundation MCQ Economics Chapter 1- Introduction:
1. The term ‘Economics’ owes its origin to the Greek word.
(a) Aikonomia
(b) Wikonornia
(c) Oikonomia
(d) None of the above
Answer: (c) Oikonomia
2. Adam Smith published his masterpiece “An enquiry into the nature and causes of the wealth of nations” in the year __________.
(a) 1776
(b) 1786
(c) 1789
(d) 1790
Answer: (a) 1776
3. Oikonomia means __________.
(a) Industry
(b) Management of household
(c) Services
(d) None of these
Answer: (b Management of household
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) All of the above.
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) Choice to be made between alternative uses
6. Which one is the feature of Marshall’s definition?
(a) Limited ends
(b) Scarce means
(c) Study of wealth as well as the study of man
(d) Study of allocation of resources
Answer: (c) Study of wealth as well as the study of man
7. According to Robbins, ‘means’ are:
(a) Scarce
(b) Unlimited
(c) Undefined
(d) All of these
Answer: (a) Scarce
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) How society manages its scarce resources
9. In Economics, we use the term scarcity to mean:
(a) Absolute scarcity and lack of resources in less developed countries.
(b) Relative scarcity i.e. scarcity about 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) Relative scarcity i.e. scarcity about the wants of the society.
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) Not all wants can be satisfied.
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) The Science of wealth
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) Paul A Samuelson
13. In every economic system, scarcity imposes limitations on __________.
(a) Households, business 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 governments, but not business firms.
(e) Business firms, governments, and the nation as a whole.
Answer: (a) Households, business firms, governments and the nation as a whole.
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) Do not exist in adequate quantity to satisfy the requirements of the society.
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) Alfred Marshall
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) None of the above
17. Human wants are in response to satisfying their wants?
(a) Unlimited
(b) Limited
(c) Scarce
(d) Multiple
Answer: (a) Unlimited
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 social requirements
Answer: (a) Inadequate quantity to satisfy the needs of the society
19. The meaning of the 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) Operational time in which supply adjusts with the market demand
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) Equal importance
21. __________ refers to the process of selecting an appropriate alternative that will provide the most efficient means of attaining the desired end, from two or more alternative courses of action.
(a) Decision making
(b) Strategy
(c) Problem Solving
(d) Effectiveness
Answer: (a) Decision making
22. Business Economics is __________.
(a) Abstract and applies the tools of Microeconomics.
(b) Involves the practical application of economic theory in business decision-making.
(c) Incorporates tools from multiple disciplines.
(d) (b) and (c) above.
Answer: (d) (b) and (c) above.
23. Business Economics is also known as?
(a) Applied Economics
(b) Managerial Economics
(c) Micro Economics
(d) All of the above
Answer: (b) Managerial Economics
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) Both (a) & (b)
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) All of the above

Theory of Demand and Supply CA Foundation MCQ Economics Chapter 2

1. Demand for a commodity refers to:
(a) Desire is backed by the ability to pay for the commodity.
(b) Need for the commodity and willingness to pay for it.
(c) The quantity demanded of that commodity at a certain price.
(d) The quantity of the commodity demanded at a certain price during any particular period.
Answer: (d) The quantity of the commodity demanded at a certain price during any particular period.
2. Demand is the ________.
(a) the desire for a commodity given its price and those of related commodities.
(b) the entire relationship between the quantity demanded and the price of good other things remaining the same.
(c) willingness to pay for a good if income is larger enough.
(d) ability to pay for a good.
Answer: (b) the entire relationship between the quantity demanded and the price of good other things remains the same.
3. The quantity demanded is always expressed as ________.
(a) Separately in isolation
(b) Separately with quantity supplied
(c) At a given price
(d) None of these
Answer: (c) At a given price
4. The quantity demanded is a ________.
(a) Flow
(b) Stock
(c) Single isolated purchase
(d) Concept without reference to time.
Answer: (a) Flow
5. In economics, Effective Demand for a thing depends on:
(a) Desire
(b) Means to purchase
(c) Willingness to use those means for that purchase
(d) All of the above.
Answer: (d) All of the above.
6. All of the following are determinants of demand except:
(a) Tastes and preferences.
(b) Quantity supplied.
(c) Income of the consumer.
(d) Price of related goods.
Answer: (b) Quantity supplied.
7. Which of the following will affect the demand for non-durable goods?
(a) Disposable income
(b) Price
(c) Demography
(d) All of the above
Answer: (d) All of the above
8. The term “Ceteris Paribus” refers to ________.
(a) Other things being equal
(b) Other things also change
(c) Other things may change
(d) None of the above
Answer: (a) Other things being equal
9. Ceteris Paribus, the demand for a commodity is inversely related to its price. This happens because of:
(a) Income Effect
(b) Substitution Effect
(c) Both (a) & (b)
(d) None of above
Answer: (c) Both (a) & (b)
10. ________ is/are the types of Related Commodities.
(a) Complementary
(b) Substitutes
(c) Complementary and Substitutes
(d) Complementary or Substitutes
Answer: (c) Complementary and Substitutes
11. Which one of the following set of Commodities represents Complementary goods?
(a) Tea and Sugar
(b) Automobile and Petrol
(c) Pen and ink
(d) All of the above
Answer: (d) All of the above
12. ________ are those goods which are consumed together or simultaneously.
(a) Complementary
(b) Substitutes
(c) Similar
(d) Un-related
Answer: (a) Complementary
13. When two commodities are complementary, a fall in the price of one (other things being equal) will cause the demand for the other to ________.
(a) Fall
(b) Rise
(c) Remain constant
(d) Fall substantially
Answer: (b) Rise
14. Two Commodities are called ________ when they satisfy the same want and can be used with ease in place of one another.
(a) Substitutes
(b) Complementary
(c) Un-related
(d) Opposite
Answer: (a) Substitutes
15. There is a ________ relation between the demand for a product and the price of its substitutes.
(a) Direct
(b) Positive
(c) Indirect
(d) Both (a)&(b)
Answer: (d) Both (a)&(b)
16. Highly-priced goods are consumed by status-seeking rich people to satisfy their need for conspicuous consumption. This is called as ________.
(a) Veblen Effect
(b) Snob Effect
(c) Helen Effect
(d) None of these
Answer: (a) Veblen Effect
17. ________ are the commodities for which the quantity demanded rises only up to a certain level of in-come and decreases with an increase in money income beyond this level.
(a) Inferior Goods
(b) Normal Goods
(c) Consumption Goods
(d) Durable Goods
Answer: (a) Inferior Goods
18. When goods are substitutes, a fall in the price of one (Ceteris Paribus) leads to the quantity demanded of its substitutes.
(a) Rise
(b) Fall
(c) Constant
(d) No effect.
Answer: (b) Fall
19. Which of the following will affect the demand for non-durable goods?
(a) Disposable income
(b) Price
(c) Demography
(d) All of the above
Answer: (d) All of the above
19A. Which of the following pairs of goods is an example of substitutes?
(a) Tea and sugar.
(b) Tea and coffee.
(c) Pen and ink.
(d) Shirt and trousers.
Answer: (b) Tea and coffee.
20. If the price of Pepsi decreases relative to the price of Coke and 7-UP, the demand for:
(a) Coke will decrease.
(b) 7-Up will decrease.
(c) Coke and 7-UP will increase.
(d) Coke and 7-Up will decrease.
Answer: (d) Coke and 7-Up will decrease.
21. Which of the following is an incor-rect statement?
(a) When goods are substitutes, a fall in the price of one (ceteris pari¬bus) leads to a fall in the quantity demanded of its substitutes.
(b) When commodities are comple-ments, a fall in the price of one (other things being equal) will cause the demand of the other to rise.
(c) As the income of the consumer increases, the demand for the commodity increases always and vice versa.
(d) When a commodity becomes fashionable people prefer to buy it and therefore its demand increases.
Answer: (c) As the income of the consumer increases, the demand for the commodity increases always and vice versa.
22. What will happen in the rice market if buyers are expecting higher rice prices in the near future?
(a) The demand for rice will increase.
(b) The demand for rice will de-crease.
(c) The demand for rice will be unaffected.
(d) None of the above.
Answer: (a) The demand for rice will increase.
23. Conspicuous goods are also known as:
(a) Prestige goods.
(b) Snob goods.
(c) Veblen goods.
(d) All of the above.
Answer: (d) All of the above.
24. A good which cannot be consumed more than once is known as ________.
(a) Durable good
(b) Non-durable good
(c) Producer good
(d) None of the above
Answer: (b) Non-durable good
25. A relative price is ________.
(a) Price expressed in terms of money.
(b) What do you get paid for babysitting your cousin.
(c) The ratio of one money price to another.
(d) Equal to a money price.
Answer: (c) The ratio of one money price to another.

CA Foundation Economics Chapter Wise Weightage Syllabus