Fundamentals of Business Activities Test 16

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Fundamentals of Business Activities Test 16

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Question 1
1 / -0

In Economics, Production refers _________________.

A
Creation of utility

B
Satisfaction of utility

C
Both (a) and (b)

D
Neither (a) nor (b)

Solution

Production is a process of combining various material inputs and immaterial inputs (plans, know-how) in order to make something for consumption (output). It is the act of creating an output, a good or service which has value and contributes to the utility of individuals. Production is the process of making, harvesting or creating something or the amount of something that was made or harvested. An example of production is the creation of furniture. An example of production is harvesting corn to eat. An example of production is the amount of corn produced.
Question 2
1 / -0

Production is a / an _____________ activity.

A
Charitable

B
Beneficial

C
Economic

D
Successful

Solution

Economic activity is an activity that generates income and involves production, sale and distribution of goods and services. The motive behind an economic activity is to earn money and not to meet emotional and sentimental human needs.
Thus, production is an economic activity that generates income and is undertaken with a motive to earn profit.
The correct option is C.
Question 3
1 / -0

Ram : My corn harvest this year is poor.
Krishna : Don't worry. Price increases will compensate for the fall in quantity supplied.
Vinod : Climate affects crop yields. Some years are bad, others are good.
Madhur : The Government ought to guarantee that our income will not fall.
In the conversation the normative statement is made by ______________.

A
Ram

B
Krishna

C
Vinod

D
Madhur

Solution

Normative Statement refers to "What ought to be" or it makes an assessment of an activity and offers advice. Hence the statement made by Madhur is a normative statement.
Question 4
1 / -0

As per Indifference Curve Analysis, to maximise his satisfaction, a Consumer will try to _____

A
Remain in the same IC

B
Reduce to lower IC

C
Reach the highest possible IC

D
Reach the Origin point

Solution

Since a higher indifference curve represents a higher level of satisfaction, a consumer will try to reach the highest possible IC to maximize his satisfaction. In order to do so, he has to buy more goods and has to work under the following two constraints: He has to pay the price for the goods and.
Question 5
1 / -0

Which of the following is/are an outcome of a technological change?

A
A downward shift in the production function

B
Same output with fewer inputs or more output with same inputs

C
Invention of a product or production process

D
Both (b) and (c) above

Solution

1) Same output with fewer inputs or more output with same inputs
2) Invention of a product or production process
Both the situations can be defined as an outcome of a technological change as the production rises because of technological advancement in both the situation.
As a result, the production possibility curve will shift to the right.
Question 6
1 / -0

In the pre-reforms period (i.e. before 1991), restrictions on import consisted of:

A
Import licenses

B
Quantitative restrictions

C
Quota system

D
All of the above

Solution

India had adopted socialist form of economy before 1991 which involved a lot of government intervention into International trade where import was banned on most of the goods through quota and licenses so that the foreign goods does not dominate domestic market.
Question 7
1 / -0

Custom Duties are levied on ______________.

A
Exports and imports

B
Manufacture of excisable goods/commodities

C
Services rendered

D
Sale made by a dealer in the course of inter-state or intra-state or commerce

Solution

Custom Duties are levied on exports and imports. Custom duty can also be defined as a type of tax which should be paid by people for exporting to foreign countries and importing goods from foreign countries.
Question 8
1 / -0

All of the following developments were noticed during 1991 (when economic reforms were enforced) except one. Identify it.

A
National Debt was nearly 60% of the GNP of India

B
Inflation crossed double digits

C
Foreign Reserves were maintained at a very high level

D
None of the above

Solution

All the following developments ( such as National Debt was nearly 60% of the GNP of India, Inflation crossed double digits) were noticed during 1991, when economic reforms were enforced, except "Foreign Reserves were maintained at a very high level. During 1991, Indian Government adopted New Economic Policy which emphasized liberalization, privatization and globalization.
Question 9
1 / -0

In the pre-reforms period (i.e. before 1991), banking scene was dominated by the __________ sector.

A
private

B
public

C
both (a) and (b)

D
neither (a) nor (b)

Solution

India adopted the socialist form of economy prior to 1991 which involved a lot of government intervention in all the sectors including banking sector which made Indian economy a little conservative compared to other economic structures prevalent then. But after 1991, the government disinvested all its share from most of the sectors including banking sector which brought privatization in banking sector where public sector used to dominate prior to 1991.
Question 10
1 / -0

Which of the following involve a trade-off?

A
Taking a nap.

B
All of these answers involve trade-offs.

C
Watching a football game on Saturday afternoon.

D
Going to university.

Solution

Following situations involve a trade-off :a) Taking a nap
b) Watching a football game on Saturday afternoon
c) Going to university
Trade off refers to any sacrifice to get a certain product or experience. As per the economics term, trade off is referred as opportunity cost, that is, next best alternative use.

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Fundamentals of Business Activities Test 16

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Fundamentals of Business Activities Test 16

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SHARING IS CARING

Question 1

Creation of utility

Satisfaction of utility

Both (a) and (b)

Neither (a) nor (b)

Solution

Question 2

Charitable

Beneficial

Economic

Successful

Solution

Question 3

Ram

Krishna

Vinod

Madhur

Solution

Question 4

Remain in the same IC

Reduce to lower IC

Reach the highest possible IC

Reach the Origin point

Solution

Question 5

A downward shift in the production function

Same output with fewer inputs or more output with same inputs

Invention of a product or production process

Both (b) and (c) above

Solution

Question 6

Import licenses

Quantitative restrictions

Quota system

All of the above

Solution

Question 7

Exports and imports

Manufacture of excisable goods/commodities

Services rendered

Sale made by a dealer in the course of inter-state or intra-state or commerce

Solution

Question 8

National Debt was nearly 60% of the GNP of India

Inflation crossed double digits

Foreign Reserves were maintained at a very high level

None of the above

Solution

Question 9

private

public

both (a) and (b)

neither (a) nor (b)

Solution

Question 10

Taking a nap.

All of these answers involve trade-offs.

Watching a football game on Saturday afternoon.

Going to university.

Solution

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