NTA UGC NET/JRF Exam, Dec. 2021/June 2022 (Commerce) Shift-II

Total Questions: 100

1. Economists adjustment to reality limited by individual consumers preferences, intelligence and environmental factor is called:

Correct Answer: (c) Bounded rationality
Solution:

Economist adjustment to reality limited by individual consumers preference, intelligence and environmental factor is called bounded rationality. It is a concept proposed by Herbert Simon. The definition of bounded rationality involves the idea that the capacity of human beings' decision-making is not fully rational because it faces various limits. These limits includes information failure, time taken to make a decision, and the limitations of human brain in processing information consumers are most likely to be affected by mental shortcuts. and individual preferences and environmental factor which limit their decision making process.

2. Match List-I with List-II

List-I (Nature of goods)List-II Income Elasticity (Eᵢ) of demand
A. Normal goodsI. Eᵢ is greater than one
B. Inferior goodsII. Eᵢ is greater than zero
C. Luxury goodsIII. Eᵢ is between zero and one
D. NecessitiesIV. Eᵢ is less than zero

Choose the correct answer from the options given below:

ABCD
(a)IIIVIIII
(b)IIIIIVII
(c)IIIIIIIV
(d)IIIIIIIV
Correct Answer: (a)
Solution:
List-I (Nature of goods)List-II Income Elasticity (Eᵢ) of demand
(A) Normal goods(II) Eᵢ is greater than zero
(B) Inferior goods(IV) Eᵢ is less than zero
(C) Luxury goods(I) Eᵢ is greater than one
(D) Necessities(III) Eᵢ is between zero and one

3. Under Indian Income Tax Act, allowances which are non-taxable for the individual assessee are:

A. Sumptuary allowances
B. Compensatory allowance paid to judges.
C. Overtime allowance
D. allowances paid to Govt. employees posted abroad.
E. Non-practising allowance
Choose the most appropriate answer from the options given below:

Correct Answer: (c) A, B, D only
Solution:

Under Indian Income Tax Act, Following are the non-taxable allowances for the individual assessee:-
• Sumptuary allowances
• Compensatory allowance paid to judges.
• Allowances paid to Govt. Employees posted abroad.
• Salary and allowances received by a teacher/professor from SAARC member state.
• Allowances paid by the UNO to its employees.

4. Which of the following decision choices are valid in relation to marginal costing?

A. Costing 'special' or one off opportunities.
B. Deciding whether to make or buy a product.
C. Most appropriate technique because of application of more automation in the industry.
D. Choosing between competing alternative actions.
E. Employing a penetration or destroyer pricing strategy.
Choose the correct answer from the options given below:

Correct Answer: (a) A, B, and E only
Solution:

Following decision choices are valid in relation to marginal costing:-
• Costing 'special' or one off opportunities.
• Deciding whether to make or buy a product.
• Choosing between competing alternative actions.
• Employing a penetration or destroyer pricing strategy.
Marginal costing is very helpful in managerial decision making. Management's production and cost and sales decision may be easily affected from marginal costing. Profitable product mix, problem of limiting factors, make or buy decision, diversification of production, fixation of selling price etc are the applications of marginal costing.

5. Answer the correct material usage variance from the information given below:

Standard material cost for manufacturing 1000 units of an output is 400 kgs of material at Rs. 2.50 per kg. When 2000 units are produced, is found that actual consumption was of 825 kgs material at a price of Rs. 2.70 per kg :

Correct Answer: (d) Rs. 62.50 Adverse
Solution:Given : Standard material cost for manufacturing 1000 units of an output is 400 kgs at Rs. 2.50/kg.
• When Unit produced 2000 units standard Quantity should be 400 × 2 = 800 kgs
• Actual consumption is 825 kgs
• Standard price is 2.70/kg
So, putting values on formula,
Material usage Variance
= (Standard quantity − Actual quantity) × Standard Price
= (800 − 825) × 2.5 = (−62.5)
= Rs. 62.50 (Adverse)

6. Pricing of housing loan by a commercial bank may follow the following steps in a logical sequence:

Competitive price determination
B. Specification of spread
C. Application of MCLR
D. Conduct of Credit Assessment
E. Quoting to prospective borrower
Choose the correct answer from the options given below:

Correct Answer: (d) C, D, B, A, E
Solution:

Following are the steps followed by commercial Bank for pricing of housing loans :-
• Conduct of Credit Assessment.
• Application of MCLR
• Specification of spread.
• Competitive price determination
• Quoting to prospective borrower.

MCLR (Marginal Cost of Funds Based Landing Rate) is the minimum interest rate a bank can charge for a loan.

7. A contract is discharged by supervening impossibility under which of the following situations?

A. Destruction of subject matter
B. Death or disablement of parties
C. Rescission
D. Remission
E. Accord and satisfaction
Choose the most appropriate answer from the options given below:

Correct Answer: (b) A and B only
Solution:

The discharge of the contract takes place when the obligations of the contract between the parties to the contract come to an end. It is termed as the termination of the contract. A contract can be discharged by various ways and 'supervening impossibility' is one of them. It arises which were impossible at the establishment of the contract would become impossible in the course of time. Following are the situations:-
• Physical (Destruction of subject matter).
• Practical (Death or disablement of parties).
• Legal (changes in law)

8. Which one of the following is a Trade related entry mode in international markets?

Correct Answer: (a) Management Contract
Solution:• Management contract :- in essence, a corporation rents out its knowledge or know-how to a government or business in the form of personnel who go to a foreign country, manage the business there under management contract, and perform contract manufacturing.

9. Match List-I with List-II

Choose the correct answer from the options given below:

ABCD
(a)IIIIIIIV
(b)IIIIIIIV
(c)IIIIIIVI
(d)IIIIVIII
Correct Answer: (d)
Solution:

10. Given below are two statements: One is labelled as Assertion (A) and the other is labelled as Reason (R)

Assertion (A) : Substitution effect is usually much larger than income effect.
Reason (R) : Consumer usually spends only a small portion of her/his income on any one commodity.
In the light of the above statements, choose the correct answer from the options given below:

Correct Answer: (a) Both (A) and (R) are correct and (R) is the correct explanation of (A)
Solution:

Both (A) and (R) correct and (R) is the correct explanation (A).
• The substitution effect is caused by a change in the price of a product in relation to the prices of similar products.
• Buyers choose to replace a higher-priced product with a similar, lower priced substitute.
• Substitution effect is usually much larger than income effect because consumer usually spends only a small portion of her/his income on any one commodity.