BUSINESS STUDIES MCQ 

CHAPTER 1
Nature and Significance of Management 
 
1. Successful organisations do not achieve goals by chance but by following a deliberate process known as 
(a) Planning 
(b) Co-ordination 
(c) Controlling 
(d) Management 
2. Management is essential for the organisations which are 
(a) Non-profit organisations 
(b) Service organisations 
(c) Social organisations 
(d) All of the above 
3. Management contains a series of interrelated functions that include 
(a) Planning 
(b) Organising 
(c) Directing 
(d) All of the above 
4. People in the organisations carry out diverse tasks with the aim to achieve 
(a) Different objectives 
(b) Common objectives 
(c) Both of the above 
(d) None of the above 
5. Successful management ensures that 
(a) Goals are achieved with least cost 
(b) Timely achievement of goals 
(c) Both of the above 
(d) None of the above 
6. Efficiency is concerned with 
(a) Doing the right thing 
(b) Doing things right 
(c) Achieving end results 
(d) None of the above 
7. Effectiveness relates to 
(a) Doing the right task 
(b) Completing activities 
(c) Achieving goals 
(d) All of the above 

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8. Rohan works as a production manager in Global Enterprises Limited. He has been given the task of getting 
1000 units of hand woven table mats manufactured at the cost of ​₹​150 per unit within 10 days. In order to be 
acknowledged as an effective manager, he must ensure that 
(a) The cost of production does not exceed ​₹​150 per unit 
(b) The work is completed within 10 days even at higher cost per unit 
(c) The cost of production is less than ​₹​150 per unit 
(d) All of the above 
9. Jay is working as a marketing manager in a company. Has been given the task of selling 100000 units of a 
product at the cost of ​₹​100 per unit within 20 days. He is able to sell all the units within the stipulated time, 
but had to sell last 1000 units at 20% discount in order to complete the target. In such a situation, he will be 
considered to be 
(a) An efficient manager 
(b) An effective manager 
(c) Both effective and efficient manager 
(d) None of the above 
10. Management is said to be poor if it is 
(a) Efficient but ineffective 
(b) Effective but inefficient 
(c) Both inefficient and ineffective 
(d) All of the above 
11. Tarang Enterprises Limited is planning to increase its sales by 30% in the next quarter. Identify the 
feature of management being highlighted in the given statement. 
(a) Management is all pervasive 
(b) Management is a goal oriented process 
(c) Management is a continuous process 
(d) All of the above 
12. Management is equally important to run a political organisation as it is to run an economic organisation. 
Which feature of management is being reflected in the given statement? 
(a) Management is goal oriented 
(b) Management is multidimensional 
(c) Management is all pervasive 
(d) Management is a group activity 
13. Management translates the works to be carried out in terms of goals to be achieved and assigns the 
means to achieve it. This statement relates to 
(a) Management of work 
(b) Management of people 
(c) Management of operations 
(d) All of the above 
14. Which of the following statements highlights that management is a group activity? 
(a) Organisation is a collection of diverse individuals with different needs. 
(b) Achievement of common goal requires teamwork and co-ordination of efforts in a common direction. 
(c) Each member of the organisation may have different individual goals but they must travel together towards 
common goals. 
(d) All of the above 
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15. Keeping in view the changes in the consumer demands and preferences ‘Tasitemaker Bakery’ has reduced 
the sugar and fat content in its products. This approach of business shows that management is 
(a) An intangible force 
(b) A group activity 
(c) A dynamic function 
(d) A multidimensional activity 
16. Which of the following is not an organisational objective of management? 
(a) Earning enough revenue to cover costs 
(b) Earning sufficient profits to cover risks of business 
(c) Increase in the prospects of business in the long run 
(d) Providing free education to their employees children 
17. Management is considered important because 
(a) It helps an organisation to adapt to the changes 
(b) Seeks to integrate individual efforts 
(c) It helps in development of the society 
(d) All of the above 
18. Management is considered to be an art because 
(a) The principles of management have universal validity 
(b) The principles of management have universal application 
(c) Different principles of management are brought into effect differently by different managers 
(d) It is not important for the practising managers to be a member of a professional association. 
19. Which of the following statements is not relevant to the concept of “Management as an inexact science”? 
(a) The principles of management lack universal validity 
(b) The principles of management lack universal applicability 
(c) The principles of management have to be modified according to the given situation 
(d) Management involves dealing with human behaviour and outcomes cannot be predicted with utmost 
accuracy 
20. The authority-responsibility relationships that exist within the organisation give rise to 
(a) Different functions within the organisation 
(b) Different levels in the organisation 
(c) Management as a multidimensional activity 
(d) Management as a group activity 
21. Which of the following is not a designation related to top level management? 
(a) President 
(b) Vice-President 
(c) Chairman 
(d) Production Manager 
22. Which of the following is not a designation related to middle level management? 
(a) Operations Head 
(b) Sales Manager 
(c) Chief Operating Officer 
(d) Divisional Manager 

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23. Which of the following is not a designation related to lower level management? 
(a) Plant Superintendent 
(b) Supervisors 
(c) Section officers 
(d) Marketing Manager 
24. Which of the following is a function of top level management? 
(a) Ensuring quality of output 
(b) Assigning necessary duties and responsibilities to their departments 
(c) Taking responsibility for all the activities of the business and its impact on the society 
(d) Ensuring that the safety standards are maintained within the organisation. 
25. Which of the following statements does not pertain to middle level management? 
(a) They are responsible for all the activities of the operational managers. 
(b) They are responsible for the welfare and survival of the organisation. 
(c) The interpreter the policies made by top level managers 
(d) Co-operate with other departments for the smooth running of the organisation. 
26. Which of the following statements is not true for lower level management? 
(a) Analyse the business environment and its implications for the survival of the business. 
(b) Ensure the quality of the output 
(c) They strive to reduce the wastage of resources 
(d) They ensure that the safety standards are maintained within the organisation. 
27. Identify the level of management which does not interact with the work force directly. 
(a) Supervisory management 
(b) Operational management 
(c) First line managers 
(d) Middle level management 
28. The main task of this level of management is to determine the overall organisational objectives and 
strategies for their realisation. 
(a) Operational management 
(b) Middle level management 
(c) First line managers 
(d) Top level management 
29. This level of management serves as a link between top level managers and first line managers. 
(a) Supervisory level management 
(b) Operational management 
(c) Middle level management 
(d) None of the above 
30. Organising as a function of management involves deciding 
(a) What activities and resources are required 
(b) Who will do a particular task 
(c) Where will it be done 
(d) All of the above 
31. The function of management related to grouping of activities to be carried out into departments and 
creating management hierarchy is 
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(a) Planning 
(b) Organising 
(c) Controlling 
(d) Directing 
32. This function of management relating to laying down the foundation for carrying out the other functions of 
management successfully is 
(a) Organising 
(b) Staffing 
(c) Planning 
(d) Controlling 
33. Supervision, communication, motivation and leadership are the key elements of this • function of 
management. 
(a) Directing 
(b) Controlling 
(c) Planning 
(d) Organising 
34. This function of Management related to placing the right person at the right job is 
(a) Organising 
(b) Staffing 
(c) Planning 
(d) Controlling 
35. It is a force that binds all the functions Of management. 
(a) Cooperation 
(b) Co-ordination 
(c) Planning 
(d) Management hierarchy 
36. Co-ordination is considered to be the essence of management because 
(a) It is a common thread that runs through all the activities within the organisation 
(b) It is implicit and inherent in all functions of the organisation 
(c) It is a force that binds all the functions of management 
(d) All of the above
37. Identify the process that provides the requisite amount, quality, timing and sequence of efforts, which 
ensures that planned objectives are achieved with a minimum of conflict. 
(a) Management 
(b) Planning 
(c) Co-ordination 
(d) Controlling 
38. Identify the feature of co-ordination being highlighted in the given statement: “Coordination is not a one 
time function, it begins at the planning stage and continue till controlling.” 
(a) Coordination ensures unity of action 
(b) Coordination is an all pervasive function 
(c) Coordination is a continuous process 
(d) Coordination is a deliberate function 
 

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ANSWERS 
1.​ Answer: d 
Explaination:(d) Management is considered to be a deliberate process as it involves creating an environment 
which is conducive to efficient and effective performance. 
2. Answer: d 
Explaination:(d) Management is essential for all types of organisations irrespective of their size or type. 
3. Answer: d 
Explaination:(d) Management as a process contains a series of functions namely planning, organising, 
staffing, directing and controlling. 
4. Answer: b 
Explaination:(b) Management seeks to integrate individual goals with organisational goals and ensure 
realisation of both. 

5.​ ​Answer: c 
Explaination:(c) Management aims to carry out the work in a manner that is completed within the stipulated 
time (effectiveness) and at the least cost (efficiency). 
6.​ Answer: b 
Explaination:(b) Efficiency aims at reduction of cost through optimum utilisation of resources and avoiding 
wastage of resources. 
7. Answer: d 
8. Answer: b 
Explaination:(b) The concept of effectiveness is related to the completion of the task within the stipulated time 
irrespective of the cost involved. 
9. Answer: b 
10. Answer: c 
11. Answer: b 
Explaination:(b) Management is considered to be goal oriented as an organisation is brought into existence for 
realisation of certain goals. 
12. Answer: c 
Explaination:(c) Management is required in all types: economic, social or political, and sizes of organisations. 
13. Answer: a 
Explaination:(a) Management is multidimensional in nature and involves three aspects, management of work 
is one of them. 
14. Answer: d 

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15. Answer: c 
Explaination:(c) In order to be successful, it is important that a business adapts itself to the changes in the 
taste and preferences of the consumers. 
16. Answer: d 
Explaination:(d) Providing free education to children is a social objective of management. 
17. Answer: d 
18. Answer: c 
Explanation:(c) Management is based on personalised application of the knowledge and skills. 

19.​ ​Answer: b 
Explanation:(b) The principles of management are not universaly valid as they deal with human behaviour 
and the outcome of application of a principle cannot be predicted with utmost accuracy. 
20.​ Answer: b 
21. Answer: d 
Explanation:(d) Production Manager is a designation for middle level management. 
22. Answer: c 
Explanation:(c) Chief Operating Officer is a designation for top level management. 
23. Answer: d 
Explanation:(d) Marketing Manager is a designation related to middle level management. 
24. Answer: d 
Explanation:(d) Ensuring quality of output; Ensuring the safety standards are maintained within the 
organisation – lower level management and assigning necessary duties and responsibilities to their 
departments – middle level management. 
25. Answer: b 
Explanation:(b) They are responsible for the welfare and survival of the organisation- top level management 
26. Answer: a 
Explanation:(a) Analyse the business environment and its implications for the survival of the business-top 
level management 
27. Answer: d 
Explanation:(d) The middle level managers interact with the supervisory/operational/first-line managers who 
in turn interact with the workers directly. 
28. Answer: d 
29. Answer: c 
30. Answer: d 
31. Answer: b 
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32. Answer: b 
33. Answer: a 
34. Answer: b 
35. Answer: b 
36. Answer: d 
37. Answer: c 
38. Answer: c 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
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 BUSINESS STUDIES MCQ 
CHAPTER 2
Principles of Management 
 
1. Which of the following statements is true with reference to principles of management? 
(a) The principles of management have evolved. 
(b) The principles of management are yet to be evolved. 
(c) The principles of management are in the continuous process of evolution. 
(d) None of the above. 
2. By profession, FW Taylor was a 
(a) Mechanical engineer 
(b) Mining engineer 
(c) Psychologist 
(d) Human resource officer 
3. The principles of pure science is considered to be _________ in nature. 
(a) Flexible 
(b) Rigid 
(c) Creative 
(d) None of the above 
4. Which of the following statements best defines the techniques of management? 
(a) It is a set of guidelines to take decisions and actions. 
(b) It is a procedure which involves a series of steps to be taken. 
(c) They are general rules for behaviour of individuals. 
(d) None of the above. 
5. The principles of management have been developed on the basis of 
(a) Observation 
(b) Experimentation 
(c) Personal experiences of the manager 
(d) All of the above 
6. Which of the following statements is/are true with reference to principles of management? 
(a) The principles are guidelines to action. 
(b) The principles denote a cause and effect relationship. 
(c) Principles help the manager to take decisions while performing various management functions. 
(d) All of the above. 
7. The principles of management are intended to be applied to all types and sizes of organisations. This 
statement reflects that the principles of management are 
(a) General guidelines 
(b) Flexible 
(c) Universally applicable 
(d) Mainly behavioural 
 

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8. The principles of management do not provide readymade straight jacket solutions to all management 
problems because 
(a) The real business situations are complex. 
(b) The real business situations are dynamic. 
(c) The principles act as general guidelines. 
(d) All of the above. 
9. Principles of management can be modified by the manager when the situation demands. This statement 
implies that the principles of management are 
(a) Rigid 
(b) Contingent 
(c) Flexible 
(d) Universally applicable 
10. The principles of management enhance the understanding of relationship between human and material 
resources for the achievement of organisational goals. Identify the feature of the principles of management 
being described in the given statement. 
(a) Cause and effect relationships 
(b) Optimum utilisation of resources and effective administration 
(c) Formed by practice and experimentation 
(d) Mainly behavioural 
11. The application of the principles of management has to be changed as per the requirements of the 
prevailing situation at a particular point of time. Which feature of the principles of management is being 
described in the given statement? 
(a) Contingent 
(b) Mainly behavioural 
(c) Cause and effect relationship 
(d) General guidelines 
12. Principles of management emphasize on logical and rational decision making rather than on the basis of 
bias and prejudice. The given statement highlights that the knowledge of principles of management leads to 
(a) Providing managers with useful insight into reality 
(b) Scientific decisions 
(c) Meeting changing environmental requirements 
(d) All of the above 
13. ‘Rule of thumb’ refers to 
(a) Use of personal judgement in handling management issues 
(b) Adopting a hit-and-trial approach to resolve management problems 
(c) Both of the above 
(d) None of the above
14. According to Taylor, “even a small production activity like loading figures of iron into boxes can be 
scientifically planned and managed. This can result in tremendous savings of human energy as well as 
wastage of time and materials.” Identify the related principle of scientific management. 
(a) Harmony, not discord 
(b) Science, not rule of thumb 
(c) Development of each and every person to get his/her greatest efficiency and prosperity 
(d) None of the above 
 

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15. According to this principle of scientific management, “Scientific management has for its foundation the 
firm conviction that true interest of the management and workers are one and the same; the prosperity for the 
employer cannot exist for a long time unless it is accompanied by prosperity for the employees and vice 
versa.” 
(a) Science, not rule of thumb 
(b) Co-operation, not individualism 
(c) Harmony, not discord 
(d) All of the above 
16. According to this principle of scientific management, the employees should be rewarded for their 
suggestions which results in substantial reduction in the cost. 
(a) Science, not rule of thumb 
(b) Co-operation, not individualism 
(c) Harmony, not discord 
(d) All of the above 
17. According to Taylor, “each specialist is to be assigned work according to his/her qualities, the employees 
who possess technical mastery should be involved in planning work whereas those with energy and good 
health may be assigned execution work.” Name the related principle of scientific management. 
(a) Functional foremanship 
(b) Science, not rule of thumb 
(c) Development of each and every person to his or her greatest efficiency and prosperity 
(d) None of the above 
18. Considering the fact that it is difficult to find one single person with all the needed qualities, Taylor 
suggested appointment of a specialist through this technique of scientific management. Identify the 
technique. 
(a) Standardisation and simplification of work 
(b) Method study 
(c) Functional foremanship 
(d) Motion study 
19. The concept of Work Study techniques includes 
(a) Time study 
(b) Motion study 
(c) Fatigue study 
(d) All of the above 
20. The objective of this technique of scientific management is to reduce a given line or a product to fixed type 
sizes and characteristics. Name the technique. 
(a) Method study 
(b) Differential piece wage system 
(c) Standardisation and simplification of work 
(d) Functional foremanship 
21. This technique of scientific management helps in development of the concept of assembly line which is 
widely used in automobile companies these days as well. Identify the technique. 
(a) Motion study 
(b) Standardisation and simplification of work 
(c) Method study 
(d) lime study 
 
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22. Which of the following is an objective of time study? 
(a) To determine the number of workers to be employed 
(b) To formulate suitable incentive schemes 
(c) To calculate the labour costs 
(d) All of the above 
 
23. This technique of scientific management aims to determine the amount and frequency of rest intervals 
that should be provided to the employees during working hours. 
(a) Time study 
(b) Method study 
(c) Motion study 
(d) None of the above
24. The technique of differential piece rate system was developed by Taylor in order to 
(a) Discriminate between efficient and inefficient workers 
(b) Reward the efficient worker 
(c) Motivate the inefficient workers to perform better 
(d) All of the above 
25. The application of this principle of management leads to higher production and better work for the same 
effort. Identify the related principle of general management. 
(a) Discipline 
(b) Equity 
(c) Division of work 
(d) Order 
26. According to this principle of general management, “an organisation should safeguard against abuse of 
managerial power, but at the same time a manager should have the necessary authority to carry out his 
responsibility.” Name the principle of management being described in the given statement. 
(a) Discipline 
(b) Authority and responsibility 
(c) Unity of command 
(d) Unity of direction 
27. Name the principle of management suggested by Henri Fayol, which advocates that, “there should be good 
superiors at all levels, clear and fair agreement and judicious application of penalties.” 
(a) Authority and responsibility 
(b) Esprit De Corps 
(c) Order 
(d) None of the above 
28. According to Henri Fayol, if this principle of general management is violated, “authority is undermined, 
discipline is in jeopardy, order disturbed and stability threatened.” Identify the principle. 
(a) Authority and responsibility 
(b) Discipline 
(c) Unity of command 
(d) Equity 
 
 
 
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29. Through this principle of management, Henri Fayol guides the managers to exhibit exemplary behaviour 
and advises that they should not fall into temptation of misusing their powers for personal benefit at the cost 
of general interest of the organisation. Which principle of management is being described in the above 
statement? 
(a) Remuneration of employees 
(b) Centralisation and decentralisation 
(c) Subordination of individual interest to general interest 
(d) Equity 
30. Which principle of general management advocates that, “Employee turnover should be minimised to 
maintain organisational efficiency.”? 
(a) Stability of personnel 
(b) Remuneration of employees 
(c) Equity 
(d) Esprit De Corps 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

ANSWERS 
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1.​ Answer: c 
Explanation:(c) Principles of Management are said to be evolutionary in nature as these principles have 
evolved over a long period of time with continuous practice and experimentation. 
2. Answer: a 
3.​ Answer: c 
Explanation:(c) Because they are applied in an absolute or in a static manner. 
4. Answer: b 
5. Answer: d 
6. Answer: d 
7.​ ​ Answer: c 
8. Answer: d 
9.​ Answer: c 
10.​ Answer: d 
11.​ ​ Answer: a 
12.​ ​ Answer: b  
Explanation:(b) Principles of management are not based on rule of thumb/hit-and-trial method, but on a 
scientific approach. 
 
13. Answer: c 
14. Answer: b 
Explanation: 
(b) Taylor believes that there was only one method to maximize efficiency which can be developed to study and 
analysis. 
15. Answer: c 
16. Answer: b 
17. Answer: c 
18. Answer: c 
Explanation:(c) Through the technique of functional foremanship, Taylor suggested appointment eight 
specialists to monitor various aspects of a job. 

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19.​ Answer: d 
Explanation:(d) The concept of work study includes time study, motion study, fatigue study and method 
study. 
20. Answer: c 
Explanation:(c) Through the technique of simplification, Taylor suggested elimination of unnecessary diversity 
of products. 
21. Answer: c 
Explanation:(c) The concept of assembly line is used extensively in automobile industries like Toyota, Ford 
etc. these days as well. 
22.​ Answer: d 
23. Answer: d 
Explanation:(d) The correct answer is fatigue study. 
24. Answer: d 
Explanation:(d) Through the technique of differential piece rate wage system, Taylor advocated . that efficient 
workers should be paid at a higher rate as compared to inefficient workers. 
25. Answer: c 
Explanation:(c) The application of principle of division of work enables an employee to gain proficiency in work 
by doing it repetitively over a period of time. 
26. Answer: b 
Explanation:(b) Through the principle of authority and responsibility, Taylor advocated that there should 
always be a balance between the authority granted and the • responsibility entrusted to an employee. 
27.​ Answer: d 
Explanation:(d) The correct answer is Discipline. 
28.​ Answer: b 
Explanation:(b) According to Fayol, there should be one and only one boss for every individual employee and 
dual subordination should be avoided. 
29. Answer: c 
Explanation:(c) Through this principle, Fayol advocates that the interest of the organisation should supersede 
individual interest of an employee under all kinds of situations. 
30. Answer: a 
Explanation: 
(a) According to Fayol, due care should be taken while carrying out the recruitment and selection process and 
the new recruits should be placed at a particular position for a sufficient tenure. 
 
 
 

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 BUSINESS STUDIES MCQ 
CHAPTER 3
Business Environment 
 
1. Which of the following is not a part of the business environment of business? 
(a) Customers 
(b) Suppliers 
(c) Competitors 
(d) None of the above 
2. Which of the following is not a component of specific forces of business environment? 
(a) Technological conditions 
(b) Customers 
(c) Employees 
(d) Investors 

3. The growing awareness about healthcare has led to an increase in the demand for healthcare products and 
services in the country. Identify the feature of business environment being described in the above case. 
(a) Dynamic nature 
(b) Uncertainty 
(c) Relativity 
(d) Interrelatedness 
 
4. Since more number of people have become more beauty and health conscious, our economy has witnessed 
an unprecedented surge in the number of health and beauty spas and wellness clinics. Related feature of 
business environment being described in the above lines is — 
(a) Totality of external forces 
(b) Dynamic nature 
(c) Interrelatedness 
(d) Relativity 

5. ‘Twinkle Stars’ is a well-known resort for organising parties, especially for children. However, in past 6 
months its popularity has reduced considerably as a new resort with better ambience and facilities has 
opened within its vicinity. Name the related feature of business environment which has influenced the 
business of ‘Twinkle Stars’ adversely. 
(a) Totality of external forces 
(b) Dynamic nature 
(c) Interrelatedness 
(d) Uncertainty 
6. Any kind of external devices, like compact discs (CD’s) for computer, have become obsolete. Google, with its 
Google Drive service, Apple with its iCloud offering, enables the users store documents, photos, music and 
movies on web-based servers. Identify the feature of business environment being described in the above lines. 
(a) Relativity 
(b) Dynamic nature 
(c) Uncertainty 
(d) Interrelatedness 
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7. According to the United Nations Environmental Agency, the world produces around 300 million tons of 
plastic each year, half of which constitutes single-use items. Ford is recycling over one billion plastic bottles 
every year to develop elements of the car’s interior, reducing the amount of plastic ending up in a landfill. The 
American car maker has revealed that their Romanian-built EcoSport SUVs’ carpets are made using 470 
recycled single-use plastic bottles. The process for making Ford EcoSport carpets involves shredding bottles 
and their caps into tiny flakes and then heating them to 260° C. Identify the related dimension of business 
environment. 
(a) Economic dimension 
(b) Social dimension 
(c) Technological dimension 
(d) Political dimension 
 
 
8. DigiLocker is the country’s first secured cloud-based platform for the storage, issuance and verification of 
documents with the Driving Licence & Vehicle Registration System of the Road Transport Ministry. The 
integration of a government department with DigiLocker since its launch last year is one of the biggest of its 
kind. It will spare 1 people the trouble of carrying licences & vehicle papers, which can be accessed on phones 
using the DigiLocker app. Identify the related dimension of business environment. 
(a) Ecoriomic dimension 
(b) Technological dimension 
(c) Social dimension 
(d) Political dimension 

9. The Uttarakhand government has developed surveillance network using latest satellite technology. Under 
this system, the state’s mining department would be in a position to check illegal mining activities across the 
state. The state government is also considering the use of drones in its proposed campaign against illegal 
mining. Identify the related dimensions of business environment. 
(a) Economic dimension and Legal dimension 
(b) Social dimension and Economic dimension 
(c) Technological dimension and Political dimension 
(d) Political dimension and Economic dimension 
 
10. In order to boost and double India’s export of goods and services to over USD 1,000 billion by 2025, it is 
important to lower effective corporate tax rate, bring down cost of capital and simplify regulatory and tax 
framework. Identify the related dimension of business environment. 
(a) Social dimension and Legal dimension 
(b) Technological dimension and Political dimension 
(c) Political dimension and Social dimension 
(d) Economic dimension and Legal dimension 

11. The Economic Survey, 2019 suggests that the psychological biases can be used in the realm of tax 
compliance. It is in favour of using religious norms such “dying in debt is a sin” to improve tax compliance. 
Identify the related dimensions of business environment. 
(a) Legal dimension and Social dimension 
(b) Social dimension and Economic dimension 
(c) Technological dimension and Political dimension 
(d) Political dimension and Economic dimension 
 
12. Electric vehicles with zero tail pipe emission are emerging as a good alternative to ‘ problems like climate 
change, surging pollution leading to ill health, crude import bill and energy security. Identify the related 
dimensions of business environment. 
(a) Economic dimension, Legal dimension and Social dimension 
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(b) Social dimension, Political dimension and Economic dimension 
(c) Economic dimension, Technological dimension and Social dimension 
(d) Social dimension, Political dimension and Legal dimension 
 
13. ‘Yo Tummy’ began its business by offering the classic combo of hamburgers and fries. But over time, their 
customers wanted healthier foods, so ‘Yo Tummy’ responded and began offering healthy alternatives such as 
salads, fruits, wraps and oatmeal. If ‘Yo Tummy’ hadn’t responded, they may have lost customers that wanted 
to eat healthier foods. The above case highlights one of the points related to the importance of business 
environment and its understanding by managers. Identify it. 
(a) It helps in coping with rapid changes. 
(b) It helps in improving performance. 
(c) It helps the firm to identify threats and early warning signals. 
(d) It enables the firm to identify opportunities and getting the first mover advantage. 
14. As a result of major government initiatives, more and more people are going ‘green’. In order to keep in 
line with the trend, ‘Clapaway’ a carpet cleaning company has advertised that they only use natural cleaners 
that come from renewable resources and that all their service vehicles are hybrid vehicles that use both gas 
and electricity. Identify one of the points related to the importance of business environment and its 
understanding by managers which is being highlighted in the above case. 
(a) It helps in assisting in planning and policy formulation. 
(b) It helps in coping with rapid changes. 
(c) It helps in improving performance. 
(d) It enables the firm to identify opportunities and getting the first mover advantage. 
15. According to the World Health Organization, 39% of adults are overweight. Over the last 40 years, the 
prevalence of obesity has tripled around the world. With over half of consumers drinking at least one sugary 
drink on a given day, regulations towards the beverage sector are likely to become increasingly onerous. In 
the U.K., for example, a sugar tax was introduced in 2018 on beverages containing more than 5% sugar. 
Identify the related dimensions of business environment. 
(a) Legal dimension and Social dimension 
(b) Social dimension and Technological dimension 
(c) Technological dimension and Legal dimension 
(d) Political dimension and Technological dimension 
16. India’s population is expected to grow under 0.5 per cent during 2031-41 due to decline in fertility rate 
and increase in life expectancy. These changes in India’s demography will also have implications such as the 
proportion of elementary school-going children will witness significant declines, lack of hospital beds and 
increase in retirement age. The related feature of business environment being described in the above lines is 
(a) Totality of external forces 
(b) Dynamic nature 
(c) Interrelatedness 
(d) Relativity 
 
17. India continues to be a lower-middle-income country along with 46 others, while Sri Lanka has climbed to 
the upper-middle-income group for the fiscal year (FY) 2020, according to the World Bank’s classification of 
countries by income levels, released on July 1, 2019. 
Identify the related dimensions of business environment. 
(a) Social dimension 
(b) Technological dimension 
(c) Economic dimension 
(d) Political dimension 
18. According to a report by the India Staffing Federation (ISF), India has emerged as the 
fifth largest market worldwide in flexi-staffing in 2018 and the country would have 6.1 million flexi-workforce 
by 2021. It showed that Haryana, Gujarat, Karnataka, Madhya Pradesh and Telangana are the states with 
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high growth potential for flexi- staffing but Andhra Pradesh tops the list of states with favourable business 
environment. Identify the feature of business environment being discussed above, 
(a) Relativity 
(b) Dynamic nature 
(c) Uncertainty 
(d) Interrelatedness 
 
19. The Union Cabinet has given ‘in-principle’ nod to divest stakes in Air India — a wholly government owned 
airline. This means the government is willing to shed a substantial portion of its stake and hand over the 
management of the ailing airline to the private sector. Identify the concept being described in the above lines. 
(a) Liberalisation 
(b) Privatisation 
(c) Globalisation 
(d) Demonetisation 
20. The Government of India launched “Make in India” initiative in September, 2014 to increase foreign direct 
investment (FDI) in 25 sectors. As of April, 2015, FDI inflow in India increased by 48% since the launch of 
“Make in India” initiative. 
Identify the concept being described in the above lines, with regard to inflow of FDI. 
(a) Demonetisation 
(b) Privatisation 
(c) Liberalisation 
(d) Globalisation 
 
21. In today’s world, the flow of goods and services is not only cheap and fast, but reliable and secure. You 
can order anything you wish from any part of the world. Internet has been connecting people without any 
limitations or boundaries in the way of doing business. Identify the concept being described in the above 
lines. 
(a) Liberalisation 
(b) Globalisation 
(c) Demonetisation 
(d) Privatisation 
 
22. On 8th November 2016, with the announcement from Government of India, all the ​₹​500 and ​₹​1,000 
banknotes of the Mahatma Gandhi series have ceased to be a legal tender. The givemment also announced 
the issuance of new ​₹​500 and ​₹​2,000 banknotes in exchange for the demonetised banknotes. Identify the 
concept being described in the above lines. 
(a) Globalisation 
(b) Liberalisation 
(c) Demonetisation 
(d) Privatisation 
 
23. Which of the following is a feature of demonetisation? 
(a) Tax administration measure 
(b) Channelising savings into the formal financial system 
(c) Development of less-cash economy 
(d) All of the above 
24. A business has to offer wider choice in purchasing enhanced quality of goods and services in order to 
maintain an edge over its competitors. The implementation of the new economic policy with liberalisation, 
privatisation and globalisation has posed various challenges for the corporate sector. One of the important 
challenges is explained in the above lines. Identify it. 
(a) Increasing competition 
(b) More demanding customers 

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(c) Necessity for change 
(d) Market orientation 

ANSWERS 
1.​ Answer: d 
Explanation: 
(d) All of the above elements are a part of business environment of an enterprise. 
2. Answer: a 
Explanation: 
(a) Technological conditions is a component of general forces that affect the business environment of an 
enterprise. 
3. Answer: d 
Explanation: 
(d) Interrelatedness, as the different elements or parts of business environment are closely interrelated 
4. Answer: c 
Explanation: 
(c) Interrelatedness, as the different elements or parts of business environment are closely interrelated 
5. Answer: b 
Explanation: 
(b) Dynamic nature as business environment is dynamic in that it keeps on changing 
6.​ Answer: c 
Explanation: 
(c) Uncertainty, as business environment is largely uncertain as it is very difficult to predict future events. 
7. Answer: c 
Explanation: 
(c) Technological dimension, as technology is facilitating recycling process. 
8. Answer: b 
Explanation: 
(b) Technological dimension, as technology is facilitating online process. 
9. Answer: c 
Explanation: 
(c) Technological dimension and Political dimension 
10. Answer: a 
Explanation: 
(a) Economic dimension and Legal dimension  
11. Answer: b 
12. Answer: c 

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13. Answer: a 
14. Answer: c 
15. Answer: a 
16. Answer: c 
17. Answer: c 
18. Answer: a 
19. Answer: b 
20. Answer: c 
21. Answer: b 
22. Answer: c 
23. Answer: d 
24. Answer: a 

 
 
 
 
 

 
 

 
 
 
 
 

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BUSINESS STUDIES MCQ 

CHAPTER 4
Planning 
 
1. Name the function of management which involves setting objectives and developing appropriate courses of 
action to achieve these objectives. 
(a) Directing 
(b) Organising 
(c) Planning 
(d) Staffing
2. Which of the following is not a benefit of planning? 
(a) Planning reduces overlapping and wasteful activities. 
(b) Planning is a mental exercise. 
(c) Planning provides directions. 
(d) Planning reduces the risks of uncertainty. 
3. Which of the following is a benefit of planning? 
(a) Helps in avoiding confusion and misunderstanding. 
(b) Ensures clarity in thought and action. 
(c) Useless and redundant activities are minimised or eliminated. 
(d) All of the above. 
4. Which of the following statements is not true with reference to planning? 
(a) Planning is a pre-requisite for controlling. 
(b) Planning does not lead to rigidity. 
(c) Planning enables a manager to look ahead and anticipate changes. 
(d) Planning facilitates co-ordination among departments and individuals in the organisation. 
 
5. What is known as the primary function of management? 
(a) Controlling 
(b) Organising 
(c) Planning 
(d) Staffing 
6. Which of the following is not a feature of planning? 
(a) Planning is futuristic. 
(b) Planning is pervasive. 
(c) Planning establishes standards for controlling. 
(d) Planning focuses on achieving objectives. 
7. All other managerial functions are performed within the framework of the plans drawn. Identify the related 
feature of planning. 
(a) Planning focuses on achieving objectives. 
(b) Planning is pervasive. 

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(c) Planning is futuristic. 
(d) Planning is primary function of management. 
 
8. Planning requires logical and systematic thinking rather than guess work or wishful thinking. Identify the 
related feature of planning. 
(a) Planning is futuristic. 
(b) Planning is a mental exercise. 
(c) Planning establishes standards for controlling. 
(d) Planning focuses on achieving objectives. 
9. Planning cannot foresee everything, and thus, there may be obstacles to effective planning. Identify the 
related limitation of planning. 
(a) Planning leads to rigidity. 
(b) Planning may not work in a dynamic environment. 
(c) Planning does not guarantee success. 
(d) Planning reduces creativity. 

10. It is not always true that just because a plan has worked before it will work again. Identify the related 
limitation of planning. 
(a) Planning leads to rigidity. 
(b) Planning reduces creativity. 
(c) Planning may not work in a dynamic environment. 
(d) Planning does not guarantee success. 
 
11. Identify the correct sequence of steps involved in the planning process. 
(a) Evaluating alternative courses, Identifying alternative course of actions, Setting objectives, Developing 
premises 
(b) Setting objectives, Identifying alternative course of actions, Evaluating alternative courses, Developing 
premises 
(c) Setting objectives, Developing premises, Identifying alternative course of actions, Evaluating alternative 
courses 
(d) Setting objectives, Developing premises, Identifying alternative course of actions, Evaluating alternative 
courses 
12. They represent the end point of planning. 
(a) Rules 
(b) Methods 
(c) Objectives 
(d) Policies 
 
13. A strategy is derived from 
(a) Policy 
(b) Objective 
(c) Method 
(d) Rule 
14. A strategy is a comprehensive plan which will not include this dimension 
(a) Determining long term objectives 
(b) Adopting a particular course of action 
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(c) The ends which the management seeks to achieve by its operations 
(d) Allocating resources necessary to achieve the objective 
15. They provide a basis for interpreting strategy, which is usually stated in general terms. 
(a) Policies 
(b) Procedures 
(c) Objectives 
(d) Programmes 
16. They detail the exact manner in which any work is to be performed. 
(a) Rules 
(b) Methods 
(c) Procedures 
(d) Programmes 
17. It helps to save time, money and effort, and increases efficiency. 
(a) Procedure 
(b) Programme 
(c) Rule 
(d) Method 
18. It is a plan which quantifies future facts and figures. 
(a) Procedure 
(b) Programme 
(c) Rule 
(d) Budget 
19. Which of the following is not a standing plan? 
(a) Policy 
(b) Procedure 
(c) Programme 
(d) Rule 
20. Which of the following is not a single use plan? 
(a) Budget 
(b) Programme 
(c) Method 
(d) All of the above 
21. Micromax was India’s largest seller of mobile handsets. It launched low-cost Chinese manufacturing with 
some smart packaging and features like long-lasting batteries and dual-sim functionality to garner 20% 
market share in India’s value-conscious mobile handset market. Identify the two types of plans being 
described in the above lines. 
(a) Strategy and objective 
(b) Rule and Programme 
(c) Programme and objective 
(d) Method and objective 
22. According to a survey, these days the young children have more power in purchasing decisions than ever 
before. The parents seek their kids’ opinions about all kinds of once-adult decisions, including where to go for 
dinner, what kind of car to buy, even what to wear,”. Therefore, the retailers are adapting to this by enhancing 
their kids’ sections. If the children want to shop in the store for their clothes, then there’s a greater chance 
the parent will also see something they want to buy as well. Identify the type of plan being described in the 
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above lines. 
(a) Programme 
b) Method 
(c) Strategy 
(d) Rule 
23. According to a survey of 250 consumer packaged goods (CPG) companies by a reputed 
firm, 75% of brand owners say they’re going to spend significantly more on packaging as it is critical to their 
brand’s success. 
Identify the type of plan being described in the above lines. 
(a) Rule 
(b) Programme 
(c) Strategy 
(d) Method 
24. According to the World Health Organization, 39% of adults are overweight. Consequently in the U.K., a 
sugar tax was introduced in 2018 on beverages containing more than 5% sugar to curb sugar intake. Identify 
the type of plan being described in the above lines. 
(a) Programme 
(b) Method 
(c) Strategy 
(d) Rule 
25. According to the Economic Survey, insights from behavioural economics can be strategically utilised to 
create an aspirational agenda for social change – from BBBP (Beti Bachao Beti Padhao) to BADLAVL (Beti 
Aapki Dhan Lakshmi Aur Vijay Lakshmi); from Swachh Bharat to Sundar Bharat; from ‘Give It Up’ for the 
LPG subsidy to ‘Think about the Subsidy’ and from tax evasion to tax compliance. Identify the type of plan 
being described in the above lines. 
(a) Programme 
(b) Method 
(c) Strategy 
(d) Rule 
26. Shubham wants to increase the sale of his business by 15% in the next quarter. Identify the type of plan 
being described in the above lines. 
(a) Method 
(b) Objective 
(c) Strategy 
(d) Programme 
27. Packaging is said to have the unique capacity to make products stand out in a crowded marketplace. 
Therefore, convenience of the consumer is at the top of mind of the marketers as they are focussing on 
developing packaging that’s easier to open, to protect against breakage, maintain freshness during delivery 
and keep a consistent look and feel across multiple channels. Identify the type of plan being described in the 
above lines. 
(a) Programme 
(b) Method 
(c) Strategy 
(d) Rule 
28. Based on National Common Mobility Card standards, India’s first indigenously developed inter-operable 
transport card was launched in March 2019 to make travel across various modes convenient. Identify the type 
of plan being described in the above lines. 
(a) Strategy 
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(b) Programme 
(c) Method 
(d) Rule 
 
29. India is world’s third largest domestic aviation market. The government plans to make India a hub for 
financing aircraft purchases and leasing of planes. In order to promote this, the government has announced 
tax incentives, like tax deductions, for companies setting up business in IFSC for fifteen years. Identify the 
type of plan being described in the above lines. 
(a) Method 
(b) Strategy 
(c) Programme 
(d) Rule 
30. The government has been doubling down on its efforts to switch to 100% electric vehicles by 2030. Many 
companies such as Tata Motors, Kinetic Motors, Maruti Suzuki and Hyundai Motors are all readying their EV 
models for a 2020 launch in order to support the plan. Identify the type of plan being described in the above 
lines. 
(a) Method 
(b) Strategy 
(c) Programme 
(d) Objective 
31. In order to encourage technologies like artificial intelligence (AI), the internet of things (iot) and virtual 
reality (VR), the government is planning to launch a scheme to invite foreign companies through a transparent 
bidding process, to set up plants for manufacturing semi-conductors, solar photo voltaic cells, lithium cell 
batteries, solar electric charging vehicles, computer servers, and laptops in India. 
Identify the type of plan being described in the above lines. 
(a) Method 
(b) Strategy 
(c) Programme 
(d) Objective 
32. Ketan Enterprises adopts different ways to provide training to employees, like Job . Rotation, Coaching, 
Vestibule Training, Conference, Lecture Method and Role Playing. Identify the type of plan being described in 
the above lines. 
(a) Method 
(b) Strategy 
(c) Programme 
(d) Procedure 
33. Swatch Ltd. plans to earn a 20% return on its investment in a new project. Identify the type of plan being 
described in the above lines. 
(a) Method 
(b) Strategy 
(c) Programme 
(d) Objective 
34. Shubham is striving to earn a profit of 30% in the current financial year. Identify the type of plan being 
described in the above lines. 
(a) Method 
(b) Objective 
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(c) Strategy 
(d) Programme 
 
 
35. Name the type of budget which is prepared to determine the net cash position. 
(a) Purchase budget 
(b) Sales budget 
(c) Cash budget 
(d) Production budget 
36. In 2019 alone, Swiggy has launched operations in 300 towns and cities. Swiggy follows a two-step 
sequence while expanding to a small town. First, it provides more laborious training to restaurants and 
delivery partners compared to their counterparts in the city. Second, it focuses on building scale in operations 
and increase the restaurant’s reach to a larger base of consumers, including optimizing kitchens, resource 
planning among others. Identify the type of plan being described in the above lines. 
(a) Method 
(b) Strategy 
(c) Programme 
(d) Procedure 
 
 
 
 
 
 
 
 
 
 
 
 
 

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ANSWERS 
1.​ Answer: c 
2. Answer: b 
Explanation:(b) Planning is a mental exercise (it is a feature of planning) 
3. Answer: d 
4. Answer: b 
Explanation:(b) Planning does lead to rigidity. 
5. Answer: c 
Explanation:(c) Planning lays down the foundation for all other functions. 
6. Answer: c 
Explanation:(c) it is a point of importance; Planning establishes standards for controlling. 
7. Answer: d 
Explanation:(d) Planning is the basis for all other functions of management. 
8. Answer: b 
Explanation:(b) Planning is basically an intellectual activity of rational thinking. 
9. Answer: b 
Explanation:(b) in business environment, nothing is constant as it consists of a number of dimensions: 
economic, political, physical, legal and social dimensions.   
10.​ Answer: d 
Explanation:(d) there are so many other unknown factors to be considered. 
11.​ Answer: c 
12. Answer: c 
Explanation:(c) All other managerial activities are also directed towards achieving these objectives. 
13. Answer: b 
Explanation:(b) a strategy is a comprehensive plan devised for attaining organisational objectives. 
14. Answer: c 
Explanation:(c) The ends which the management seeks to achieve by its operations – objective 

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15.​ Answer: a 
Explanation:(a) Policies act as a guide to managerial action and decisions in the implementation . of strategy. 
16. Answer: c 
Explanation:(c) procedures are specified in a chronological order 
17.​ Answer: d 
18.​ Answer: d 
Explanation:(d) Budget is a numerical plan 
19. Answer: c 
Explanation:(c) Programmes are specific and can be implemented only one time. 
20. Answer: c 
Explanation:(c) Methods can be used repetitively to perform routine jobs. 
21.​ Answer: a 
Explanation:(a) Strategy and objective 
22. Answer: c 
23. Answer: c 
24. Answer: c 
25. Answer: a 
26. Answer: b 
27. Answer: c 
28. Answer: a 
29. Answer: b 
30. Answer: b 
31. Answer: b 
32. Answer: a 
33. Answer: d 
34. Answer: b 
35. Answer: c 

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36. Answer: b 

 
 
 

BUSINESS STUDIES MCQ 

CHAPTER 5
Organising 
 
1. Name the process which co-ordinates human efforts, assembles resources and integrates both into a 
unified whole to be utilised for achieving specified objectives, 
(a) Management 
(b) Planning 
(c) Organising 
(d) Directing 
2. Organising is a process by which the manager 
(a) Establishes order out of chaos 
(b) Removes conflict among people over work or responsibility sharing 
(c) Creates an environment suitable for teamwork 
(d) All of the above 
3. It is defined as the framework within which managerial and operating tasks are performed. 
(a) Span of management 
(b) Organisational structure 
(c) Informal organisation 
(d) None of the above 
4. It refers to the number of subordinates that can be effectively managed by a superior, 
(a) Organisational structure 
(b) Informal organisation 
(c) Span of management 
(d) None of the above 
5. As the span of management increases in an organisation, the number of levels of management in the 
organisation 
(a) Increases 
(b) Decreases 
(c) Remains unaffected 
(d) None of the above 
6. Uranus Limited is a company dealing in metal products. The work is mainly divided into functions 
including production, purchase, marketing, accounts and personnel. Identify the type of organisational 
structure followed by the organisation. 
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(a) Functional structure 
(b) Relational structure 
(c) Divisional structure 
(d) None of the above 
 
 
7. Identify the type of organisational structure which facilitates occupational specialisation, 
(a) Functional structure 
(b) Horizontal structure 
(c) Network structure 
(d) Divisional structure 
8. Identify the type of organisational structure which makes training of employees easier, as the focus is only 
on a limited range of skills. 
(a) Network structure 
(b) Divisional structure 
(c) Functional structure 
(d) Matrix structure 
9. This type of organisational structure is most suitable when the size of the organisation is large, has 
diversified activities and operations require a high degree of specialisation, 
(a) Divisional structure 
(b) Functional structure 
(c) Network structure 
(d) Matrix structure 
10. Under this type of organisational structure, manpower is grouped on the basis of different products 
manufactured. 
(a) Divisional structure 
(b) Functional structure 
(c) Network structure 
(d) Matrix structure 
11. Which of the following is not a feature of functional structure? 
(a) It promotes functional specialisation. 
(b) Managerial development is difficult. 
(c) It is easy to fix responsiblity for performance. 
(d) It is an economical structure to maintain. 
12. Which of the following is not a merit of functional structure? 
(a) It promotes control and co-ordination within a department. 
(b) It makes training of employees easier, as the focus is only on a limited range of skills. 
(c) It ensures that different products get due attention. 
(d) It leads to occupational specialisation. 
13. Rishabh has joined as a Creative Head in an entertainment company. He always ensures that the work 
has been divided into small and manageable activities and also the activities of similar nature are grouped 
together. Identify the related step in organising process being mentioned in the above lines. 
(a) Identification and division of work 
(b) Departmentalisation 
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(c) Assignment of duties 
(d) Establishing reporting relationships 
 
 
 
14. Indigo Limited has a staff of 300 people which is grouped into different departments. The organisational 
structure depicts that 100 people work in Production department, 150 in Finance department, 20 in 
Technology department and 30 in Human Resource department. Identify the type of organisational structure 
being followed by the company. 
(a) Functional structure 
(b) Divisional structure 
(c) Informal structure 
(d) None of the above 
15. Which of the following is not a merit of divisional structure? 
(a) It promotes product specialisation. 
(b) It ensures that different functions get due attention. 
(c) It promotes flexibility and faster decision making. 
(d) It facilitates expansion and growth as new divisions. 
16. Which of the following is not a demerit of divisional structure? 
(a) It is an expensive structure to maintain, since there may be a duplication of activities across products. 
(b) All functions related to a particular product are integrated in one department. 
(c) Conflict may arise among different divisional heads due to different interests. 
(d) Authority provided to the managers to supervise all activities related to a particular division may lead to 
undesirable consequences. 
17. Identify the correct sequence of steps to be followed in an organising process. 
(a) Departmentalisation, Establishing reporting relationships, Assignment of duties, Identification and division 
of work 
(b) Identification and division of work, Departmentalisation, Assignment of duties, Establishing reporting 
relationships 
(c) Identification and division of work, Assignment of duties, Departmentalisation, Establishing reporting 
relationships 
(d) Identification and division of work, Establishing reporting relationships, Departmentalisation, Assignment 
of duties 
18. Which of the following is not a demerit of functional structure? 
(a) It places more emphasis on the objectives pursued by a functional head than on overall enterprise 
objectives. 
(b) It may lead to conflict of interests among departments due to varied interests. 
(c) It leads to occupational specialisation. 
(d) It may lead to difficulty in co-ordination among functionally differentiated departments. 
19. Lakshay has been given the task of arranging for five-day conference for foreign delegates. In order to 
ensure smooth functioning of the event, he has made two people as co-ordinators to take care of activities 
related to registration and refreshment. Identify the function of management being carried out by Lakshay. 
(a) Planning 
(b) Staffing 
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(c) Organising 
(d) Directing 
20. Which of the following is not a feature of formal organisation? 
(a) It specifies the relationships among various job positions. 
(b) The standards of behaviour of employees are evolved from group norms. 
(c) It is deliberately designed by the top management. 
(d) It places less emphasis on interpersonal relationships among the employees. 
21. Which of the following is not a merit of formal organisation? 
(a) It is easier to fix responsibility for mistakes. 
(b) Scalar chain of command is followed. 
(c) It leads to effective achievement of organisational goals. 
(d) It leads to faster spread of information and rapid feedback. 
22. Which of the following is not a demerit of formal organisation? 
(a) It may lead to procedural delays. 
(b) It may lead to spreading of rumours. 
(c) It emphasises on following rigidly laid down policies. 
(d) It places more importance on work rather than the relationships. 
23. Which of the following is not a feature of informal organisation? 
(a) It originates from within the formal organisation. 
(b) The standards of behaviour evolve from group norms. 
(c) Scalar chain of command is not followed. 
(d) It is deliberately created by the management. 
24. Which of the following is not a merit of informal organisation? 
(a) It leads to faster spread of information and speedy feedback. 
(b) It helps to fulfill the social needs of the members. 
(c) It .does not fulfill inadequacies in the formal organisation. 
(d) All of the above 
25. Which of the following is not a demerit of informal organisation? 
(a) It leads to spreading of rumours. 
(b) It gives more importance to structure and work. 
(c) It may restrict implementation of changes within the organisation. 
(d) It puts psychological pressure on members to conform to group expectations, even if they are against the 
interest of organisation. 
26. Which of the following is not an element of delegation? 
(a) Responsibilty 
(b) Authority 
(c) Accountability 
(d) Decentralisation 
27. It arises from the established scalar chain which links the various job positions and levels of an 
organisation. 
(b) Authority 
(d) All of the above 
(b) Top to bottom 
(d) None of the above 

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28. The authority flows from as we go higher up in the management hierarchy. 
(a) Bottom to top 
(b) Decreases 
(c) In all directions 
(d) None of the above 
 
29. The scope of authority _________ as we go higher up in the management hierarchy. 
(a) Increases 
(b) Decreases 
(c) Remains same 
(d) None of the above 
30. It is the obligation of a subordinate to properly perform the assigned duty. 
(a) Responsibility 
(b) Authority 
(c) Accountability 
(d) All of the above 
31. The responsibility flows 
(a) In all directions 
(b) Downwards 
(c) Upwards 
(d) None of the above 
32. Authority granted to an employee should be 
(a) More than the responsibility entrusted to him 
(b) Less than the responsibility entrusted to him 
(c) Equal to the responsibility entrusted to him 
(d) All of the above 
33. It helps the managers to ensure that their subordinate discharges his duties properly. 
(a) Responsibility 
(b) Authority 
(c) Accountability 
(d) All of the above 
34. The accountability flows 
(a) In all directions 
(b) Downwards 
(c) Upwards 
(d) None of the above 
35. Which of the following can be delegated? 
(a) Responsibility 
(b) Authority 
(c) Accountability 
(d) All of the above 
36. Which of the following cannot be delegated? 
(a) Responsibility and accountability 
(b) Authority and responsibility 
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(c) Accountability and responsibility 
(d) All of the above 
37. Authority arises from 
(a) Responsibility 
(b)Formal position 
(c) Accountability 
(d) All of the above 
38. Responsibility is derived from 
(a) Authority 
(b)Formal position 
(c) Accountability 
(d) All of the above 
39. Accountability is derived from 
(a) Authority 
(b) Formal position 
(c) Responsibility 
(d) All of the above 
40. When decision-making authority is retained organisation is said to be by higher management levels, an 
(a) Decentralised 
(b) Centralised 
(c) Fragmented 
(d) None of the above 
 
 
 
 
 
 
 
 
 
 
 
 
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ANSWERS 
1.​ Answer: c 
2. Answer: d 
3. Answer: b 
4. Answer: c 
5. Answer: b 
Explanation:(b) because more subordinates can be effectively managed by a superior 
6. Answer: a 
Explanation:(a) as the people are being grouped on the basis of functions 
7.​ Answer: a 
Explanation:(a) it emphasises on specific functions 
8.​ Answer: c 
Explanation:(c) as each employee is expected to gain proficiency with regard to one function only 
9.​ Answer: b 
Explanation:(b) it relates to single product companies 
10.​ Answer: a 
Explanation:(a) the divisions are created on the basis of products 
11. Answer: c 
Explanation:(c) it is difficult to fix responsibility for performance 
12. Answer: c
13. Answer: b

14.​ Answer: a 
Explanation:(a) as people are grouped on the basis of functions 
15.​ Answer: b 
16. Answer: b 
17. Answer: b  
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18. Answer: c 
Explanation:(c) it is a merit 
19. Answer: c 
20. Answer: b 
Explanation:(b) it relates to informal organization 
21. Answer: d 
Explanation:(d) it relates to informal organization 
22. Answer: b 
Explanation:(b) it relates to informal organization 
23. Answer: d 
Explanation:(d) it relates to formal organization 
24.​ Answer: c 
Explanation:(c) it does fulfill the inadequacies of formal organisation 
25.​ Answer: b 
Explanation:(b) it relates to formal organization 
26.​ Answer: d 
27. Answer: b 
28. Answer: b 
Explanation:(b) a superior has authority over subordinate 
29.​ Answer: a 
30. Answer: a 
31.​ Answer: c 
Explanation:(c) a subordinate is responsible to his superior 
32.​ Answer: c 
33. Answer: c 
Explanation:(c) accountability is answerability 
34. Answer: c 
Explanation:(c) a subordinate is accountable to his superior 
35. Answer: b 
36. Answer: a  

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37. Answer: a 
38. Answer: a
39. Answer: c
40. Answer: b 

BUSINESS STUDIES MCQ 

CHAPTER 6
Staffing 
 
1. Which of the following is not an external source of recruitment 
(a) Campus recruitment 
(b) Promotion 
(c) Casual callers 
(d) Direct recruitment 

2. It is a good source of filling the vacancies with employees from over staffed departments. 
(a) Transfer 
(b) Promotion 
(c) Placement agencies 
(d) Government exchanges 
3. Under this method of recruitment, a notice is placed on the notice board of the organisation containing the 
details of the jobs available. 
(a) Casual callers 
(b) Labour contractors 
(c) Recommendations of employees 
(d) None of the above 

4. Which of the following is an internal source of recruitment? 

(a) Transfer 
(b) Advertising on television 
(c) Casual callers 
(d) Labour contractors 
5. Which of the following is not an advantage of using external sources of recruitment? 
(a) Qualified personnel 
(b) Wider choice 
(c) Fresh talent 
(d) Economical source 

6. Which of the following is not a disadvantage of using external sources of recruitment? 

(a) Dissatisfaction among existing staff 
(b) Lengthy process 
(c) The scope for induction of fresh talent is reduced 
(d) Costly process 

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7. It is a career oriented process. 
(a) Training 
(b) Development 
(c) Selection 
(d) Recruiment 

8. It is the process of management which is concerned with obtaining, utilising and maintaining a satisfactory 
and satisfied work force. 
(a) Planning 
(b) Organising 
(c) Staffing 
(d) Directing 

9. This analysis would enable an assessment of the number and types of human resources necessary for the 
performance of various jobs and accomplishment of organisational objectives. 
(a) Breakeven analysis 
(b) Workload analysis 
(c) Workforce analysis 
(d) All of the above 

10. This analysis would reveal the number and type of human resource available within the organisation. 
(a) Workload analysis 
(b) Breakeven analysis 
(c) Workforce analysis 
(d) All of the above 

11. Workforce analysis would enable to know whether the organisation is 
(a) Understaffed 
(b) Overstaffed 
(c) Optimally staffed 
(d) All of the above 
12. It refers to the process of searching for prospective employees and stimulating them to apply for jobs in 
the organisation. 
(a) Selection 
(b) Training 
(c) Recruitment 
(d) Orientation 
13. It is the process of choosing from the pool of the prospective job candidates developed at the stage of 
recruitment. 
(a) Selection 
(b) Training 
(c) Recruitment 
(d) Orientation 

14. It is the process of introducing the selected employee to other employees and familiarising him with the 
rules and policies of the organisation. 
(a) Orientation 
(b) Selection 
(c) Training 
(d) Recruitment 
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15. It refers to the employee occupying the position or post for which the person has been selected. 
(a) Orientation 
(b) Selection 
(c) Placement 
(d) Recruitment 

16. The important aspects of staffing include 

(a) Selection 
(b) Training 
(c) Recruitment 
(d) All of the above 
17. The various activities involved in the process of recruitment include 
(a) Identification and assessment of the different sources of recruitment 
(b) Selecting the most suitable source or sources 
(c) Inviting applications from the prospective candidates 
(d) All of the above 

18. It refers to the horizontal movement of employees along the organisational structure, 
(a) Transfer 
(b) Promotion 
(c) Training 

19. Promotion leads to 

(a) Shifting an employee to a higher position 
(b) Entrusting higher responsibilities 
(c) Increase in status 
(d) All of the above 
20. When the employees are given promotion, their 
(a) Motivation level improves 
(b) Loyalty increases 
(c) Job satisfaction level is higher 
(d) All of the above 

21. It is suitable for filling casual vacancies when work load is high or when certain number of permanent 
workers are absent. 
(a) Direct recruitment 
(b) Labour contractors 
(c) Advertising on television 
(d) Placement agencies and management consultants 

 
22. Under this method of recruitment, an organisation maintains a database of unsolicited applicants in their 
offices. 
(a) Direct recruitment 
(b) Casual callers 
(c) Labour contractors 
(d) Advertising on television 

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23. This source of recruitment basically specialises in filling up the vacancies at the middle level and top level 
management. 
(a) Direct recruitment 
(b) Labour contractors 
(c) Advertising on television 
(d) Placement agencies and management consultants 

24. It is a very useful source of recruitment for hiring casual or ‘badli’ workers to whom compensation is 
provided on a daily wage basis. 
(a) Placement agencies and management consultants 
(b) Direct recruitment 
(c) Labour contractors 
(d) Advertising on television 

25. Many big organisations maintain a close liaison with the universities, vocational schools and management 
institutes to recruit qualified personnel for various jobs. This is known as 
(a) Placement agencies and management consultants 
(b) Direct recruitment 
(c) Labour contractors 
(d) Campus recruitment 
26. This test is an indicator of a person’s learning ability or the ability to make decisions and judgements. 
(a) Trade test 
(b) Personality test 
(c) Intelligence test 
(d) Aptitude test 

27. It is a measure of an individual’s potential for learning new skills. 

(a) Trade test 
(b) Personality test 
(c) Intelligence test 
(d) Aptitude test 

28. These tests measure the existing skills of the individual in terms of the level of knowledge and proficiency 
in the area of professions or technical training. 
(a) Trade test 
(b) Personality test 
(c) Intelligence test 
(d) Aptitude test 

29. These tests are used to know the pattern of interests or involvement of a person. 
(a) Trade test 
(b) Personality test 
(c) Intelligence test 
(d) Interest test 

30. Which of the following is not a benefit of training and development to an organisation? 
(a) Help to avoid wastage of efforts and money 
(b) Enhance employee productivity 
(c) Lead to better career of the individual 
(d) Reduce absenteeism and increase employee turnover 

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31. Which of the following is not an on-the-job method of training? 
(a) Apprenticeship training 
(b) Induction training 
(c) Internship training 
(d) Vestibule training 

32. Under this method of training, a trainee is put under the guidance of a master worker, 
(a) Internship training 
(b) Vestibule training 
(c) Apprenticeship training 
(d) Induction training 
33. This type of training method is adopted when employees have to handle sophisticated machinery and 
equipment at their workplace. 
(a) Apprenticeship training 
(b) Induction training 
(c) Internship training 
(d) Vestibule training 
34. This type of training is provided to the new employees of an organisation in order to familiarise them with 
the organisational rules and policies, their superior and subordinate, and so on. 
(a) Vestibule training 
(b) Apprenticeship training 
(c) Internship training 
(d) Induction training 

35. Which of the following activities lie within the scope of Human Resource Department? 
(a) Formulating compensation and incentive plans 
(b) Ensuring healthy labour relations and union management relations 
(c) Creating provision for social security and welfare of employees 
(d) All of the above 
36. Identify the correct sequence of the steps involved in the staffing process 
(a) Recruitment, Estimating the Manpower Requirements, Placement and Orientation, Selection 
(b) Estimating the Manpower Requirements, Selection, Placement and Orientation, Recruitment 
(c) Selection, Estimating the Manpower Requirements, Recruitment, Placement and Orientation 
(d) Estimating the Manpower Requirements, Recruitment, Selection, Placement and Orientation 

37. Identify the correct sequence of the steps involved in the selection process 
(a) Medical Examination, Contract of Employment, Reference and Background checking, Selection Decision, 
Job Offer 
(b) Reference and Background checking, Selection Decision, Contract of Employment, Medical Examination, 
Job Offer 
(c) Job Offer, Reference and Background checking, Selection Decision, Medical Examination, Contract of 
Employment 
(d) Reference and Background checking, Selection Decision, Medical Examination, Job Offer, Contract of 
Employment 
38. Lalit has always been fascinated by the hand woven textile designs. Therefore, he decided to become a 
weaver. He was told that in order to understand and leam this workmanship, he will have to work under the 
guidance of a master worker for a certain number of years. Identify the type of training being described in the 
given lines. 
(a) Vestibule training 
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(b) Apprenticeship training 
(c) Internship training 
(d) Induction training 

 
39. Kundan Lai joined a food processing unit as a factory worker. Since he was expected to work on 
sophisticated machinery, he was asked to undergo a special training. Identify the training method with 
reference to above lines. 
(a) Vestibule training 
(b) Apprenticeship training 
(c) Internship training 
(d) Induction training 

40. In the job application form for the post of Production Manager, Ketan had given details of his present 
employer. The company contacted the General Manager of his present company to establish Ketan’s 
credibility. Identify the step in selection process being described in the above lines. 
(a) Job offer 
(b) Contract of employment 
(c) Reference and background checking 
(d) Selection decision 
41. Aruna applied for the post of an art and craft teacher in a reputed school in Delhi. After successfully 
clearing the tests and the interview, she was offered an employment contract containing the terms and 
conditions, and the date of joining. Identify the steps in the staffing process being described in the above 
lines. 
(a) Reference and background checking 
(b) Selection decision 
(c) Job offer 
(d) Contract of employment 

42. Roshni Limited is a company dealing in lights and illumination. Whenever the . company is in need of 
daily wage workers, a notice is placed on the factory gate for 
the same. Identify the source of recruitment being used by the company. 
(a) Placement agencies and management consultants 
(b) Direct recruitment 
(c) Labour contractors 
(d) Advertising 
43. When the Principal of Golden Life Public School was on the verge of retirement, the management of the 
school contacted a specialised business firm in order to fill up the vacancy. Identify the source of recruitment 
being used by the management. 
(a) Labour contractors 
(b) Advertising 
(c) Placement agencies and management consultants 
(d) Direct recruitment 

44. Rakesh works as a software engineer in an IT company. He provided the reference of close friend Rohan to 
the Human Resource Department for the post of Senior Business Development Manager. Rohan was duly 
selected for the concerned post by the company. Identify the source of recruitment being used by the 
company. 
(a) Advertising 
(b) Placement agencies and management consultants 
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(c) Recommendation of employees 
(d) Direct recruitment 

45. When Jaskaran Singh applied for the post of Computer teacher in a school in Bhubaneswar, he was 
asked to prepare a powerpoint presentation on a particular topic during selection procedure. Identify the type 
of selection test being mentioned in the above lines, 
(a) Trade test 
(c) Intelligence test 
(b) Personality test 
(d) Interest test 
 

 
 

 
 

 
 

 
 

 
 

 
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ANSWERS 
1.​ Answer: b 
Explanation: 
(b) it is an internal source 
2. Answer: a 
Explanation: 
(a) as the employees may be transferred from an overstaffed department to an under staffed department 

3.​ Answer: d 
Explanation: 
(d) direct recruitment 

4.​ Answer: a 
Explanation: 
(a) it is an internal source 

5.​ Answer: d 
Explanation: 
(d) it involves high cost 

6.​ Answer: c 
Explanation: 
(c) it is an advantage 

7. Answer: c 
Explanation: 
(c) it is for an individual 

8. Answer: c 

9. Answer: b 
10. Answer: b 

11. Answer: d 

12. Answer: c 
13. Answer: a 

14.Answer: a 
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15. Answer: c 
16. Answer: d 

17. Answer: d 

18. Answer: a 
19. Answer: d 

20. Answer: d 

21. Answer: a 
22. Answer: b 

23. Answer: d 

24. Answer: b 
25. Answer: d 

26. Answer: c 

27. Answer: d 
28. Answer: a 

29. Answer: d 

30. Answer: b 
31. Answer: d 

32. Answer: c 
33. Answer: d 

34. Answer: d 

35. Answer: d 
36. Answer: d 

37. Answer: d 
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38. Answer: b 
39. Answer: a 

40. Answer: c 

41. Answer: c 
42. Answer: b 

43. Answer: c 

44. Answer: a 
45. Answer: c 

 
 

 
 

 
 

 
 

 
 

 
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BUSINESS STUDIES MCQ 

CHAPTER 7
Directing 
 

1. It is very difficult to detect the source of such communication. 

(a) Upward communication 
(b) Vertical communication 
(c) Lateral communication 
(d) Informal communication 

2. Which of the following is not a type of semantic barriers? 

(a) Badly expressed message 
(b) Unclarified assumptions 
(c) Technical jargon 
(d) Premature evaluation 

3. Which of the following is not a type of psychological barriers? 

(a) Premature evaluation 
(b) Lack of attention 
(c) Fear of challenge to authority 
(d) Distrust 
4. Which of the following is not a type of personal barrier? 
(a) Fear of challenge to authority . 
(b) Unwillingness to communicate 
(c) Loss by transmission and poor retention 
(d) Lack of proper incentive 

5. It refers to the process of instructing, guiding, counselling, motivating and leading j people in the 
organisation to achieve their objectives. 
(a) Planning 
(b) Organising 
(c) Staffing 
(d) Directing 
6. Which of the following is not an element of directing? 
(a) Supervision 
(b) Communication 
(c) Leadership 
(d) Inspection 

7. While other functions prepare a setting for action, name the function that initiates action in the 
organisation. 
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(a) Planning 
(b) Organising 
(c) Staffing 
(d) Directing 
8. Identify the level at which the directing function takes place in an organisation? 
(a) Top level management 
(b) Middle level management 
(c) Lower level management 
(d) All of the above 

9. It is defined as the process of guiding the efforts of employees and other resources to accomplish the 
desired objectives. 
(a) Supervision 
(b) Communication 
(c) Leadership 
(d) Inspection 

10. It means the process of making subordinates to act in a desired manner to achieve certain organisational 
goals. 
(a) Supervision 
(b) Communication 
(c) Leadership 
(d) Motivation 
11. Effective motivation in the organisation does not contribute towards 
(a) Developing performance levels of employees 
(b) Helping to reduce employee turnover 
(c) Resistance to changes in the organisation 
(d) All of the above 

12. These needs are most basic in the hierarchy of motivation theory and correspond to primary needs. 
(a) Self Actualisation Needs 
(b) Basic Physiological Needs 
(c) Security Needs 
(d) Belonging Needs 

13. Mohit recently got a raise in his salary due to annual increment. Which of his human needs is being 
satisfied through this? 
(a) Security Needs 
(b) Belonging Needs 
(c) Self Actualisation Needs 
(d) Basic Physiological Needs 

14. Which of the following is not an assumption of Maslow’s theory? 

(a) People’s behaviour is not based on their needs. 
(b) Satisfaction of such needs influences their behaviour. 
(c) A satisfied need can no longer motivate a person; only next higher level need can motivate him. 
(d) A person moves to the next higher level of the hierarchy only when the lower need is satisfied. 

15. It refers to all measures which are used to motivate people to improve performance, 
(a) Leadership 
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(b) Motivation 
(c) Incentives 
(d) Communication 

16. Which of the following is not an example of financial incentive? 

(a) Perquisites 
(b) Job Enrichment 
(c) Profit Sharing 
(d) Co-partnership 

17. Which of the following is not an example of non-financial incentive? 

(a) Career Advancement Opportunity 
(b) Perquisites 
(c) Status 
(d) Organisational Climate 
 

18. Ashutosh works as a manager in Kuber Ltd. Besides the salary, the company offers him benefits such as 
free housing, medical aid and education to the children, etc. Identify the type of incentive being offered to him. 
(a) Perquisites 
(b) Job Enrichment 
(c) Co-partnership 
(d) Pay and allowances 

19. On joining Kartar Ltd. as Chief Financial Officer, Madhumita was allotted 500 shares of the company. 
Identify the type of incentive being described. 
(a) Perquisites 
(b) Retirement Benefits 
(c) Co-partnership 
(d) Pay and allowances 

20. Boom Limited gives due weightage to the perquisites and prestige of job so that the designation helps to 
satisfy the psychological, social and esteem needs of an individual. Identify the type of incentive being 
described in the above lines. 
(a) Employee empowerment 
(b) Job security 
(c) Status 
(d) Perquisites 
21. On joining Foster Public School as a Physical Education teacher, Vikram realised that he did not have any 
freedom to introduce any changes in the sports activities being : carried out in the school. Identify the 
incentive which was being ignored by the school. 
(a) Organisational climate 
(b) Job security 
(c) Career advancement opportunities 
(d) Employee recognition program 

22. On the occasion of the Founders Day of the firm, Veena was felicitated with the certificate of best 
performer as a Business Development Manager. Identify the type of incentive being described in the above 
lines. 
(a) Career advancement opportunities 
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(b) Employee recognition program 
(c) Organisational climate 
(d) Job security 

23. Ishan works as an Accounts Officer in Fabrications Limited. He also feels very proud of the fact that he is 
the incharge of recreation committee in his office. Identify the type of incentive being offered to Ishan. 
(a) Career advancement opportunities 
(b) Employee recognition program 
(c) Organisational climate 
(d) Employee participation 

24. It is the process of influencing the behaviour of people by making them strive voluntarily towards 
achievement of organisational goals. 
(a) Supervision 
(b) Communication 
(c) Leadership 
(d) Motivation 

25. As the general manager of an e-commerce company, Gagan maintains good interpersonal relations with 
followers and also motivates them to contribute for y ‘ achieving organisational goals. Identify the concept 
being described in the above lines. 
(a) Supervision 
(b) Communication 
(c) Determination 
(d) Leadership 

26. Which of the following is not a feature of leadership? 

(a) It shows ability of an individual to influence others. 
(b) It leads to achievement of organisational goals. 
(c) Leadership is one-time process. 
(d) It leads to desired change in the organisation. 
27. It refers to the process of exchange of ideas, views, facts, feelings etc., between or among people to create 
common understanding. 
(a) Supervision 
(b) Communication 
(c) Motivation 
(d) Leadership 
28. Identify the correct sequence of steps involved in the communication process. 
(a) Sender, Message, Encoding, Media, Decoding, Receiver, Feedback 
(b) Sender, Decoding, Receiver, Feedback, Message, Encoding, Media 
(c) Sender, Message, Encoding, Media, Decoding, Receiver, Feedback 
(d) Sender, Media, Decoding, Receiver, Message, Encoding, Feedback 
29. Formal communication may take place between 
(a) Superior and subordinate 
(b) Subordinate and superior 
(c) Two managers at the same level 
(d) All of the above 

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30. Upward communications refer to flow of communication from 
(a) Subordinate to superior 
(b) One departmental manager to another 
(c) Superior to subordinate 
(d) All of the above 

31. Downward communications refer to flow of communication from 

(a) One departmental manager to another 
(b) Superior to subordinate 
(c) Subordinate to superior 
(d) All of the above 
32. Lateral communication takes place from 
(a) First to second division of the same organisattion 
(b) Superior to subordinate 
(c) Subordinate to superior 
(d) All of the above 

33. Which of the following is not a type of communication barriers? 

(a) Semantic barriers 
(b) Psychological barriers 
(c) Rational barriers 
(d) Organisational barriers 

34. Which of the following ways help in improving the communication effectiveness? 
(a) Ensuring proper feedback 
(b) Being a good listener 
(c) Ensuring follow up patience 
(d) All of the above 

35. As the incharge of a small scale factory manufacturing glassware, Raghu guides his subordinates and 
clarifies their doubts in performing a task, so that they are able to achieve the work targets given to them. 
Identify the function of management being described in the above lines. 
(a) Planning 
(b) Staffing 
(c) Directing 
(d) Organising 

36. Yajur, as a Project Manager, is able to assess the true potential of his subordinates and constantly 
motivates them to realise their full potential. Identify the element of directing being described in the above 
lines. 
(a) Leadership 
(b) Communication 
(c) Supervision 
(d) Motivation 

37. Suman works as a Project Co-ordinator in an export house. Whenever the workload is high, she is able to 
convince her team by explaining to them the purpose, providing training and motivating them with additional 
rewards so as to be able to win their wholehearted co-operation. Identify the element of directing being 
described in the above lines. 
(a) Supervision 
(b) Motivation 
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(c) Leadership 
(d) Communication 

38. As an employee of an automobile company, Suraj has always been very lazy and evasive. In order to 
change his behaviour, his boss decided to give him an incentive. Identify the feature of motivation being 
described in the above lines. 
(a) Motivation is an internal feeling. 
(b) Motivation produces goal-directed behaviour. 
(c) Motivation is a complex process. 
(d) None of the above 

39. Radhika runs a confectionary in a local market. In order to make the workers in the .Confectionary work 
optimally, she on one hand provides them overtime wages and on the other hand imposes penalty, if required, 
by deducting the wages. Identify the feature of motivation being described in the above lines. 
(a) Motivation is an internal feeling. 
(b) Motivation produces goal-directed behaviour. 
(c) Motivation is a complex process. 
(d) Motivation can be either positive or negative. 
40. In order to motivate the workers in the factory to work overtime, Manoj decided to provide additional 
wages to the workers. On knowing this, a worker in his factory, Madhur, was very happy, whereas Raju was 
disappointed as he preferred to go back home on time rather than working for overtime wages. Identify the 
feature of motivation being described in the above lines. 
(a) Motivation is an internal feeling. 
(b) Motivation produces goal-directed behaviour. 
(c) Motivation is a complex process. 
(d) Motivation can be either positive or negative. 
41. Identify the correct sequence of steps involved in the motivation process. 
(a) Tension, drives, search behaviour, unsatisfied need, satisfied behaviour, reduction of tension 
(b) Unsatisfied need, tension, drives, search behaviour, satisfied behaviour, reduction of tension 
(c) Drives, search behaviour, unsatisfied need, tension, satisfied behaviour, reduction of tension 
(d) Search behaviour, reduction of tension, unsatisfied need, tension, drives, satisfied behaviour 

42. Esha was facing the problem of high labour turnover in her firm. On the advice of her friend, she 
introduced special benefits for the employees, which helped her to retain talented people in the organisation. 
Identify the related point of importance of motivation. 
(a) Motivation helps to improve performance levels of employees. 
(b) Motivation helps to reduce employee turnover. 
(c) Motivation helps to reduce absenteeism in the organisation. 
(d) Motivation helps to mould the attitudes of employees. 
43. Yamini received a special gold coin from her school management for exceptionally good board result of her 
students in her subject. Identify the need of Yamini being fulfilled as per Maslow’s Need Heirarchy Theory. 
(a) Esteem Needs 
(b) Belonging Needs 
(c) Self Actualisation Needs 
(d) Basic Physiological Needs 

44. Jay and Lai work in a garment factory. Jay always earns a higher wage than Lai, as he produces more 
units of output. Identify the type of financial incentive being adopted by the company. 
(a) Perquisites 
(b) Productivity linked wage incentives 
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(c) Co-partnership 
(d) Pay and allowances 

45. During the year 2018, Halla Walla Limited made surplus profits due to growing reputation of the business 
as a result of sincerity of its employees. In order to give due recognition to its employees and motivate them to 
continue with the good work, the company decided to give a certain percentage of profits to them. Identify the 
type of financial incentive being adopted by the company. 
(a) Perquisites 
(b) Productivity linked wage incentives 
(c) Co-partnership 
(d) Profit sharing 

46. Om Limited adopts a systematic performance appraisal system which provides opportunity to employees 
to improve their skills and be promoted to the higher level jobs. Identify the type of incentive being adopted by 
the company. 
(a) Employee recognition programme 
(b) Organisational climate 
(c) Career advancement opportunities 
(d) Job security 
47. Dheeraj Madan works as a Human Resource Manager in Busybee Limited. He gives due care in designing 
jobs, so that it offers a meaningful work experience by assuming a diversity of work content requiring higher 
level of knowledge. Identify the type of incentive being adopted by the company. 
(a) Employee recognition programme 
(b) Organisational climate 
(c) Career advancement opportunities 
(d) Job enrichment 

48. On the successful completion of two years in a company, Harsh received a letter confirming his job as 
permanent employee. Identify the need of Harsh being fulfilled as per Maslow’s Need Heirarchy Theory. 
(a) Esteem Needs 
(b) Security Needs 
(c) Self Actualisation Needs 
(d) Basic Physiological Needs 

49. Identify the style of leadership in which the superior uses file forces from within the groups in order to 
establish control. 
(a) Autocratic leadership 
(b) Democratic leadership 
(c) Laissez-faire leadership 
(d) Authoritarian leadership 

 
 

 
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ANSWERS 
1.​ Answer: d 
Explanation: 
(d) As it leads to spreading of rumours 
2. Answer: d 
Explanation: 
(d) It is a type of psychological barrier 

3. Answer: c 
Explanation: 
(c) It is a type of personal barrier 

4. Answer: c 
Explanation: 
(c) It is a type of psychological barrier 

5. Answer: d 

6. Answer: d 
7. Answer: d 
8. Answer: d 

9. Answer: a 
10. Answer: c 

11. Answer: c 

12. Answer: b 
13. Answer: d 

14. Answer: a 

15. Answer: c 
16. Answer: b 

17. Answer: b 

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18. Answer: a  
19. Answer: c 

20. Answer: c 

21. Answer: a 
22. Answer: b 

23. Answer: d 

24. Answer: c 
25. Answer: d 

26. Answer: c 

27. Answer: b 
28. Answer: c 

29. Answer: d 

30. Answer: a 
31. Answer: b 

32. Answer: a 

33. Answer: c 
34. Answer: d 

35. Answer: c 
36. Answer: a 

37. Answer: c 

38. Answer: b 
39. Answer: d 

40. Answer: c 
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41. Answer: b  
42. Answer: b 

43. Answer: a 

44. Answer: b 
45. Answer: d 

46. Answer: c 

47. Answer: c 
48. Answer: b 

49. Answer: b 

  
 

 
 

 
 

 
 

 
 

 
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BUSINESS STUDIES MCQ 

CHAPTER 8
Controlling 
 

1. Which of the following is not an importance of controlling function? 

(a) It ensures order and discipline. 
(b) It restricts co-ordination in action. 
(c) It helps in judging accuracy of standards. 
(d) It improves employee motivation. 

2. Which of the following statements does not highlight the relationship between planning and controlling? 
(a) Planning and controlling are separable twins of management. 
(b) Planning without controlling is meaningless, controlling without planning is blind. 
(c) Planning is prescriptive, controlling is evaluative. 
(d) Planning and controlling are interrelated and interdependent. 

3. Om Prakash has set up a small business unit for the manufacturing of detergent. In order to market the 
detergent in the local residential areas, he has appointed a team of ten salesmen. Each salesman is expected 
to sell at least 200 units of the detergent within a week’s time. Identify the point of importance of controlling 
being highlighted in the above case. 
(a) Controlling helps in judging accuracy of standards. 
(b) It ensures efficient use of resources. 
(c) It helps in improving employee motivation. 
(d) It facilitates co-ordination in action. 
4. It is the process of ensuring that events confirm to plans. 
(a) Planning 
(b) Controlling 
(c) Organising 
(d) Directing 
5. The controlling function is performed by 
(a) Top level management 
(b) Lower level management 
(c) Middle level management 
(d) All of the above 

6. Controlling function brings the management cycle back to the 

(a) Organising function 
(b) Directing function 
(c) Planning function 
(d) None of the above 

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7. Deviations are said to be positive in nature when 
(a) Planned performance is more than the actual performance 
(b) Actual performance is more than the planned performance 
(c) Both planned and actual performances are same 
(d) None of the above 

8. Which of the following statements is true with respect to controlling function? 

(a) It is a forward looking function. 
(b) Is a backward looking function. 
(c) Both (a) and (b) 
(d) None of the above 
9. Identify the correct sequence of the steps involved in the controlling process. 
(a) Measurement of actual performance, Taking corrective action, Setting performance standards, Comparison 
of actual performance with standards, Analysing deviations 
(b) Comparison of actual performance with standards, Setting performance standards. Measurement of actual 
performance, Analysing deviations, Taking corrective action 
(c) Setting performance standards, Measurement of actual performance, Comparison of actual performance 
with standards, Analysing deviations, Taking corrective action 
(d) Taking corrective action, Measurement of actual performance, Comparison of actual performance with 
standards, Analysing deviations, Setting performance standards 

10. Which of the following is a technique used for measuring actual performance? 
(a) Random sampling 
(b) Personal observation 
(c) Performance reports 
(d) All of the above 
11. The comparison of actual performance with the planned performance becomes easier if the standards are 
set in 
(a) Qualitative terms 
(b) Quantitative terms 
(c) Either of the above 
(d) None of the above 
12. This concept of Control Management is based on the belief that if you try to control everything, you may 
end up controlling nothing. 
(a) Critical point control 
(b) Key result areas 
(c) Management by exception 
(d) Deviations 
13. When the deviations between the actual performance and the planned performance are within the limits 
(a) A limited corrective action is required 
(b) No corrective action is required 
(c) A major corrective action is required 
(d) None of the above 
14. In an artificial plants manufacturing unit, the standard output set for a worker is 50 units per day. 
Dinesh produces 48 units in one day. In the given case, the value of deviation is 
(a) -2 
(b) + 2 
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(c) 98 
(d) None of the above 

15. The need for the controlling function is felt in 

(a) Business organisations 
(b) Political organisations 
(c) Social organisations 
(d) All of the above 

16. Controlling is known as a backward-looking function because 

(a) It relates to future course of action. 
(b) It is like a post-mortem of the past activities 
(c) To find out deviation, it aims at improving future performance. 
(d) All of the above 
17. Reducing the workers, absenteeism in a factory by 20% is an example of 
(a) Quantitative standard 
(b) Qualitative standard 
(c) Deviation 
(d) None of the above 
18. Yash runs a logistic company. The Tour Incharges of each trip in the company are expected to submit a 
report to the Event Manager on the completion of every trip. Identify the step in the controlling process being 
described in the above lines. 
(a) Setting of standards 
(b) Measurement of actual performance 
(c) Taking corrective action 
(d) Analysing the deviations 

19. In a marketing firm, the Financial Manager pays more attention towards an increase of 3% in the 
marketing cost as compared to a 15% increase in the courier expenses. Identify the concept being used by the 
manager. 
(a) Management by exception 
(b) Critical point control 
(c) Corrective action 
(d) None of the above 

 
 

 
 

 
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ANSWERS 
1.​ Answer: b 
Explanation: 
(b) It facilitates co-ordination in action 
2. Answer: a 
Explanation: 
(a) Planning and controlling are inseparable twins 

3. Answer: c 
Explanation: 
(c) By making employees aware of the expected performance 

4. Answer: b 

5. Answer: d 
6. Answer: c 

7. Answer: b 

8. Answer: c 
9. Answer: c 

10. Answer: d 

11. Answer: b 
12. Answer: c 

13. Answer: b 

14. Answer: a 
15. Answer: d 

16. Answer: b 

17. Answer: a 
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18. Answer: b 
19. Answer: b 

BUSINESS STUDIES MCQ 

CHAPTER 9
Financial Management 
 

1. Business finance is needed to 

(a) Establish a business 
(b) Run a business 
(c) Expand a business 
(d) All of the above 

2. Which of the following is not a tangible asset? 

(a) Machinery 
(b) Trademarks 
(c) Factories 
(d) Offices 

3. Financial Management aims at 

(a) Reducing the cost of funds procured 
(b) Keeping the risk under control 
(c) Achieving effective deployment of such funds 
(d) All of the above 
4. Primary aim of financial management is to 
(a) Maximise shareholder’s wealth 
(b) Wealth maximisation concept 
(c) Maximisation of the market value of equity shares 
(d) All of the above 

5. This decision relates to how the firm’s funds are invested in different assets, 
(a) Investment decision 
(b) Financing decision 
(c) Dividend decision 
(d) None of the above 

6. Purchasing a new machine to replace an existing one is an example of 

(a) Financing decision 
(b) Dividend decision 
(c) Working capital decision 
(d) Capital budgeting decision 

7. The size of assets, the profitability and competitiveness are all affected by 
(a) Working capital decision 
(b) Capital budgeting decision 
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(c) Financing decision 
(d) Dividend decision 

8. These decisions affect the liquidity as well as profitability of a business. 

(a) Capital budgeting decision 
(b) Financing decision 
(c) Working capital decision 
(d) Dividend decision 

9. Dev has two projects A and B in hand. The same amount of risk is involved in both the projects. If the rate 
of return of project A and B is 20% and 15% respectively, then under normal circumstance, which of the two 
projects is likely to be selected? 
(a) Project A 
(b) Project B 
(c) Both project A and project B 
(d) None of the above 

10. This decision is about the quantum of finance to be raised from various long-term sources. 
(a) Investment decision 
(b) Financing decision 
(c) Dividend decision 
(d) Capital budgeting decision 

11. The inability of a business to meet its fixed financial obligations, like payment of interest, is known as 
(a) Business risk 
(b) Financial risk 
(c) Long-term risk 
(d) Market risk 

12. The overall financial risk depends upon the 

(a) Proportion of debt in the total capital 
(b) Proportion of equity in the total capital 
(c) Both of the above 
(d) None of the above 
13. This decision determines the overall cost of capital and the financial risk of the enterprise, 
(a) Dividend decision 
(b) Capital budgeting decision 
(c) Investment decision 
(d) Financing decision 

14. Which of the following sources of capital should not be selected by a business if its fixed cost is high? 
(a) Equity shares 
(b) Preference shares 
(c) Debentures 
(d) All of the above 

15. When the stock market index is rising, a company may issue in order to meet its financial requirements. 
(a) Debentures 
(b) Bonds 
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(c) Equity shares 
(d) None of the above 

16. When the stock market is bearish, a company may depend upon in order to raise the required funds. 
(a) Debentures 
(b) Equity shares 
(c) Preference shares 
(d) All of the above 
17. Name the financial decision which relates to disposal of profits. 
(a) Investment decision 
(b) Financing decision 
(c) Dividend decision 
(d) Capital budgeting decision 

18. Under which of the following circumstances a company is not likely to declare a higher dividend? 
(a) When the earnings of the company are high 
(b) When a company has a lucrative forthcoming business opportunity 
(c) When the cash flow position of the company is strong 
(d) None of the above 

19. A company is likely to declare higher dividends if 

(a) Tax rates are high 
(b) Tax rates are relatively lower 
(c) Tax rate has no effect on dividend declaration 
(d) None of the above 

20. It is essentially the preparation of a financial blueprint of an organisation’s future operations. Identify the 
related concept. 
(a) Financial management 
(b) Financial planning 
(c) Capital budgeting decisions 
(d) Dividend decision 

21. Name the process that enables the management to foresee the fund requirements, both the quantum as 
well as the timing. 
(a) Financial management 
(b) Capital budgeting decisions 
(c) Dividend decision 
(d) Financial planning 

22. Kapil Limited is a company dealing in ready-to-eat food products. Over the years, the earning potential of 
the company has gone up and it enjoys a good reputation. The Financial Manager is confident of the fact that 
not just the earnings of the current year, but of our future years are likely to be high. Identify the related 
factor of dividend decision being described in the given lines. 
(a) Earnings 
(b) Stability of earnings 
(c) Stability of dividend 
(d) Growth prospects 

23. Amber Limited has been experiencing a downfall in its popularity, due to growing competition. Also the 
company doesn’t see any forthcoming viable business expansion opportunities in the near future. So the 
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management of the company has decided to declare high dividends for the current financial year. Identify the 
factor related to dividend decision being described above. 
(a) Cash flow position 
(b) Growth opportunities 
(c) Stability of earnings 
(d) Stability of dividends 

24. Gamble Limited is a company dealing in healthcare products. The company is earning high profits but is 
short on cash, so it has decided to declare less dividends in the current financial year. Identify the factor 
related to dividend decision being described in the above lines. 
(a) Preference of shareholders 
(b) Earning 
(c) Cash flow position 
(d) Contractual constraints 
25. Lalit, an experienced stock broker advised his client Prabhu to invest in the shares of Blue Angel Limited, 
as the company has declared high dividends since an increase in dividend is perceived as a good news and 
stock prices react positively to it. Identify the related factor of dividend decision being described in the above 
lines. 
(a) Tax rate 
(b) Growth prospects 
(c) Stock market reactions 
(d) Access to capital markets 
26. A company must adhere to the provisions of the Companies Act while taking the dividend decision. 
Identify the related factor of dividend decision being mentioned in the above line. 
(a) Contractual constraints 
(b) Legal constraints 
(c) Access to capital market 
(d) Preferences of shareholders 
27. While taking a loan from a financial institution, Lokesh Enterprises signed an agreement that they shall 
not pay dividend to its shareholder more than 15% until the loan is repaid, or dividend shall not be declared if 
the liquidity ratio is found to be less than 1:1. Identify the factor related to dividend decision being described 
in the above case. 
(a) Access to capital market 
(b) Preferences of shareholders 
(c) Contractual constraints 
(d) Legal constraints 

28. Which of the following is not an objective of financial planning? 

(a) Ensuring enough funds are available at the right time 
(b) Ensuring excess availability of funds at the right time 
(c) Ensuring smooth business operations 
(d) All of the above 

29. The financial plans are drawn by taking into consideration 

(a) Growth prospects 
(b) Performance of the organisation – 
(c) Investments 
(d) All of the above 

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30. The short-term financial plans are known as 
(a) Objectives 
(b) Budgets 
(c) Programs 
(d) Policies 

31. Arrange the following steps involved in the process of financial planning in the correct sequence. 
(a) Estimation of expected profit, Preparation of a sales forecast, Preparation of financial statements 
(b) Preparation of a sales forecast, Preparation of financial statements, Estimation of expected profit 
(c) Preparation of a sales forecast, Estimation of expected profit, Preparation of financial statements 
(d) Preparation of financial statements, Estimation of expected profit, Preparation of a sales forecast 
32. Which of the following is not an importance of financial planning? 
(a) It helps in avoiding business shocks and surprises. 
(b) If helps in co-ordinating various business functions. 
(c) If helps to reduce waste, duplication of efforts and gaps in planning. 
(d) It tries to delink the present with the future. 

33. Which of the following is not a part of owners’ funds? 

(a) Equity shares 
(b) Reserves and surplus 
(c) Debentures 
(d) Preference shares 

 
34. Which of the following is not a source of borrowed funds? 
(a) Loan from financial institutions 
(b) Debentures 
(c) Retained earnings 
(d) Public deposits 

35. Which of the following statements is not true? 

(a) The cost of debt is higher than cost of equity. 
(b) The lender’s risk is lower then equity shareholder’s risk. 
(c) The interest paid on debt is treated as a tax deductible expense. 
(d) None of the above 

36. In order to raise an additional capital of ?50 lacs, Yudhister Limited has used debt because 
(a) Increased use of debt lowers the overall cost of capital 
(b) Decrease in use of debt lowers overall cost of capital 
(c) Increase in use of debt increases the overall cost of capital 
(d) None of the above 
37. Which of the following statements is not true? 
(a) Increased use of debt increases the financial risk of a business. 
(b) Increased use of debt decreases the financial risk of a business. 
(c) Decrease in use of debt increases the financial risk of a business. 
(d) None of the above 
38. Name the decision which affects both the profitability and the financial risk. 
(a) Financial planning decision 
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(b) Capital budgeting decision 
(c) Capital structure decision 
(d) All of the above 

39. A higher financial leverage ratio indicates that 

(a) The dependency of the firm on the debt is more. 
(b) The dependency of the firm on the debt is less. 
(c) The proportion of equity in the total capital is high. 
(d) None of the above 

40. As the financial leverage of a company increases, it leads to 

(a) A decline in the cost of funds but an increase in the financial risk 
(b) An increase in the cost of funds but a decline in the financial risk 
(c) Both an increase in the cost of funds and financial risk 
(d) Both a decline in the cost of funds and financial risk 
41. When does the earnings per share (EPS) rise with higher debt? 
(a) When the rate of return on investment is higher than the rate of interest. 
(b) When the rate of return on investment is lower than the rate of interest. 
(c) When the rate of interest is more than the rate of return. 
(d) None of the above. 
42. The total capital of Uranium Private Limited is ?50 lacs. The amount of debt is ?20 lacs. The company has 
earned a profit of ^10 lacs during the current financial year. Its return on investment (ROI) for the present 
year is 
(a) 20% 
(b) 40% 
(c) 10% 
(d) 80% 

43. If in a particular situation, the earnings per share (EPS) falls with the increased use of debt, it indicates 
that 
(a) The rate of return on investment (Rol) is less than the cost of debt. 
(b) The rate of return on investment is more than the cost of debt. 
(c) The cost of debt is less than the rate of return on investment. 
(d) None of the above 

44. If the rate of return on investment for a company is 16%, a situation of unfavourable financial leverage 
will be said to arise when the rate of interest payable on debt capital is 
(a) More than 16 % 
(b) Less than 16 % 
(c) Equal to 16% 
(d) None of the above 

45. Under which of the following situations a company should not issue debt capital? 
(a) When the cash flow condition of the company is strong. 
(b) When the rate of tax is low. 
(c) When the return on investment is high. 
(d) When the interest coverage ratio is high. 

46. Under which of the following situations a company is not likely to issue equity capital? 
(a) When the debt service coverage ratio is high. 
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(b) When the interest coverage ratio is high. 
(c) When the cost of debt capital is low. 
(d) All of the above 

47. If a company is borrowing funds @ 10% and the tax rate is 30%, the after-tax cost of debt is only 
(a) 10% 
(b) 3% 
(c) 20% 
(d) 7% 

48. Which of the following statements is not true with regard to use of fixed capital? 
(a) It affects the long term growth of the business. 
(b) Large amount of funds are involved. 
(c) The business risk involved is low. 
(d) The investment decisions are irreversible. 
49. Under which of the following conditions the fixed capital requirements of a business is not likely to below? 
(a) When the raw material is easily available 
(b) When the labour intensive production technique is used 
(c) When the level of collaboration is low 
(d) When the growth prospects of the firm are low 
50. Under which of the following circumstances the fixed capital requirement of a business is not likely to be 
high? 
(a) When the raw material is not easily available 
(b) Capital intensive techniques of production are used 
(c) The growth prospects of a company a high 
(d) When the financial alternatives are easily available 
51. The working capital requirement of a business is not likely to be low when 
(a) The scale of the business operation is small 
(b) When the growth prospects of the business are high 
(c) When the raw material is easily available 
(d) When the rate of inflation is low 

52. The working capital requirement of a business is not likely to be high when? 
(a) The nature of business is trading 
(b) Scale of operation of business is small 
(c) It is difficult to procure raw material 
(d) The rate of inflation is low 

 
 

 
 
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ANSWERS 
1. ​Answer: d 2.​ Answer: b 3.​ Answer: d 4.​ Answer: d 

5.​ Answer: a 6.​ Answer: d 7.​ Answer: b 8.​ Answer: c 

9.​ Answer: a 10.​ Answer: b 11.​ Answer: b 12.​ Answer: a 

13.​ Answer: d 14.​ Answer: c 15.​ Answer: c 16.​ Answer: a 

17.​ Answer: c 18.​ Answer: b 19.​ Answer: b 20.​ Answer: b 

21.​ Answer: d 22.​ Answer: c 23.​ Answer: b 24.​ Answer: c 

25.​ Answer: c 26.​ Answer: b 27.​ Answer: c 28.​ Answer: b 

29.​ Answer: d 30.​ Answer: b 31.​ Answer: b 32.​ Answer: d  

33.​ Answer: c 34.​ Answer: c 35.​ Answer: a 36.​ Answer: a 

37.​ Answer: b 38.​ Answer: c 39.​ Answer: a 40.​ Answer: a 

41.​ Answer: a 42.​ Answer: a 43.​ Answer: a 44.​ Answer: a 

45.​ Answer: b 46.​ Answer: d 47.​ Answer: d 48.​ Answer: c 

49.​ Answer: c 50.​ Answer: d 51.​ Answer: b 52.​ Answer: c 

 

 
 

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BST CHAPTER 10 

1. Which of the following statements is not true with regard to money market? 
(a) It involves low market risk. 
(b) It is situated at specific locations. 
(c) Deals in unsecured and short-term debt instruments. 
(d) The instruments traded are highly liquid. 

2. Which of the following statements is not true with regard to Treasury bills? 
(a) Are issued in the form of a promissory note. 
(b) They are highly liquid and have assured yield 
(c) They carry high risk of default. 
(d) They are available for a minimum amount of ​₹​25,000 and in multiples thereof. 

3. Which of the following statements is not true with regard to Commercial paper? 
(a) Is a long-term unsecured promissory note with a fixed maturity period. 
(b) It usually has a maturity period of 15 days to one year. 
(c) It is sold at a discount and redeemed at par. 
(d) Companies use this instrument for bridge financing. 

4. Which of the following statements is not true with regard to Call money? 
(a) It is short-term finance repayable on demand. 
(b) Its maturity period ranges from one day to fifteen days. 
(c) There is a direct relationship between call rates and other short-term money market instruments. 
(d) It is used for inter-bank transactions. 

5. Which of the following statements is not true with regard to primary market? 
(a) Is also known as the old issues market. 
(b) It facilitates the transfer of investible funds from savers to entrepreneurs. 
(c) It deals with new securities being issued for the first time. 
(d) It facilitates the transfer of investible funds from savers to entrepreneurs. 
6. Which of the following statements is not true with regard to capital market? 
(a) The funds are raised for a short period of time. 
(b) Both debt and equity funds can be raised. 
(c) It is classified into two types. 
(d) All of the above. 

7. Which of the following statements is not true with regard to stock exchange? 
(a) It provides a platform for buying and selling of new securities. 
(b) It curbs the marketability of the securities. 
(c) By providing a ready market, it extends liquidity to the securities. 
(d) It provides a platform for buying and selling of old securities. 

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8. Which of the following is not a protective function of stock exchange? 
(a) Prohibition of fraudulent and unfair trade practices. 
(b) Controlling insider trading. 
(c) Regulation of takeover bids by companies. 
(d) Promotion of fair practices and code of conduct in securities market. 

9. Raj Enterprises wishes to invest ​₹​1,10,000 in treasury bills. What is the maximum number of treasury bills 
it can buy with this fund? 
(a) 6 
(b) 7 
(c) 4 
(d) 2 

10. Which of the following statements is true with regard to financial markets? 
(a) They link the households which save funds and business firms which invest these funds. 
(b) They work as an intermediary between the savers and the investors by mobilising funds between them. 
(c) They allocate funds available for investment into their most productive investment opportunity. 
(d) All of the above 

11. The allocated function is performed by 

(a) Financial market 
(b) Capital market 
(c) Money market 
(d) All of the above 

12. It is a market for short-term funds which deals in monetary assets whose period of maturity is up to one 
year. 
(a) Primary market 
(b) Secondary market 
(c) Capital market 
(d) Money market 

13. It is an instrument of short-term borrowing by the Government of India maturing in less than one year. 
(a) Commercial bill 
(b) Treasury bill 
(c) Call money 
(d) None of the above 
14. Who issues a treasury bill? 
(a) Any nationalised bank 
(b) Any private sector bank 
(c) Reserve Bank of India 
(d) All of the above 
15. Suppose an investor purchases a 91 days Treasury bill with a face value of ​₹​2,00,000 for ​₹​1,92,000. By 
holding the bill until the maturity date, the investor receives ​₹​2,00,000. What is the amount of interest 
received by him? 
(a) ​₹​8,000 
(b) ​₹​80,000 
(c) ​₹​3,92,000 
(d) ​₹​2,00,000 

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16. It is used as an alternative to bank borrowing for large and creditworthy companies, 
(a) Commercial bill 
(b) Commercial papers 
(c) Call money 
(d) None of the above 

17. It is a method by which banks borrow from each other to be able to maintain the cash reserve ratio. 
(a) Commercial bill 
(b) Commercial papers 
(c) Call money 
(d) None of the above 
18. A rise in call money rates makes other sources of finance such as commercial paper and certificates of 
deposit 
(a) Expensive in comparison with banks who raise funds from these sources. 
(b) Cheaper in comparison with banks who raise funds from these sources. 
(c) Creates no effect on other sources. 
(d) None of the above 
19. It is a short-term, negotiable, self-liquidating instrument which is used to finance the credit sales of firms. 
(a) Commercial bill 
(b) Commercial papers 
(c) Call money 
(d) None of the above 
20. The capital market consists of 
(a) Development banks 
(b) Commercial banks 
(c) Stock exchanges 
(d) All of the above 

21. A company can raise capital through the primary market in the form of 
(a) Equity shares 
(b) Preference shares 
(c) Debentures 
(d) All of the above 

22. They can be issued to individuals, corporations and companies during periods of tight liquidity when the 
deposit growth of banks is slow but the demand for credit is high. 
(a) Commercial papers 
(b) Call money 
(c) Commercial bill 
(d) Certificate of deposit 

23. Which of the following participants represent capital market? 

(a) Development banks 
(b) Commercial banks 
(c) Stock exchanges 
(d) All of the above 

24. Under this method of floatation in primary market, a subscription is invited from general public to invest 
in the securities of a company through the issue of advertisement. 
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(a) Private placement 
(b) Offer through prospectus 
(c) Offer for sale 
(d) All of the above 
25. PK Enterprises Limited has sold an entire lot of 5,00,000 equity shares @ ​₹9​ each to Prosperous Bank 
Private Limited. The bank intum will offer the shares to general public for subscription @ ​₹​11 per share. 
Identify the method of floatation being described in the given lines. 
(a) Private placement 
(b) Offer through prospectus 
(c) Offer for sale 
(d) Rights issue 
26. Jaykant is holding hundred shares of a company. He has been given a privilege offer to subscribe to a new 
issue of shares of the same company in proportion of 2:1 to the number of shares already possessed by him. 
Identify the method of floatation being described in the above case. 
(a) Offer through prospectus 
(b) Offer for sale 
(c) Rights issue 
(d) Private placement 

27. Stock Exchange works as a mechanism for valuation of securities through the forces of demand and 
supply. Identify the related function of performed by the stock exchanges. 
(a) Providing liquidity and marketability to existing securities. 
(b) Safety of transaction. 
(c) Pricing of security. 
(d) Spreading of equity cult. 

 
28. Stock exchanges provide an opportunity to the investors to disinvest and invest. Identify the related 
function of the stock exchange. 
(a) Providing scope for speculation. 
(b) Providing liquidity and marketability to existing securities. 
(c) Pricing of security. 
(d) Spreading of equity cult. 
29. The process of holding shares in electronic form is known as 
(a) Demutualisation 
(b) Dematerialisation 
(c) Speculation 
(d) None of the above 
30. One of the common irregularities noted by the Securities and Exchange Board of India during the 
inspection of a stock exchange was that it was dealing with unregistered sub-brokers. Identify the related 
function of Securities and Exchange Board of India 
(a) Regulatory function 
(b) Protective function 
(c) Developmental function 
(d) None of the above 

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31. It acts like a bank and keeps securities in electronic form on behalf of the investor, 
(a) Depository Participant 
(b) Depository 
(c) Stock exchange 
(d) None of the above 

32. It serves as an intermediary between the investor and the depository who is authorised to maintain the 
accounts of dematerialised shares. 
(a) Depository Participant 
(b) Depository 
(c) Stock exchange 
(d) None of the above 

33. It is a number assigned to each transaction by the stock exchange and is printed on the contract note. 
(a) PAN number 
(b) Unique Order Code 
(c) Contract Note 
(d) None of the above 
34. Identify the correct sequence of steps to be followed in the trading procedure at Stock Exchange 
(a) Opening a trading account and Demat account, Placing an order, Settlement of order, Execution of order 
(b) Settlement of order, Opening a trading account and Demat account, Placing an order, Execution of order 
(c) Opening a trading account and Demat account, Placing an order, Execution of order, Settlement of order 
(d) Placing an order, Opening a trading account and Demat account, Execution of order, Settlement of order 
35. The mandatory detail that an investor has to provide to the broker at the time of opening a demat account 
is 
(a) Date of birth and address 
(b) PAN number 
(c) Residential status (Indian/NRI) 
(d) Bank account details. 
36. It is a legally enforceable document which is issued by a stock broker within 24 hours of the execution of 
a trade order. 
(a) PAN number 
(b) Unique Order Code 
(c) Contract Note 
(d) None of the above 
37. On this day, the exchange will deliver the share or make payment to the other broker, 
(a) Pay-in day 
(b) Pay-out day 
(c) Transaction day 
(d) None of the above 
38. When is a trade confirmation slip issued to the investor? 
(a) On placing an order 
(b) On execution of the order 
(c) On settlement of the order 
(d) None of the above 

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39. After the trade has been executed, the broker issues a Contract Note to the investor within 
(a) 52 hours 
(b) 24 hours 
(c) 48 hours 
(d) 12 hours 

ANSWERS 
1.​ Answer: b 
Explanation: 
(b) it has no physical locations 

2.​ Answer: c 
Explanation: 
(c) they carry no risk of default 

3.​ Answer: a 
Explanation: 
(a) it is a short-term instrument 

4.​ Answer: c 
Explanation: 
(c) There is an inverse relationship between call rates and other short-term money market instruments 

5. Answer: a 
Explanation: 
(a) it is a new issue market 

6.​ Answer: a 
Explanation: 
(a) it deals in long term funds 

7.​ Answer: b 
Explanation: 
(b) it promotes marketability of shares 

8.​ Answer: c 
Explanation: 
(c) it is regulatory function 

9.​ Answer: c 
Explanation: 
(c) because it is issued for ​₹​25,000 and in multiples there off 

10.​ Answer: d 

11.​ Answer: d 

12.​ Answer: d 
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13.​ Answer: b 
14.​ Answer: c 

15.​ Answer: a 

16.​ Answer: b 
17.​ Answer: c 

18.​ Answer: b 

19.​ Answer: a 
20.​ Answer: d 

21.​ Answer: d 

22.​ Answer: d 
23.​ Answer: d 

24.​ Answer: b 

25.​ Answer: c 
26.​ Answer: c 

27.​ Answer: c 

28.​ Answer: b 
29.​ Answer: b 

30.​ Answer: a 
31.​ Answer: b 

32.​ Answer: a 

33.​ Answer: b 
34.​ Answer: c 

35.​ Answer: b 
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36.​ Answer: c 
37.​ Answer: b 

38.​ Answer: b 

39.​ Answer: b 
 

 
 

 
 

 
 

 
 

 
 

 
 

 
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BST CHAPTER 11 

1. Which of the following statements is not true with regard to the concept of product? 
(a) It is a bundle of utility. 
(b) It is a source of satisfaction. 
(c) It is confined to physical product. 
(d) All of the above. 

2. In order to promote the sales of the company, Mukund Limited has decided to offer consumer durable 
products at 0% finance. Identify the type of marketing factor being described in the above line. 
(a) Controllable factor 
(b) Non-controllable factor 
(c) Environmental factor 
(d) None of the above 

3. Harshit is planning a start up a venture for offering mobile pet care services at door step. He has decided to 
charge ?1000 for heated hydrobath & blow dry of a pet and ?500 for shampoo and conditioning. Identify the 
element of marketing mix which is not being described in the above case. 
(a) Product 
(b) Place 
(c) Price 
(d) None of the above 
4. Guneet went to a shop and expressed her desire to buy a copper water bottle only of Prestige company. 
Identify the component related to branding being described in the above case. 
(a) Trademark 
(b) Generic name 
(c) Brand name 
(d) Brand mark 
5. The term ‘market’ may be understood in which of the following contexts? 
(a) Geographical area covered 
(b) Type of buyers 
(c) Quantity of goods transacted 
(d) All of the above 

6. According to the modem marketing concept, which of the following statements is true? 
(a) It refers to the group of people who do not have the ability but willingness to buy a particular product. 
(b) It refers to only the set of people who have the purchasing power to buy a particular product. 
(c) It refers to the set of actual and potential buyers for a product. 
(d) It refers only to the people who show interest in a particular product. 

7. Which of the following is a feature of marketing process? 

(a) Satisfying needs and wants of the consumers 
(b) Creating a market offering 
(c) Developing an exchange mechanism 
(d) All of the above 
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8. Which of the following statements does not reflect a condition to be satisfied for an exchange to take place? 
(a) Involvement of at least two parties- the buyer and the seller- is mandatory. 
(b) Each party should be capable of offering something of value to the other. 
(c) Exchange can take place if the buyers and sellers are not able to communicate with each other. 
(d) Each party should have freedom to accept or reject other party’s offer. 

9. Which of the following can be marketed? 

(a) Red Cross society persuading to donate blood. 
(b) Kerala Tourism persuading people to visit Kerala for health tourism. 
(c) Political parties persuading to vote for a particular candidate. 
(d) All of the above 
10. Karam Limited is offering a travel package for 15 destinations worldwide with a free insurance on the 
bookings for the month of December, 2019. Identify the feature of marketing being described in the above 
lines. 
(a) Needs and wants 
(b) Creating a market offering 
(c) Customer value 
(d) Exchange mechanism 

11. Agile Limited has launched a new range of air conditioners in order to add value to the usability of the 
product. The new range of air conditioners have an inbuilt air purifier and are available in attractive colours. 
Identify the type of marketing philosophy being described in the above lines. 
(a) Product concept 
(b) Production concept 
(c) Marketing concept 
(d) Societal marketing concept 
12. In order to promote the habit of health and hygiene among weaker sections of the society, Abhyas Limited 
has launched low cost packs of hand wash. Identify the type of marketing philosophy being adopted by the 
company. 
(a) Product concept 
(b) Production concept 
(c) Marketing concept 
(d) Societal marketing concept 

13. Sujhav Limited is a company dealing in various types of fire extinguishers. Considering the fact that 
people generally don’t buy fire extinguishers, the company undertakes aggressive sales promotion efforts in 
order to create and maintain demand for the product. Identify the type of marketing philosophy being 
described in the given case, 
(a) Product concept 
(b) Selling concept 
(c) Marketing concept 
(d) Societal marketing concept 

14. Madhubala is planning to launch an online education portal. In order to understand the varied needs of 
the students, she conducted an online survey. Based on the feedback of the survey, she has decided to offer 
educational packages to the prospective buyers. Identify the type of marketing concept being described in the 
given lines. 
(a) Product concept 
(b) Production concept 
(c) Marketing concept 
(d) Societal marketing concept 
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15. Pragati Limited has chalked out an action plan in order to increase its market share in the international 
market by 20% in the next one year. The action plan contains the details about how the production levels will 
be increased, promotional activities will be carried out and so on. Identify the type of marketing function being 
described in the given lines. 
(a) Gathering and analysing market information 
(b) Marketing planning 
(c) Product designing and development 
(d) Packaging and labelling 

16. In order to improve upon its competitive edge, Khushboo Limited has change the packaging of its hair 
care products. They are now available in a consumer friendly design, which has a nozzle attached to the lid so 
that at the time of usage, the consumer doesn’t need to open the cap of the bottle. Name the marketing 
function being explained in the given lines. 
(a) Product designing and development 
(b) Customer support services 
(c) Promotion 
(d) Physical distribution 
17. In order to get feedback about its new product launch, Taggi Limited conducted an online survey through 
a short questionnaire. Identify the marketing function being mentioned in the given line. 
(a) Gathering and analysing market information 
(b) Marketing planning 
(c) Product designing and development 
(d) Packaging and labelling 

18. Gabbar is a wholesaler of food grains. He categorises his stock into different groups on the basis of their 
quality and also fixes up the prices accordingly. Identify the type of marketing function being mentioned in 
the given line. 
(a) Physical distribution 
(b) Transportation 
(c) Warehousing 
(d) Standardisation and grading 

19. In order to enhance the easy marketability of the products, Dev, a producer gets the home furnishing 
products manufactured in confirmation to the predetermined specifications. Identify the type of marketing 
function being described in the given case. 
(a) Physical distribution 
(b) Standardisation and grading 
(c) Transportation 
(d) Warehousing 
20. Good Health Limited has decided to launch a new range of water bottles with in-built water purifier. 
Instead of marketing the product by is generic name, the company has decided to call it Turifiere’. Identify the 
type of marketing function being described in the given lines. 
(a) Packaging and labelling 
(b) Branding 
(c) Pricing 
(d) Promotion 

21. Drishti Limited is a chain of trusted optical centers for prescription & fashion eyewear. It caters to affluent 
people with a range of premium sunglasses for men, women and kids. In order to raise the level of buyers’ 
satisfaction, the company has decided to create a special section in each of its outlets for handling customer 
complaints and adjustment requirements. Identify the type of marketing function described in the given lines. 
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(a) Product designing and development 
(b) Customer support services 
(c) Promotion 
(d) Physical distribution 
22. Ecofriend Limited has decided to launch solar jackets, which will have an inbuilt solar charger as well. In 
order to make its product competitive, the company has decided to offer it for sale within the range of ^1500 
to ^4000. Identify the related function of marketing being mentioned in the given case. 
(a) Packaging and labelling 
(b) Branding 
(c) Pricing 
(d) Promotion 

23. Keeping in view the recent trends of sales regression, Sona Limited has decided to offer a flat 15% 
discount on all its products. Identify the related function of marketing being described in the given lines. 
(a) Packaging and labelling 
(b) Branding 
(c) Pricing 
(d) Promotion 

24. BeCool Limited has decided to market its products through the conventional network of 
manufacturer-wholesaler-retailer-consumer. Identify the function of marketing being described in the above 
line. 
(a) Physical distribution 
(b) Transportation 
(c) Warehousing 
(d) Standardisation and grading 
25. While reading the label of a pack of aluminium foil, Reshma discovered that the product was 
manufactured at Hyderabad but was available for sale in many states across the country. Identify the 
function of marketing which has made this possible. 
(a) Physical distribution 
(b) Standardisation and grading 
(c) Transportation 
(d) Warehousing 

26. Ranjan’s business is being adversely affected due to the delay in delivery on account of poor weather 
conditions. Identify the marketing function which will be helpful to him in this regard. 
(a) Physical distribution 
(b) Standardisation and grading 
(c) Transportation 
(d) Warehousing 

27. Champ Limited is a company providing online education to school children of all the classes. Over the 
years, it has established a good reputation and a market share of 75%. However, in past 2 months, due to the 
entry of a new competitor in the same segment, the market share of the company has reduced by 20%. 
Identify the type of marketing factor which has adversely affected the sales of the company. 
(a) Controllable factors 
(b) Environmental factors 
(c) Marketing mix 
(d) None of the above 

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28. Identify the component of branding being depicted below. 

 
(a) Brand name 
(b) Brand mark 
(c) Trademark 
(d) Generic name 

29. What does the symbol given below denote? 

 
(a) Brand name 
(b) Brand mark 
(c) Trademark 
(d) Generic name 
30. Pranav has decided to start a business of manufacturing crockery and cutlery items. In order to give a 
unique identification to his products, he has decided to assign the brand name ‘Elegan’ as it will enable the 
firm to secure and control the market for its products. Identify the relative advantage of branding to the 
marketers being described in the above case. 
(a) Facilitates differential pricing 
(b) Ease in the launching of new products 
(c) Facilitates product differentiation 
(d) Assists in advertising and display programmes 

31. Srijan is fond of a particular brand of stationery. Every time he buys his favourite brand stationery 
products, he does not need make a close inspection of that product. Identify the relative advantage of 
branding to the customers being described in the given case. 
(a) Supports in product identification 
(b) Certifies quality 
(c) Considered to be a status symbol 
(d) None of the above 
32. Karan had started the business of producing exclusive home decor items under the brand name 
‘Eleganza’ 15 years back. Over the years, he has diversified into new segments like home furnishing, furniture 
and kitchenware. However, all the products are being sold under the same brand name ‘Eleganza’, as it 
appears to be apt for all of them. Identify the relative feature of a good brand name being described in the 
given case. 
(a) Short and easy to pronounce, spell and remember 
(b) Reflects the functions of the product 
(c) Distinctive/easily identifiable 
(d) Versatile, can be used for brand extension 

33. Sugandha purchased a pack of crayons for her daughter from a nearby stationery shop. She noticed that 
the crayons were packed in a portable transparent plastic bag. Identify the level of packaging being described 
in the above lines. 
(a) Primary package 
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(b) Secondary packaging 
(c) Transportation packaging 
(d) None of the above 

34. Lavanya runs a Play School from her residence. Recently, she placed an order online for 200 chalk boxes. 
The boxes were delivered to her in a corrugated box. Identify this level of packaging which facilitated 
movement of the product. 
(a) Primary package 
(b) Secondary packaging 
(c) Transportation packaging 
(d) None of the above 
35. In an inter school quiz competition, the participants were shown empty bottles of soft drinks and were 
asked to identify the brands. All the participants were able to do so. Identify the related point highlighting the 
importance of packaging which is being described in the given case. 
(a) Rising standards of health and sanitation 
(b) Facilitates product differentiation 
(c) Innovative packaging adds value to a product. 
(d) Useful in self service outlets 

36. When Reema had sent her servant to the market to buy a pack of chips, she asked him specifically to 
bring the yellow coloured packet of chips of a particular brand. Identify the function of packaging being 
described in the above line. 
(a) Helps in product identification 
(b) Provides protection to the product 
(c) Facilitates the use of product 
(d) Assists in promotion of the product 
37. On visiting a supermarket to buy a pack of moisturizer, Harsha noticed that the packaging of most of the 
beauty products exhibited a photograph of a celebrity. Identify the related function of packaging being 
described in the given case. 
(a) Facilitates the use of product 
(b) Assists in promotion of the product 
(c) Helps in product identification 
(d) Provides protection to the product 

38. The labelling of a pack of oats cookies explains how the product is beneficial in adding fibre to the diet 
and the other related health benefits. Identify the related function of labelling being described in the given 
case. 
(a) Describes the product and specifies its content 
(b) Identification of the product or brand 
(c) Grading of products 
(d) Helps in promotion of the products 
39. Identify the component of promotion mix being described in the given exhibit? 

 
(a) Advertising 
(b) Sales Promotion 
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(c) Public relation 
(d) Personal selling 

40. Identify the related function of labelling being depicted below as given on the pack of the chips. 

 
(a) Describes the product and specifies its content 
(b) Grading of products 
(c) Helps in promotion of the products 
(d) Identification of the product or brand 
41. Riya refused to buy an insulated lunch box for ?1200 as she felt that the real worth of the product was 
much less than its monetary value. Identify the factor related to pricing decision being described in the given 
case. 
(a) Cost of the product 
(b) The utility and demand 
(c) Government and legal regulations 
(d) Pricing objectives 

42. A salesman of a company dealing in pet foods is paid a fixed salary of ?20000 per month and furthermore, 
?20 extra per unit of the product sold beyond the target sales. Identify the type of cost being described in the 
given example. 
(a) Fixed cost 
(b) Variable cost 
(c) Semi-variable cost 
(d) None of the above 

43. Under which of the following conditions is a marketer not likely to fix the price of his products at higher 
end? 
(a) When he faces high degree of competition 
(b) When he wants to attain market share leadership 
(c) When the product is unique in terms of packaging, product difference and product differentiation 
(d) When the demand for the product is low 
44. Under which of the following situations is a company not likely to fix a lower price for its product? 
(a) When the competition has introduced a substitute product 
(b) If the demand for a product is inelastic 
(c) When the company wants to attain market share leadership 
(d) When the demand for the product is low 

45. Nooper Limited is marketing its products online. Identify the channel of distribution being adopted by the 
company. 
(a) Zero level channel 
(b) One level channel 
(c) Two level channel 
(d) Three level channel 

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46. Kannu has decided to sell her range of organic food products through her own retail outlets. Identify the 
channel of distribution being adopted by the company. 
(a) Zero level channel 
(b) One level channel 
(c) Two level channel 
(d) Three level channel 

47. Srijan Limited sells its products through the company approved retailers. Identify the channel of 
distribution being adopted by the company. 
(a) Zero level channel 
(b) One level channel 
(c) Two level channel 
(d) Three level channel 

48. Hena is planning to set up a small manufacturing unit for manufacturing eco-friendly packaging material. 
She has decided to market her products through the conventional channel of distribution, which involves 
wholesalers and retailers. Identify the channel of distribution being adopted by the company. 
(a) Zero level channel 
(b) One level channel 
(c) Two level channel 
(d) Three level channel 

49. Under which of the following conditions will the company not be able to provide high level of customer 
services? 
(a) When it maintains high level of inventory 
(b) When it maintains low level of inventory 
(c) When it owns large number of warehouses 
(d) None of the above 

50. Under which of the following conditions does a business need not maintain high level of inventory? 
(a) When higher level of customer services need to be provided 
(b) When high degree of accurate sales forecast can be made 
(c) When the responsiveness of the distribution system is low 
(d) All of the above 

51. Mehak Limited has hired 300 salesmen who will be assigned the task of contacting prospective buyers 
and creating awareness about the new range of organic incenses introduced by the company. Identify the 
element of promotion been described in the given lines. 
(a) Advertising 
(b) Sales promotion 
(c) Personal selling 
(d) Public relation 
52. Within 2 years of it’s inception, Bhavishya Limited has created a very positive reputation about itself and 
its products in the eyes of general public by participating extensively in various social welfare programs. 
Identify the component of promotion mixing described in the given lines. 
(a) Advertising 
(b) Personal selling 
(c) Public relation 
(d) Sales promotion 
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ANSWERS 
1.​ Answer: c 
Explanation: 
(c) It includes both tangible and intangible attributes 

2.​ Answer: a 
Explanation: 
(a) It is promotion 

3.​ Answer: d 
Explanation: 
(d) It is promotion 

4.​ Answer: c 
Explanation: 
(c) Prestige is a brand name 

5. ​ Answer: d 
6. Answer: c 

7.​ Answer: d 

8.​ Answer: c 
9.​ Answer: d 

10.​ Answer: c 

11.​ Answer: a 
12.​ Answer: b  

13.​ Answer: b 

14.​ Answer: b  

15.​ Answer: b  

16.​ Answer: a 

17.​ Answer: a 
18.​ Answer: d 

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19.​ Answer: b 
20.​ Answer: b  

21.​ Answer: b 

22.​ Answer: c  

23.​ Answer: d 

24.​ Answer: a 

25.​ Answer: c 
26.​ Answer: d 

27.​ Answer: b 

28.​ Answer: b 
29.​ Answer: c 

30.​ Answer: c 

31.​ Answer: a 
32.​ Answer: d 

33.​ Answer: a 

34.​ Answer: c 
35.​ Answer: b 

36.​ Answer: a 
37.​ Answer: b 

38.​ Answer: d 

39.​ Answer: b 
40.​ Answer: c 

41.​ Answer: b 
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42.​ Answer: c 
43​. Answer: c 

44.​ Answer: b 

45.​ Answer: a 
46​. Answer: a 

47.​ Answer: b 

48.​ Answer: c 
49.​ Answer: b 

50.​ Answer: b 

51.​ Answer: c 
52.​ Answer: c 

 
 

 
 

 
 

 
 

 
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 BST CHAPTER 12 
1. Yash had severe pain in his throat, so he called up the doctor and asked for a telephonic advice. The doctor 
prescribed him a sachet of Throat Reliever Hot Sip. He asked his servant to get a sachet from a local chemist 
with a cash memo. After consuming the sachet, he started feeling more ill, so he picked up the empty sachet 
and started reading the label. To his utter dismay, the sachet had already expired last month. Which of the 
following remedies is not available to him any longer as a consumer? 
(a) To withdraw the hazardous goods from sale. 
(b) To replace the defective product with a new one. 
(c) To refund the price paid for the product. 
(d) To pay a reasonable amount of compensation for any loss suffered by the consumer due to the negligence 
of the opposite party. 

2. Due to the negligence of the doctors, Johar passed away within a week’s time after his surgery of the spine. 
Which of the following parties can not file a case in this regard? 
(a) The consumer 
(b) Any registered consumers’ association 
(c) A legal heir or representative of a deceased consumer 
(d) All of the above 

 
3. Which of the following activities lie within the scope of consumer protection? 
(a) Educating consumers about their rights and responsibilities 
(b) Helping consumers in getting their grievances redressed 
(c) Protecting the interests of consumers 
(d) All of the above 

4. Jagga started a small stationery shop in the nearby market. In pursuit of earning higher profits in a short 
term, he overpriced all his products by 20%. Gradually, the consumers understood his pricing strategy and 
stopped coming to his shop for making any purchase. Identify the related point highlighting the importance of 
consumer protection from businessmen’s point of view. 
(a) Long-term interest of business is assured 
(b) Business uses society’s resources so they need to safeguard consumer’s interests. 
(c) Social responsibility towards consumers as an important interest group. 
(d) It is the moral obligation of the businessmen to give due consideration to the consumer’s interests. 

5. Dipika Pallikal, the Padma Shri recipient, in a petition filed in 2012 said that she had faced humiliation 
and loss of reputation, as a transaction using a bank’s debit card at a hotel in the Netherlands’ Rotterdam 
failed, though she had a balance of more than 10 times the billed amount in her account. The bank claimed 
that the incident was a case of “force majeure”, which means a natural and unavoidable catastrophe or an act 
of God, and was beyond is control. A consumer court in Chennai has directed the bank to pay a 
compensation of lakh to Dipika Pallikal for “deficiency in service”. The bank was also directed to pay her 
₹​5,000 as expenses. Identify the right of consumers being exercised in the given case. 
(a) Right to safety 
(b) Right to be heard 
(c) Right to seek redressal 
(d) Right to consumer education 

6. When Aaradhya, inspite of paying the full price of the plot as per the terms and conditions of the allotment 
letter, was not given the possession of the plot by the builder, she filed a case in the State Commission. 
Identify the right of consumers being exercised in the given case. 
(a) Right to safety 
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(b) Right to be heard 
(c) Right to seek redressal 
(d) Right to consumer education 

7. Ranjan bought a bottle of soft drink of a famous beverage company and found a gutka pouch floating inside 
the bottle. He forwarded a legal notice to the company, accusing it of the deficiency in service that could cause 
health hazard to the consumer. Identify the right of consumer being violated in the given case. 
(a) Right to safety 
(b) Right to be heard 
(c) Right to seek redressal 
(d) Right to consumer education 
8. Siddhartha booked several rooms in a reputed five-star hotel in Goa for his destination wedding. On the 
day of his wedding, when his friend Ramandeep, after attending the lunch party, returned to his room to take 
a shower, he had a fall in the bathroom. The bathroom was three stairs down to the bathing area and there 
was a handle bar to the right. On the second step, Ramandeep slipped badly and fell on his face with a great 
force, resulting in multiple fractures. He filled a case against the hotel for compensation for the injuries 
suffered due to faulty designing of its room. Identify the right of consumers being violated in the given case. 
(a) Right to be heard 
(b) Right to seek redressal 
(c) Right to consumer education 
(d) Right to safety 
9. A consumer court in Pune slapped a ​₹​55,000 fine on a reputed online food-delivery company along with a 
hotel for delivering non-vegetarian food to a lawyer who had ordered a vegetarian dish. He had ordered paneer 
butter masala but was delivered butter chicken instead. When he reportedly registered the complaint, the 
hotel promised to replace it and send another parcel of food with the correct dish. However, Deshmukh 
allegedly received butter chicken instead of paneer butter masala the second time as well. Deshmukh sent 
notices to both the restaurant and the online food-delivery cpmpany for ‘hurting religious sentiments’. Identify 
the right of consumers being violated in the given case. 
(a) Right to be heard 
(b) Right to seek redressal 
(c) Right to choose 
(d) Right to safety 
10. A popular nationalised bank has been fined ​₹​8 lakh by the country’s highest consumer court, National 
Consumer Disputes Redressal Commission (NCDRC), for not sharing complete insurance policy details with a 
customer. The bank has been ordered to pay the full amount as compensation to the customer. Identify the 
right of consumers being violated in the given case. 
(a) Right to be heard 
(b) Right to seek redressal 
(c) Right to information 
(d) Right to safety 
11. Naina, her husband and her two minor daughters were travelling from Mumbai to Delhi, availing a 
company’s flight services in 2018. The airlines had issued boarding passes to all of them. Naina claimed in 
her plea that the airlines left all her family at the Mumbai Airport without informing them, despite their being 
in the airport premises. The family had to stay in a hotel and purchase new tickets the next day. The State 
Consumer Disputes Redressal Commission (SCDRC). on hearing the plea, asked an airline company to pay 
₹​50,000 to Naina and her family. Identify the right of consumers being exercised in the given case. 
(a) Right to safety 
(b) Right to be heard 
(c) Right to seek redressal 
(d) Right to consumer education 
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12. Identify the right of consumers being promoted in the picture given on the right. 

 
(a) Right to safety 
(b) Right to be heard 
(c) Right to seek redressal 
(d) Right to consumer education 

13. Identify the right of consumers being exhibited in the picture on your right. 

 
(a) Right to choose 
(b) Right to be heard 
(c) Right to seek redressal 
(d) Right to consumer education 

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14. Identify the right of consumers being promoted in the picture. 

 
(a) Right to safety 
(b) Right to be heard 
(c) Right to seek redressal 
(d) Right to consumer education 

15. Identify the right of consumers being promoted in the given picture. 

 
(a) Right to seek redressal 
(b) Right to consumer education 
(c) Right to information 
(d) Right to be heard 

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16. Identify the responsibility of consumers being promoted in the picture. 

 
(a) Buy only standardised goods 
(b) Read labels carefully 
(c) Assert yourself to ensure that you get a fair 
(d) Be honest in your dealings 

17. Identify the responsibility of consumers being highlighted in the picture given below. 

 
(a) Be honest in your dealings 
(b) Learn about the risks associated with products and services 
(c) Assert yourself to ensure that you get a fair deal 
(d) Respect the environment. 
18. Recently, Yamini purchased a pack of dog food for her pet. It was nowhere mentioned on the pack that it 
had to be mixed in lukewarm water in order to ensure easy digestion. Therefore, Yamini kept serving the food 
to her pet by mixing it in cold water. As a result, her pet fell ill and had to be hospitalised. Identify the right of 
consumers being ignored by the company marketing the pet food. 
(a) Right to consumer education 
(b) Right to information 
(c) Right to choose 
(d) Right to be heard 

19. Which of the following types of cases are filed in the State Commission? 
(a) When the value of the goods or services in question, along with the compensation claimed, exceeds ​₹​20 
lakhs but does not exceed ​₹​1 crore. 
(b) When the value of the goods or services in question, along with the compensation claimed, exceeds ​₹​20 
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lakhs but does not exceed ​₹​2 crore. 
(c) When the value of the goods or services in question, along with the compensation claimed, exceeds ​₹​40 
lakhs but does not exceed ​₹​1 crore. 
(d) None of the above 
20. Where can the aggrieved party appeal further in case he is not satisfied with the order of the District 
Forum? 
(a) National Commission 
(b) State Commission 
(c) Supreme Court of India 
(d) All of the above 

21. In case an aggrieved consumer is not satisfied with the decision of the State Commission, he can make a 
further appeal in 
(a) National Commission 
(b) District Forum 
(c) Supreme Court of India 
(d) All of the above 

22. In case an aggrieved consumer is not satisfied with the decision of the National Commission, he can make 
a further appeal in 
(a) State Commission 
(b) District Forum 
(c) Supreme Court of India 
(d) All of the above 

23. Which of the following statements is not true with regard to the District Forum? 
(a) It consists of a President and three other members, one of whom should be a woman. 
(b) The members are appointed by the District Government. 
(c) A complaint can be made to the appropriate District Forum when the value of the goods or services in 
question, along with the compensation claimed, does not exceed ?10 lakhs. 
(d) All of the above 

24. Which of the following statements is true with regard to the State Commission? 
(a) It consists of a President and not less than two other members, one of whom should be a woman. 
(b) The members are appointed by the State Government concerned. 
(c) A complaint can be made to the appropriate State Commission when the value of the goods or services in 
question, along with the compensation claimed, exceeds ​₹​20 lakhs but does not exceed ​₹​1 crore. 
(d) All of the above 
25. Which of the following statements is not true with regard to the National Commission? 
(a) It consists of a President and at least five other members, one of whom should be a woman. 
(b) The members are appointed by the Central Government. 
(c) A complaint can be made to the National Commission when the value of the goods or services in question, 
along with the compensation claimed, exceeds ​₹​1 crore. 
(d) Where the aggrieved party was not satisfied with the order of the National Commission, the case can be 
taken to the Supreme Court of India. 

26. Which of the following functions are carried out by the consumer organisations? 
(a) Publishing periodicals to impart knowledge about consumer issues. 
(b) Providing legal assistance to consumers. 

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(c) Filing complaints in appropriate consumer courts on behalf of the consumers, 
(d) All of the above 

27. In case a consumer is not satisfied with the order passed in the State Commission, he can further make 
an appeal in the National Commission within a time period of 
(a) 10 days 
(b) 20 days 
(c) 30 days 
(d) 45 days 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
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ANSWERS 
1.​ Answer: b 
Explanation: 
(b) Because he has already consumed the product 

2. Answer:: a 
Explanation: 
(a) Because he is dead 

3. Answer: d  

4. Answer: a 
5. Answer: c 

6. Answer: b 

7. Answer: a 
8. Answer: d 

9. Answer: c 

10. Answer: c 
11. Answer: c 

12. Answer: d 

13. Answer: a 
14. Answer: a 

15. Answer: c 
16. Answer: c 

17. Answer: b 

18. Answer: b 

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19. Answer: a 
20. Answer: b 

21. Answer: a  

22. Answer: c 
23. Answer: d 

24. Answer: d  

25. Answer: a 
26. Answer: d 

27. Answer: c 

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