UGC NET PYQ Paper 2: Commerce 29 Sep 2022 Shift 1

The incorrect answer is the bank does expect the borrowing country to spend the loan in a particular country.

Key Points

• The world's leading economic powers founded the World Bank as "the first and largest multilateral financial institution" after the Bretton Woods Conference in 1945.
• The World Bank was founded, in part, "to assist in the reconstruction and development of territories of members by facilitating the investment of capital for productive purposes and the encouragement of the development of productive facilities and resources in less developed countries," according to its Charter or Articles of Agreement.

 Important PointsThe bank's lending operations are governed by a set of policies that were developed in accordance with the articles of association.

1. The bank needs to correctly evaluate the loans' chances of being repaid. It should take into account the availability of natural resources, the capability of the industrial plant now in use to exploit the resources, the openness of the plant, and the history of the nation's debt.
2. The bank should only make loans for certain, highly prioritised projects that are both technically and economically sound.
3. The bank only makes loans to help a country cover the project costs in foreign currency. The borrowing nation is typically expected to mobilise its own resources.
4. The bank does not anticipate that the country borrowing the money will use it in a particular nation. In reality, it promotes the borrower to purchase equipment and supplies for the bank's financial projects at the lowest cost possible while still ensuring quality.
5. The bank's policy is to establish ongoing relationships with borrowers in order to monitor project progress and stay informed about the financial and economic situation in the countries where loans are being taken out. Additionally, it aids in the resolution of any administrative and technical issues that can develop.
6. The bank indirectly places a high priority on fostering local private enterprise.

Hence, it can be concluded that option 4 is not the guiding principle of world bank lending operation.

The correct answer is Mutual funds.

Key Points

• A rule known as "skin in the game" denotes a mutual fund scheme's or fund house's readiness to match their interests with those of the investors.
• The recent decision by SEBI is based on the idea that a mutual fund scheme will act more favourably towards investors if it holds a larger share in those schemes.

 Important Points"Skin in the game rule" 

• It is taking responsibility for the risk by contributing to the accomplishment of a specific objective. The set of rules for managing risk was established by King Hammurabi of Mesopotamia in 1972–1750 BC, and it is best known as "Hammurabi's code." This code includes the ideas of incentives, accountability, and reciprocity. Conflicts of interest among managers, fund sponsors, and unit holders in mutual funds have recently gained academic, governmental, and legal attention on a global scale.
• In this regard, Sebi declared that a portion of the pay (20%) for important employees must be given in the form of units of the plan that they directly oversee or are otherwise responsible for.
• The lock-in period for the aforementioned unit-based compensation will be at least three years or the duration of the scheme. It will be susceptible to clawback if the employee violates the code of conduct in any way.
• The new regulation will be in place starting on July 1.
• According to the justification, this will align the interests of important AMC workers with those of scheme participants.

Hence, it can be concluded that SEBI's 'Skin in the game rule' is applicable to Mutual Funds.

The correct answer is Niche marketing.

Key Points

• When a company decides to focus on a specific good or service, niche marketing happens as a result.
• The company then centres its marketing efforts around these target markets.

Important PointsWhen it comes to the definition of niches, there are many different aspects based on:

• Price (luxury, discount) (luxury, discount)
• Level of excellence (premium, handmade)
• Demographics (gender, income level, education level) (gender, income level, education level)
• Geographics (citizens of certain countries, cities) (residents of certain countries, cities)

Example of Niche Marketing: 

• For example, there may be various segments related to the same market for shoes. Shoes for parties, the office, women, men, or casual wear are a few examples of footwear. These are all examples of niche markets, and each market is defined and segmented to cater to the unique demands and tastes of its customers.

Hence, it can be concluded that Concentration of all marketing efforts on a small but specific and well defined segment of the population is called Niche Marketing.

Additional Information

Franchising: In the marketing and distribution process known as franchising, the owner of a business system (the franchisor) offers a single person or group of people (the franchisee) the right to operate a company that sells goods or renders services using the franchisor's business system.

Ambush Marketing: Ambush marketing is the practise of appropriating another marketer's promotional strategy in order to compete and increase awareness of your good or service.

Viral Marketing: Viral marketing aims to disseminate knowledge about a good or service from person to person using email, the internet, or word-of-mouth. The aim of viral marketing is to get people to spread a marketing message to their friends, family, and other people in order to rapidly increase the number of people who receive it.

The correct answer is Money measurement concept.

Key PointsMoney Measurement Concept:

The money measurement concept is an accounting concept based on the idea that a business should only record those transactions and events that can be measured in monetary terms, i.e., at a transaction price that is equal to cash outflow or inflow in terms of money, measurable in the currency unit used in that particular country, in order to provide quantitative information rather than qualitative information.

Important Points

• Example of Money Measurement Concept: The skills and competence of human employees employed by the company contribute to its growth and performance, although they cannot be assigned to an objective monetary value and are therefore not recognised as assets in the balance sheet of the company.
• However, transactions involving employees that are measurable in monetary terms, such as salary expenses and pension liabilities to the company, must be measured and acknowledged as a valid source to be added to financial statements.

Hence, it can be concluded that if a company does not include the value of skills gained by its employees from training programmes in its annual financial statements, it is applying money measurement concept of accounting.

Additional Information

Going Concern Concept:

• According to the going concern principle of accounting, a company's operations will not be liquidated or forced to end for any reason, and they will instead continue in the future.
• A business is considered a continuing concern if there is no reason to think that it will have to or will have to halt operations in the near future.

Revenue recognition concept: 

• A generally accepted accounting standard (GAAP) called revenue recognition specifies how and when revenue should be recognised.
• According to the accrual accounting revenue recognition concept, revenues must be recognised when they are earned and realised rather than when cash is received.

Business entity concept:

• According to the concept of business entities, businesses and their owners are considered to be different legal entities for the purposes of accounting procedures.
• Accountants should only keep track of the business's affairs, not the owners' private affairs.

The correct answer is 2.24.

Key Points

Interest Coverage Ratio:

• The ability of a company to pay the interest on outstanding debt is quantified using the interest coverage ratio.
• Divided by interest expense during a specific time period, a company's earnings before interest and taxes (EBIT) yields the interest coverage ratio.
• Instead of using EBIT to determine the ratio, other implementations of the method use EBITDA or EBIAT.
• Although the ideal ratio may differ by industry, a higher coverage ratio is generally preferable.

 Important PointsThe formula used is:

Interest Coverage Ratio = EBIT/Interest Expense

where:

EBIT = Earnings before interest and taxes​

Solution:

EBIT = 35 lakh (Given)

Interest on borrowings:

Term Loan 15% of 50 lakh = 15/100 x 50,00,000 = 7,50,000

Working capital term loan from bank @ 20% of Rs. 30 lakhs = 20/100 x 30,00,000 = 6,00,000

Public deposits accepted @ 14% of Rs. 15 lakh = 2,10,000

Total Interest on borrowings = 7,50,000 + 6,00,000 + 2,10,000 = 15,60,000.

Hence, Interest Coverage Ratio = 35,00,000/15,60,000 = 2.243

The correct answer is Capital account of the new partners.

Key PointsThe five scenarios listed below can affect how goodwill is treated in accounting when a partner is admitted:

1. When goodwill (or the premium for goodwill) is paid privately, accounting treatment is used.
2. When a new or incoming partner purchases goodwill (premium for goodwill) in cash or by cheque and keeps it in the business, how is it treated in accounting?
3. When goodwill (premium for goodwill) is brought in cash or by cheque by the new or incoming Partner and is withdrawn by sacrifice partner totally or in part, how is it treated in accounting?
4. When goodwill (premium for goodwill) is brought in kind, goodwill is treated accounting-wise.
5. The new or incoming partner does not provide all or any portion of the goodwill (premium for goodwill).

Important PointsNo cash is brought in by the new partner to cover their share of goodwill (premium for goodwill):

• When a company's goodwill is computed, if a new partner cannot bring their share of goodwill in cash, goodwill will be modified through the capital accounts of the new partner.
• In this instance, the current partner's (the sacrificing partner's) capital accounts are credited in accordance with their sacrificing ratio and the new partner's capital account is debited for his or her share of goodwill.

The journal entry is as under:

Note: To ensure that the new partner's capital is not reduced and is kept intact, his current account rather than his capital account is debited.

Hence, it can be concluded that when the incoming partner cannot bring premium for goodwill, then the necessary adjustment for goodwill is done through capital account of the new partners.

The correct answer is Oligopoly.

Key Points

• An oligopoly is a market sector in which only a small number of businesses compete or are dominant.
• There is a lot of market concentration.
• This does not imply that there are only two, three, or four rivals.
• There might even be dozens of them. Only a small number of them are dominating, though.

 Important PointsKinked Demand Curve Model 

Prof. Paul M. Sweezy, Profs. R. C. Hall and C. J. Hitch, all worked independently to develop this model.

• When the demand curve is not a straight line and exhibits a difference in elasticity at higher and lower prices, the demand curve is said to be kinked.
• The oligopoly model is one instance of a kinked demand curve.
• According to this oligopoly model, prices are rigid and firms will experience various consequences from price increases and decreases.
• Since competing businesses will respond to price reductions and price hikes differently, the demand curve kinks.

Hence, it can be concluded that Sweezy's kinked demand curve model to explain the price and output determination relates to oligopoly type of market structure.

Additional InformationConsequences of Price Increase/ decrease in Oligopoly MarketEffect of price increase

• When a company raises its prices, it becomes more expensive than competitors, which will cause customers to switch to those competitors.
• A considerable decline in demand is therefore probable in response to a price increase. As a result, demand is price elastic.
• Because the percentage decline in demand is greater than the percentage increase in price, businesses will suffer in this scenario of rising prices.

Effect of a price cut

• Price reduction by a company would probably have a different outcome. If a company lowers its prices, it will immediately raise demand significantly, which will increase sales. A rise in market share for the company.
• The other companies will react by lowering their prices in order to follow the first company since they do not want to see their market share decline. Overall, if prices are lowered across the board, each company would only experience a modest rise in demand.
• Demand for a company is price inelastic due to the "pricing war," which results in a slower percentage increase in demand.
• Revenue will decrease if demand is inelastic and the price declines.

The correct answer is Satiety of demand.

Key Points

1. According to the ordinal utility approach, utility cannot be evaluated numerically since it is not additive; rather, it can only be ranked according to preference.
2. When presented with several "bundles of products," the customer must be able to rate the various "bundles of goods" according to the satisfaction that each bundle provides.
3. This will allow the consumer to choose the order of preference.
4. For example, if a consumer gets 3 utils from consuming one unit of commodity X and 12 utils from consuming commodity Y, this indicates that consuming commodity Y gives them greater happiness than doing so with commodity X.
5. According to the cardinals, one unit of Y provides the consumer with four times more utility than one unit of X does.

 Important PointsAssumptions of Ordinal Utility Approach

• Rationality: It is assumed that the consumer is rational, which means that, given his limited income and the costs of products and services, he seeks to maximise overall utility.
• Utility can only be measured ordinally: This assumption holds that utility cannot be measured and can only be ranked in accordance with the order of desire for various types of products.
• Transitivity and Consistency of Choice: The customer is expected to make a choice that is either transitive or consistent. According to the transitivity of choice, the customer must prefer commodity X to commodity Z if he prefers commodity X to Y and Y to Z. In other words, he must treat X=Z if X=Y and Y=Z. According to the consistency of choice principle, if a consumer favours commodity X over commodity Y at one moment in time, he will not choose Y over X at a later time or even consider them equal.
• Non-satiation: It is posited that the consumer has not reached the point of satiety for any good and, as a result, prefers higher quantities of all goods.
• Diminishing Marginal Rate of Substitution: The diminishing marginal rate of substitution (MRS) is the rate at which the consumer is willing to switch from one good (A) to another good (B) while maintaining the same level of overall satisfaction. DB/DA is used to indicate the MRS. According to the ordinal method, if the consumer keeps choosing A over B, DB/DA will continue to decrease.

Hence, it can be concluded that Satiety of demand  is not the assumption for consumer behaviour based on the Ordinal Utility Theory.

The basic production function is -

Q = f(KL)

Important PointsLong-term production function - 

• The term "long run" refers to a length of time during which the production function is solely based on variable factors.
• In the long run, there are no set factors, and everything becomes changeable. As inputs are varied proportionally, the scale of production can be altered.

The production function of Cobb-Douglas - 

• Paul H. Douglas and C.W. Cobb's empirical examination of the American manufacturing sector served as the foundation for the Cobb-Douglas production function.
• For the whole output of the manufacturing industry, it is a linear homogeneous production function of degree one that accounts for the two inputs of labor and capital.

The shape of the Cobb-Douglas (C-D) production function is 

Q = AKaLb

where L = the amount of labor used

K is the amount of capital used.

Q is the amount of work completed.

Positive constants A, B and a.

• The efficiency parameter is actually parameter A. It acts as a gauge for technological advancement.
• The level of output that can be produced by any specific combination of the inputs would increase with a larger value of A.
• The distribution parameters are also and. They relate to the product's respective factor shares.
• Here, it is presumptive that the company employs two inputs, labor (L) and capital (K), and generates just one output (Q).

Short term financing - Short-term financing is needed when there is a short-term, or less than a year, financial need.

Important PointsMatching Approach - 

• This strategy states that the maturity of funding sources should correspond to the type of assets being financed.
• As a result, this strategy is also known as the matching strategy.
• According to the hedging method, short-term funds should be used to cover seasonal or temporary working capital needs while long-term funds should be used to cover permanent working capital needs.

Conservative Approach - 

• This strategy proposes that the use of short-term funds should be for urgent needs and that all expected investments in current assets should be supported from long-term sources.
• Only emergencies will be met with the short-term cash.

Aggressive Approach - 

• The aggressive method is a high-risk working capital financing strategy in which temporary working capital and a sizeable portion of permanent working capital are financed with short-term funds.
• The levels of inventories, accounts receivable, and bank balances under this financing strategy are barely adequate without a safety net for uncertainty.
• It states that even a small portion of investments in fixed assets must be supported with short-term funds.

Traditional Approach - 

• When creating a working capital policy for a company, the trade-off between profitability and risk is a crucial factor to take into account.
• In other words, both profitability and risk depend on a company's Net Working Capital (Current Assets - Current Liabilities) level.

Thus, Aggressive Approach of working capital where a firm finances a part of its permanent working capital with short term financing.

Key PointsCapital structure - A company's capital structure is the specific mix of debt and equity it uses to finance both its general operations and expansion.

Important PointsNet Income Approach - 

• The Weighted Average Cost of Capital (WACC) and the value of the company are both predicted to fluctuate in response to changes in a firm's financial leverage by the Net Income Approach.
• According to the Net Income Approach, the WACC lowers, and the firm's value grows as leverage (the proportion of debt) increases. Conversely, if the leverage is reduced, the WACC rises, and the firm's value is down.

Net Operating Income Approach - 

• David Durand created the concept of net operating income (NOI). According to the net operating income approach, changes in a company's or a firm's debt components have no impact on the value of the company.
• According to the net operating income concept, a company's value is based on its operational income and any related business risk.

Traditional Approach - 

• The classic theory of capital structure predicts that the ideal capital structure will rise to a certain point, then remain constant, before starting to decline.
• It implies that there is a debt-to-equity ratio that is best, where the WACC is lowest and the firm's market value is largest.
• When a company exceeds the ideal debt to equity ratio, the cost of equity increases and has a negative impact on WACC. When the WACC rises above the threshold, the market value of the company begins to decline.

Modigliani-Miller Approach- 

• This strategy is quite similar to the NOI strategy.
• This strategy assumes that the firm's use of leverage has no impact on the cost of capital and, consequently, the value of the company.
• According to Modigliani and Miller, there is no ideal balance of debt and equity financing because any reasonable choice of debt and equity results in the same cost of capital under their assumptions.

Key PointsPerpetual debt - Perpetual debt, often referred to as constant debt, is a type of debt instrument that is bought with the intention of creating a consistent flow of income in the form of interest payments.

Cost of Capital - The minimum rate of return a company must achieve before creating value is known as cost of capital.

Important PointsCost of Debt - 

K_d =Interest×(1−t)RV×100Interest×(1−t)RV×100

Interest = Rs. 10

RV = Rs.110

t = 35% or 0.35

Kd = 10×(1−0.35)110×10010×(1−0.35)110×100

Kd = 10×0.65110×10010×0.65110×100

Kd = 5.91%

Cost of Capital = cost of debt + Cost of equity + cost of retained earning

Cost of Capital = 5.91% + 0 + 0

Cost of Capital = 5.91%

Important PointsType I errors - 

• A Type I mistake is essentially the rejection of the true null hypothesis in statistical hypothesis testing.
• False positive error is another name for type I errors.
• The possibility of a type I mistake in hypothesis testing cannot be totally eliminated.
• There are ways to reduce the dangers of receiving results that have a type I mistake, though.
• In above situation, Dushyant failed to recognized Shakuntala because she was not wearing a ring, but it was truth that she was Shakuntala. Here Dushyant has rejected her even though she is Shakuntala. Thus, this situation shows type 1 error.

Additional InformationType II error -

• When a researcher fails to reject a null hypothesis that is actually wrong, this is referred to as a type II error or a false negative.
• Here, a researcher comes to the false conclusion that there is no substantial influence.

Sampling error - 

• A sampling error is a statistical error that happens when an analyst fails to choose a sample that accurately represents the full population of data,
• and the results they get in the sample do not correspond to the results that may be acquired from the entire population.

Non-Sampling error - 

• Non-sampling error is a mistake that occurs throughout the data collection process due to elements other than selecting a sample.
• Non-sampling mistakes may result in bias in surveys, polls, or sample data.

Important Points Adjusted R2 (R̅2) - 

• A modified version of R2 adjusted with the number of predictors is called adjusted R2.
• It disallows the addition of irrational features and permits the comparison of regression models with various numbers of predictors.
• If a new independent variable does not considerably boost R-squared, then the value of Adjusted R-squared will actually fall.
• On the other hand, if the R-squared value significantly increases after the addition of the new independent variable, the adjusted R-squared value will likewise rise.

Additional InformationCoefficient of determination (r2) - 

• A statistical measure in a regression model called the coefficient of determination (R2 or r-squared) identifies the percentage of variance in the dependent variable that can be explained by the independent variable.
• The coefficient of determination is most frequently used to determine how well a regression model fits observed data.

Coefficient of multiple determination (R2) - 

• The percentage of variance in the dependent variable that the multiple regression model based on the independent variables can explain is known as the coefficient of multiple determination.

Logistic regression - 

• When the dependent variable is binary, the proper regression analysis to use is logistic regression. Analysis that makes predictions is logistic regression.
• A binary dependent variable and one or more nominal, ordinal, interval, or ratio-level independent variables are used to describe data and to explain the relationship between them.

• The root-mean-square deviation, commonly known as the standard deviation, is the square root of the mean of the squares of all the values of a series calculated from the arithmetic mean.
• Arithmetic mean is used to measure the deviations in calculating standard deviation due to its least squares property.
• The standard deviation increases together with a series' elements' increasing distance from the mean. Thus, Option 1 is correct.

Option 2 - Z-Score value of 'X' is the ratio between 'X' divided by mean X

• A data point's z-score indicates how many standard deviations away from the population mean it is.
• Since z-scores are expressed in terms of standard deviations, it enables users to compare data from various samples.
• For a single data point, x, the z-score is calculated by subtracting the population mean from the raw data score and dividing the result by the population standard deviation. z=(x−μ)/σ

Thus, Option 2 is incorrect.

Option 3 - The coefficient of variation is calculated as follows:  σx¯σx¯ × 100

• The coefficient of variation is often calculated using the following formula -
• Coefficient of variation (CV) = Standard Deviation/Mean x100 CV =(SD/M) x 100. Thus Option 3 is correct.

Option 4 - Standard deviation can be equal to zero in some situations.

• There is no spread when the standard deviation is zero, meaning that all data values are equal. Thus, option 4 is correct.

• The correlation coefficient is used to gauge how closely two variables are related.
• The correlation coefficient's value falls between -1.0 and +1.0.
• This indicates that any value outside of this range will be the consequence of a measurement error in the correlation.

Important Points

∑xy/N⋅σx⋅σy

• The sample covariance between variables and their sample standard deviations are used to calculate the sample correlation coefficient.

• A geometric mean of two regression coefficients makes up the correlation coefficient.
•  b_yx, b_xu are the regression coefficients.

• The population covariance between variables and their population standard deviations are used to calculate the population correlation coefficient.

Hence, option 3 is not correct to calculate the coefficient of correlation between two variables.

The incorrect answer is it serves as a basis of both formal and informal organizations.

Key PointsThe Authority is described as follows:

• a rightful claim to a choice that may be made or assigned,
• a right to command,
• The right to demand proper and truthful implementation of the decision.

Important PointsFeatures/Characteristics of Authority

• It is a legitimate right of an individual.
• It makes it possible to choose employees based on the placeholder.
• This denotes the authority to demand conformity.
• It is used in a specific way to manage the behaviour of subordinates.
• It goes up and down the organisational hierarchy.
• Authority can be delegated.
• It unites all of the different employees in the business and is the ultimate organisational force.
• Authority serves as a basis of formal organizations.
• It is mostly well-defined, conspicuous and finite.
• It is employed to carry out organisational objectives.
• Differentiating power from authority. Power is defined as the capacity to affect a person's attitude and behaviour, whereas authority is a specific authorisation received from a higher authority.

Hence, it can be concluded that option 4 is the incorrect answer.

The correct answer is Achievement test.

Key Points

• The purpose of the selection tests is to evaluate a candidate's proficiency in the knowledge, skills, and talents that the job analysis deems necessary for successful job performance.
• A test is a tool created to assess particular psychological variables.

 Important PointsAchievement Test:

• Achievement tests gauge candidates' expertise in fields like marketing, human resources, and economics.
• An achievement exam is administered to applicants who claim to know something in order to gauge their level of proficiency.
• Because of this, achievement tests are often referred to as performance or proficiency assessments.
• Achievement tests are an improved version of the work sample method and are used to assess the applicant's current abilities and activities.
• Examples of these examinations include the Purdue test for machinists and machine operators, Stanford-Binet Scales, Miller Analogies Test, and adaptability tests.
• Trade tests are the most popular kind of achievement tests given. For instance, in a typing test, the candidate is given material to type, and the time taken by the candidate in typing that material as well as the errors made by him/her are noted down. This allows for the measurement of the candidate's proficiency in typing.
• Similar tests are offered for shorthand, calculators, operating calculators, basic mechanical equipment, dictation and transcription equipment, and simple mechanical tools.

Hence, it can be concluded that achievement test measures the applicant's, level of knowledge and skill in a particular job in which one he will be appointed.

Additional Information

• Aptitude Test: A candidate's latent capacity to learn a particular job if given the necessary training is measured via aptitude tests, also known as potential ability tests and specific cognitive tests. When a new hire has little to no experience relevant to the job position, aptitude tests take on a special relevance.
• Personality Test: These assessments are meant to gauge a person's fundamental traits or makeup. They examine the individual's motivation, introversion, emotional responses, emotional stability, mood, value system, adaptability, interpersonal relationships, self-image, self-confidence, ambition, tact, optimism, decisiveness, sociability, objectivity, patience, fear, distrust, suspicion, judgement, dominance, impulsiveness, integrity, and other traits. When it comes to personality assessment, industrial psychologists frequently emphasise the "big five" personality factors.
• Interest Test: Interest tests have been created to help people find their areas of interest and the types of jobs that will make them happy. In a way, they serve as inventory of the preferences of particular professions' workforces.

The correct answer is Diversifying into additional businesses.

Key Points

• Organizational change is the process through which a firm or business changes a key aspect of its structure, such as its culture, the operational infrastructure or supporting technologies, or its internal procedures.
• The process of guiding organisational change to a successful conclusion is known as organisational change management, and it typically consists of three main phases: preparation, implementation, and follow-through.

 Important PointsAim of Task Dimension of organizational change 

• Grouping related tasks together is necessary for developing broad task categories. Every task within a certain category of activity, to some extent, requires the same knowledge, skills, and temperament as other tasks within that category.
• By categorising them, you can observe how many tasks require the same abilities and training. This may help you decide whether or not training is beneficial. Priority can be given to training programmes based on "complete" activity categories. All of a group's activities might be covered by a single training course.
• To ensure that training programmes include all important tasks, including those that call for particular talents, task categorization is crucial. Identification of the several essential types of abilities needed for a job is aided by task categorization.

Hence, it can can be concluded that the Task Dimension of organizational change aims to Diversifying into additional businesses.

The correct answer is Tolerance (1 − R2).

Key Points

• The independent/explanatory variables shouldn't be connected with one another, which is one of the fundamental presumptions for a regression-based model.
• Let's now attempt to comprehend why this presumption was initially created. A regression equation's main goal is to reveal the specific effects of each explanatory factor on the dependent or target variable, and this is what the regression coefficients do.
• Because all other explanatory variables remain constant, a regression coefficient captures the average change in the dependent variable for a change of 1 unit in the explanatory variable.
• Because of this, it will be impossible to separate the individual impacts of the explanatory variables on the target variable if they are linked. Multicollinearity is the term for this issue.

Important PointsMeasurement of Multicollinearity

• A very simple test known as the VIF test is used to assess multicollinearity in our regression model. The variance inflation factor (VIF) identifies the strength of correlation among the predictors.

The formula of VIF is

• VIF = 1 /(1- R²i)
• Where R²i is the coefficient obtained by regressing the i^th independent variable on the remaining predictors. As shown below, we can also compute the tolerance and use it to detect multicollinearity.

VIF_i = 1/1-R²i = 1/Tolerance

• The tolerance is the reciprocal of VIF.
• If R²i is 0, the VIF is equal to 1. As a result, we cannot predict the variance of the remaining predictors. The i^th predictor is not correlated to the others.
• Hence, Multicollinearity = Tolerance (1 − R²).

The correct answer is Pareto distribution.

Key Points

• The Pareto principle, sometimes known as the 80/20 rule, states that 20% of the activities or inputs that can be linked to it will produce 80% of the outcomes or results.
• The rule can be interpreted in one of two ways: either as the helpful many, which finds that numerous sources account for a small number of results, or as the vital few, which finds that a small number of sources account for a large number of results.
• The Pareto principle is an analytical framework for structuring ideas and creating remedies for consumer and company issues.

 Important PointsPareto Distribution aptly describes the ownership of income and property in a capitalist economy because of the following reasons:

• When an economy's resources and goods are distributed as efficiently as possible, or when pareto efficiency, no adjustment can be made without making someone worse off.
• Although the economy can evolve in the direction of Pareto efficiency, pure Pareto efficiency only exists in theory.
• Since it is highly challenging to implement any adjustment that will not make any one individual worse off, alternative criteria for economic efficiency based on Pareto efficiency are frequently employed to determine economic policy.
• Combinations on the PFF reflect efficient markets when Pareto efficiency is graphically represented; it is quantified along the production possibility frontier.
• Market failure happens when inefficiency is not resolved, either by making someone worse off or by leaving resources unutilized.

 Additional Information

1. Normal Distribution: A probability distribution that is symmetric about the mean is the normal distribution, sometimes referred to as the Gaussian distribution. It demonstrates that data that are close to the mean occur more frequently than data that are far from the mean. The normal distribution appears as a "bell curve" on a graph.
2. Poisson Distribution: The chance of a discrete (i.e., countable) result is provided by a Poisson distribution, which is a discrete probability distribution. The discrete result for Poisson distributions is k, which stands for the frequency of an event.
3. F- Distribution: The F-distribution or F-ratio is a continuous probability distribution that frequently appears as the null distribution of a test statistic, most notably in the analysis of variance (ANOVA) and other F-tests. It is also known as Snedecor's F distribution or the Fisher-Snedecor distribution (after Ronald Fisher and George W. Snedecor).

The correct answer is 50 ∶ 15 ∶ 35.

Key Points

• Regional Rural Banks (RRBs) are scheduled commercial banks in India that are controlled by the government and do regional business in several Indian states.
• The Indian government's Ministry of Finance is the owner of these banks. They were established to provide fundamental banking and financial services to rural communities. RRBs do have urban branches though.
• The scope of operation is restricted to the region that the Indian government has declared to include, which may include one or more State districts.
• RRBs carry out a number of tasks, including offering banking services to rural and semi-urban areas, managing government projects like paying MGNREGA workers' wages and distributing pensions, and offering para-banking services like lockers, debit and credit cards, mobile banking, internet banking, and UPI.

Important Points

• Regional Rural Banks Amendment (Bill ) 2014 mandates that of the capital issued by a RRB, 50% shall be held by the central government, 15% by the concerned state government and 35% by the sponsor bank. 
• The Bill permits RRBs to obtain capital from sources besides the federal, state, and sponsor banks.
• The combined ownership of the central government and the sponsor bank cannot go below 51% in such a scenario.
• Additionally, the federal government would need to engage the relevant state government if the state government's share of the RRB fell below 15%.

Hence, it can be concluded that the share capital of an RRB is subscribed by the Central Government, State Government and the Sponsoring Bank in 50:15:35.

The correct answer is SWIFT.

Key Points

• The member-owned cooperative Society for Worldwide Interbank Financial Telecommunications (SWIFT) offers its members safe and secure financial transactions.​Economic sanctions have been imposed through SWIFT on deviants like Iran and Russia.
• With the help of this payment network, people and businesses can accept card or electronic payments even when the payer's bank is different from the customer's or the vendor's.
• The biggest and most efficient system for international payments and settlements is SWIFT today.
• Each member institution of SWIFT is given a distinctive ID code (a BIC number) that not only identifies the bank name but also the nation, city, and branch.

​Hence, it can be concluded that SWIFT is used for international money transfer.

​Additional Information

RTGS:

• The ongoing process of settling interbank payments on an individual order basis across the books of a central bank is known as real-time gross settlement.
• The method used by this approach is in opposition to netting the day's debits and credits.
• Large-value interbank funds transactions typically use real-time gross settlement.
• Global central banks are using RTGS systems more frequently, which can reduce the risks associated with high-value payment settlements between financial institutions.

NEFT: 

• A payment system called NEFT makes it possible to transfer money electronically from one bank to another.
• According to the Reserve Bank of India, money transfers can be done by either an individual or a business to an individual's or an organization's bank account with any bank that participates in the NEFT scheme (RBI).
• The majority of banks in the nation currently accept NEFT payments. Transactions in NEFT are carried out in batches every half-hour.
• According to the RBI website, there are currently 23 half-hourly settlement batches that take place from 8 am to 7 pm on all working days of the week, excluding the second and fourth Saturdays of each months.

Immediate Payment Service (IMPS)

• This rapid electronic financial transfer service enables transactions between and within banks.
• Simply said, IMPS enables users to immediately transfer money across accounts.

The correct answer is Price lining.

Key Points

• Pricing is a technique used to estimate the value that a producer would receive in exchange for their goods and services.
• Simply said, the producer's offerings are priced using a system that is fair to both the producer and the client.

 Important Points

Price lining: 

• Price lining is a marketing strategy that groups goods and services according to their attributes and overall worth to consumers.
• This tactic offers numerous pricing options for comparable products in an effort to increase sales for a business.
• It is the practise of selecting a price target and then creating a product so that the company can maximise total profit at that price.
• When purchasing a more basic model, the price usually starts off lower and rises as the product's quality improves.
• Price lining relies on establishing the idea that a product with a higher price tag must also be of superior quality.
• Your more expensive product or service must offer enough more features or advantages over its more affordable competitors to justify its higher price.
• Customers who are engaged in the premium model must feel that their money is investing in a service or good that is fundamentally superior. This frequently entails providing genuine enhancements to crucial components rather than merely additional bells and whistles.

Hence, it can be concluded that pricing practice of setting a price target and then developing a product that would allow the firm to maximise total profit at that price is called price lining.

 Additional Information

• Price ceiling: A price ceiling is a cap placed by the government on the cost of a good or service in order to protect consumers by preventing prices from becoming too high. The price established by the price ceiling must be less than the price of natural equilibrium for the measure to be effective.
• Price matching: Price matching is the practise of matching a retailer's lower product price in a cutthroat marketplace. Consider a retail establishment that offers the same thing to you for less money. Because clients may acquire the best deal available without visiting another store or shop, businesses adopt this method to save time and money.
• Pricing Power: Pricing power is a concept used in economics to describe how changing a firm's product price affects the amount of demand for that product. Price elasticity of demand and pricing power are related.

The correct answer is Target-Rate-of-Return-Pricing.

Key Points

• Pricing issues can keep you up at night.
• If you undervalue your offer, you will lose money. If you overcharge for it, you may lose out on sales that may have made your year.
• Choosing a pricing strategy that is ideal for your company's conditions is necessary to arrive at the ideal price.

Important PointsTarget Rate of Return Pricing

• Target return price is a way to figure out the cost of a product in which the business has to reach a specific level of profitability in a set amount of time.
• To fulfil the profitability of the investor, the company must accomplish some objective.
• The majority of regulated industries employ it.

Example: Consider the following scenario:- An investor provides you with funding and a deadline to establish your brand. Let's say the investor wants to see a 50% increase in their investment within two years. In other words, this person or organisation intends to receive a 50% return on their initial investment after two years. The challenge that remains is how to double the investor's capital in just two years. Setting the proper price for your goods or services is crucial for achieving this goal.

You can utilise the target return technique to accomplish personal objectives as well. You must choose the appropriate prices if, for instance, you anticipate having a specific level of profitability by the end of the year.

Formula:

Target-Return Pricing = Unit Cost + (Desired Return x Invested Capital) / Unit Sales

Additional Information

1. Mark-up Pricing: A markup is the price differential between the selling price of a good or service and its cost. A profit for the business is essentially the price that is added to the total cost of a good or service. Take into consideration the following equation to further illustrate this idea: Selling price = cost of the good or service + a markup.
2. Economic-Value-to-Customer Pricing: John L. Forbis and Nitin T. Mehta created the value-based pricing system known as Economic Value to the Customer (EVC) in 1979. The approach seeks to help firms determine the appropriate pricing for a good or service. Businesses can better capture value using the EVC process than with a standard cost-plus pricing model.
3. Competitive Pricing: The practise of choosing strategic price points to take advantage of a product- or service-based market in relation to competition is known as competitive pricing. Since services might differ from business to business but a product's features stay the same, businesses offering identical products tend to employ competitive pricing more frequently. Once a price for a good or service has stabilised, competitive pricing is typically applied.

Hence, it can be concluded that Target-Rate-of-Return-Pricing method is used in regulated industries.

The correct answer is Early Adopters.

Key Points

• A theory called Diffusion of Innovation (DOI) was created by E.M. Rogers.
• One of the earliest theories in social science dates to Rogers in 1962.
• It was first used in communication to explain how an idea or product gradually develops traction and diffuses (or spreads) within a particular demographic or social system.
• People embrace a new concept, habit, or product as a result of this spread when they are a member of a social system.
• Adoption is the act of doing something different from what was done previously (i.e., purchase or use a new product, acquire and perform a new behavior, etc.).
• Adoption depends on the person thinking the concept, action, or product is novel or inventive. Diffusion is made possible through this.

 Important Points

• The process through which certain people are more likely to accept the invention than others rather than happening simultaneously in a social system is known as "innovation adoption."
• According to research, those who adopt innovations sooner than those who acquire them later have different traits.
• Understanding the traits of the target demographic that will facilitate or impede acceptance of the invention is crucial when promoting it to that group.
• Although the bulk of the general population tends to fall towards the middle of the five major adopter categories, it is still important to comprehend the traits of the target demographic. 

Early Adopters: 

• Early adopters often wait until the product or service has received several reviews before making a purchase because they are not quite as risk-taking as innovators.
• Early adopters are typically looked up to as role models within their social systems and are referred to as "influencers" or "opinion leaders."
• They are crucial to achieving "critical mass" in the distribution of a good or service, it give them a competitive advantage.
• As a result, if a product or service has a limited number of early adopters, its overall adoption rate is also likely to be modest.
• Early adopters are those who wait a few days and take some time to study reviews before attending to the movies.

Hence, it can be concluded that Early Adopters categories of customers are opinion leaders who carefully search for new technologies that might give them a dramatic competitive advantage

Additional Information

• Innovators: Innovators are those that are eager to test out new ideas first. They are bold and curious about novel concepts. These folks are frequently the first to come up with novel ideas and are very eager to take chances. If anything, not much has to be done to appeal to this demographic.
• Early Majority: Though they hardly ever take the lead, members of this group are often the first to adopt novel concepts. Having said that, before they are willing to adopt an innovation, they often require proof that it is effective. Success stories and proof of the innovation's efficacy are some strategies to appeal to this demographic.
• Late Majority: These folks are resistant to change and won't adopt a new idea until the majority has given it a shot. Information on how many other individuals have tried the innovation and successfully adopted it is one tactic to appeal to this audience.
• Laggards: These people are exceedingly traditional and tradition-bound. They are the hardest group to convince to accept change since they are so resistant to it. Statistics, fear appeals, and peer pressure from other adopter groups are all methods for influencing this population..

• A theory and a set of business practices, referred to as IMC, allow for consistent messaging across channels and provide a cohesive brand experience for customers.
• This fundamental marketing idea is applicable to all forms of communication used by businesses, not only advertising.

Important Points

Vertical integration:

• Vertical integration is a tactic that enables a business to streamline operations by directly controlling different stages of the production process instead of depending on outside suppliers or contractors.
• Vertical integrations can help boost profit and allow companies more immediate access to consumers.
• Companies that choose to integrate vertically do so to strengthen their supply chains, reduce their production costs, capture upstream or downstream profits, or access new distribution channels. Pricing is not included in this.

Hence, Pricing is not coordinated in the Vertical Integration of Integrated Marketing Communications.

• Marketing tactic are a group or collection of calculated steps or strategies used to advertise the products or services of a company.
• The goal is to maintain a competitive good or service while increasing sales.
• Marketing tactics use a variety of approaches to promote their products, including delivering or launching promotional merchandise, sending emails, and interacting with customers on social media sites.

Important Points

Service: 

• Any assistance provided by a business to its customers after they have made a purchase is known as after-sales service or support.
• The customer will not only purchase your product, but they will also have high standards for the service they receive.

Brand: 

• Consumers are more likely to purchase products from companies who share their beliefs and values.
• Companies that support causes or give back to the community can connect with their audience and make consumers feel good about purchasing from them.

Incentives: 

• Customer incentives are gifts given to customers in exchange for actions that promote the brand.
• The most effective customer incentive programmes involve effective brand-building initiatives that raise customer values.

Communication is not a marketing tactic used for designing customer value.

• Michael Porter first proposed Porter's Generic Strategy in 1980.
• Porter suggested that each corporation or organization should only focus on one of these tactics in order to avoid squandering resources in a fruitless effort to expand operations quickly.

Important Points Porter's Generic Strategy consists of the

1. Cost Leadership Strategy
2. Differentiation Strategy
3. Focus Strategy

which are its three fundamental strategies.

Additional Information1. Cost Leadership Strategy - 

• The initial Porter's Generic strategy focuses on the business's pricing aspect.
• Customers who care about costs are the strategy's target audience.
• With this strategy, the business offers a product of comparable quality at a lower cost than its rivals.

2.Differentiation Strategy -

• The following tactic tries to highlight how company goods differ from those of their rivals.
• There are clients who are concerned about pricing, but there are also some who don't care as long as they receive high-quality goods.
• The Differentiation strategy enters the picture here. company offer the top qualities their product has to offer.
• If company have a feature that the competing products lack, this generic technique will work considerably better for business.

3. Focus Strategy -

• Companies can concentrate more on offering specific items that respond to the unique needs of a consumer segment by using the Focus strategy.
• Because it attempts to offer distinctive and exclusive goods and services, it is extremely relevant to smaller enterprises with less competition.

Hence, Market Penetration is not a generic strategy as per the generic strategies identified by Porter.

Important Points

• An influential argument is made by Gerard Tellis, a well-known authority on innovation, advertising, and international markets, that a company's culture is the primary factor in determining how innovative a company is.
• He outlines the three characteristics and three activities required to foster an environment of constant invention in this ground-breaking work.

Important Points

• Certain common law and equitable duties of directors that have developed through time appear to have been codified in Section 166.
• In conclusion, the following are the general responsibilities of directors [assigned to the board of directors] under the 2013 Act -

1. To behave within one's authority and in compliance with the company's bylaws.
2. To act in good faith in order to advance the company's goals for the advantage of all of its members.
3. To use good faith, reasonable care, independent judgement, skill, and diligence.
4. To prevent interest conflicts.
5. To prevent unfair advantage or gain for himself, his loved ones, partners, or colleagues.

Thus, Duty to attend Board Meetings is not general duty of director.

Unemployment - When someone is actively looking for work and is considered to be employable, they are said to be unemployed. People in the workforce who are employed but do not have suitable jobs are included in this group.

Important PointsOkun's law - 

• The relationship between two important macroeconomic variables, unemployment and production, is the subject of Okun's law, which is named after economist Arthur Okun.
• Okun's Law states that there is a causal link between unemployment and output losses in a nation.
• According to the statement, "for every 1% decrease in unemployment in an economy, the GDP will increase by 2% and the Gross National Product (GNP) will increase by 3%."
• It implies that the relationship between unemployment and GDP and GNP is inverse.

Additional InformationPhillips curve - 

• The Phillips curve shows that unemployment and inflation have an inverse connection in the short run, but not in the long run.
• When unemployment is at its natural rate, the long-run Phillips curve is vertical. If the natural rate of unemployment changes, the long-run Phillips curve will shift.

Misery index - 

• The misery index is a measurement of the financial anguish experienced by average people as a result of the possibility of (or actuality of) losing their jobs and rising living expenses.
• The unemployment and inflation outlook of a nation are totaled by the misery index, a single statistical measure.
  Arthur Okun created the misery index.

Pareto distribution - 

• Vilfredo Pareto, an Italian economist and sociologist, is the name of the Pareto Distribution.
• The 80-20 Rule and the Pareto Principle are two more names for it. In society, the Pareto Distribution is used to describe geophysical, scientific, and social events.
• The disparities in the wealth distribution in his native Italy were captured by Pareto in a mathematical formula.

• Income from sources that are primarily based on agricultural operations is referred to as agricultural income.
• Farming land, structures on or associated with agricultural property, as well as commercial produce from a horticulture land, are some of these sources of revenue.

Important PointsFor things like tea, coffee, rubber, etc., the Income Tax has established regulations to create this division between agricultural and non-agricultural produce are as follows -

Additional Information

• The section 33AB deduction can be claimed by an assesses who engages in the production of tea, coffee, or rubber in India.
• In order to claim the deduction, the assesses must deposit the money in one of the two specified accounts listed below-

1. either deposit money in a "Special account" kept with a national bank or
2. put money in a "Deposit account."

The correct answer is C and E only.

Key PointsCurrency Depreciation

• In a floating rate system, the exchange value of a nation's currency in relation to other currencies is referred to as currency depreciation.
• Based on trade imports and exports for a certain nation, the depreciation rate of a currency is calculated.
• Demand for imported goods drives up imports, which boosts foreign currency investment and weakens home currencies.

Important PointsCauses of Currency Depreciation

1. A fall in the world price of a country's major export. This leads to a decline in export revenues and a fall in overseas demand for the exporting nation's currency
2. There is a surge in the value of imports causing a deficit on the current account of the balance of payments which then leads to a net outflow of currency, causing exchange rate weakness.
3. A country's central bank reduces interest rates, leading to a net outflow of hot money(Portfolio outflow) - this is short term financial capital that searches for the best risk-adjusted rate of return
4. Depreciation might be caused by intervention from the Central Bank e.g. it goes into the market to sell their own currency and buy gold and foreign currencies.
5. The basic trend analysis of the variables show that; for countries that suffers from high original sin, a depreciation in currency is accompanied by rising external indebtedness and/or high debt servicing costs.

Hence, it can be concluded that currency depreciation in the Indian Rupee in recent times has largely been attributed to only option C and E only.

The correct answer is B, C and D only.

Key PointsGlobalization

• The process of globalisation is how concepts, information, expertise, goods, and services go across national and international borders.
• The phrase is used in the business world to refer to linked economies characterised by free trade, the free movement of capital across nations, and simple access to foreign resources, especially labour markets, in order to maximise profits and benefit for the general welfare.

Important PointsBarriers to Globalization

• Nationalism: Globalization threatens national identity because it makes it more difficult for any one national identity to maintain its distinctive significance and set itself apart from other national identities. In a wired world, the government no longer has the only ability to exert cultural control over its residents and territory, which makes it difficult to create and sustain an unified national identity as individuals become global consumers of goods and information. Globalization has an impact on nationalism not just in terms of culture and identity, but also in terms of politics and the economics.
• Emerging Trade Barriers: The most commonly used barriers to globalization are called trade barriers. Tariffs are a kind of tax imposed on imported goods(and sometimes exported goods) by the importing country. The reasons a country impose taxes if to protect a domestic sector of the economy from foreign competition and to create revenue for the government
• Regulatory Controls: Global trade will not be viable if there are additional regulatory restrictions in the nation.

Hence, it can be concluded that factors restraining globalization are only B, C and D.

The correct answer is B and D only.

Key PointsStock Split

• When a business decides to raise its share count by dividing its existing shares into new shares, this is known as a stock split.
• Stock splits don't offer the corporation any financial benefits. They merely lower the stock's price to make it more accessible.
• Stock splits are frequently favourable developments for shareholders since they draw fresh capital and eventually boost share prices.

Important PointsPurposes of Stock Split

• Attracting investors: As was already noted, a company split frequently draws investors since the stock price is lower and the entry barrier to investment is lower.
• Reduce Market Price: Stock splits don't offer the corporation any financial benefits. They merely lower the stock's price to make it more accessible.
• Making Market Activity Easier: Since the shares are now more affordable, trade frequently increases after a stock split. Additionally, this may result in general improvements in share price.
• Enhancing Liquidity: Splitting a stock expands the number of shares that are accessible. As a result, the bid-ask spread narrows and investors find it simpler to acquire and sell shares.

Hence, it can be concluded that B and D only options are correct.

Confusion Points

• A stock split is mainly done to increase the liquidity and lower the market price. This automatically results in increase in number of shares outstanding.
• To increase the number of shares outstanding is not the ultimate aim of stock split. 

The correct answer is A and B only.

Key PointsContribution

• The contribution margin is the percentage of a product's sales revenue that isn't consumed by variable costs and goes towards paying the firm's fixed expenses.
• One of the main components of break-even analysis is the idea of contribution margin.
• Labor-intensive businesses with few fixed expenses tend to have low contribution margins, whereas capital-intensive, industrial businesses have more fixed costs and, thus, higher contribution margins.
• The difference between a product's sale price and the variable costs related to its manufacture and sale is calculated as the contribution margin, i.e., Contribution = Sales - Variable Cost

 Important PointsEnhancing these three inputs will simply increase your contribution margin. You must combine the following actions in order to raise your contribution margin:

• Lowering the cost of your items sold
• Raising the unit selling price
• Changing the mix of sales and selling more profitable goods with a higher P/V ratio
• Lowering labour costs
• Adjusting your pricing to achieve the highest profit the market will tolerate.
• The contribution margin (and gross profit) will rise in line with an improvement in these inputs.

Hence, it can be concluded that contribution margin can be increased by option D and E only.

The correct answer is A, C, D and E only.

Key PointsPublic issue of shares

• A public issue occurs when a public limited business raises money by selling brand-new shares to the general public.
• The business may be publicly traded or privately held.
• Unlisted companies are publicly traded businesses that are neither listed on a stock exchange nor have their shares traded there, as opposed to listed businesses that are both listed on the exchange and have their shares traded among investors.

Important PointsInformation to be disclosed before making public issue irrespective of their share price are:

1. Earning per share: EPS indicates how much money a company makes for each share of its stock and is a widely used metric for estimating corporate value. A higher EPS indicates greater value because investors will pay more for a company's shares if they think the company has higher profits relative to its share price.
2. Pre-issue P/E ratio: A company's share price and earnings per share are compared using the price-to-earnings (P/E) ratio.A high P/E ratio may indicate that a company's stock is overpriced or that investors anticipate rapid future growth rates. Because there is nothing to put in the denominator, businesses with no earnings or losses do not have a P/E ratio.
3. Average return on net worth in last 3 years: Before making any public issue, a company is required to show its average return on net worth in last 3 years .
4. Net asset value per share based on last balance sheet: The net asset value performs similar functions as the stock price, as it represents the worth of one share of a mutual fund or an ETF. The NAVPS can be used to compare the performance of a mutual fund against the market or industry benchmarks.

Hence, it can be concluded that only A, C, D and E option is correct.

The correct answer is A and B only.

Key PointsPerfect Competition Market

• A market condition when there are many buyers and sellers engaging in similar goods is referred to as perfect competition.
• A further benefit of perfect competition is the absence of any governmental, societal, or technological hurdles to an organization's entry or leave.
• A firm is a price taker in perfect competition market. The price is determined by demand and supply.
• In a market where there is perfect competition, both buyers and sellers are completely informed of the going rate for a given good. As a result, none of them buy or sell at a greater price. As a result, with perfect competition, the same price rules the market.

Important PointsPrice and Output Determination under Perfect Competition Market (In Short-run)

• The industry is said to be in short-term equilibrium when the sum production is stable and shows no signs of increasing or decreasing output.
• As a result, the company is in equilibrium when the industry as a whole is in equilibrium.
• It indicates that when all businesses make the same amount of money, the short-term commercial equilibrium is complete. SMC=MR=AR=SAC is a must for this to happen.
• Because certain businesses may make profits or losses that are above average in the near term, the market's equilibrium is an unanticipated and unplanned occurrence.

​
Price and Output determination under Perfect Competition Market (Long-Run)

• The long-run price and output determination under perfect competition, OP determines the price by the intersection of the Supply curve, S, and Demand curve D.
• At this rate, the equilibrium for the firm is in calculation through the consumption of LMR = LMC.
• This means that OM is the output at the firm’s equilibrium over the long term. There is a complete equilibrium position.
• Price=LAR=LMR=LAC=LMC. In this way, the firm has normal earnings.
• Long-run equilibrium, Price LAR=LAC=LMR=LMC.

• In the short run, the cost and production theory define the relationship between input and output.
• A company can increase its output by changing variable factors while keeping fixed variables constant.
• According to the cost of production theory of value, short-term costs have short-term consequences, resulting in a limited output range.

Important Points

A. Economic rent is the same as economic profit - False.

• Economic rent is the payment made to a factor of production that is in excess of the minimum amount necessary to keep that factor in its current use.
• Economic profit, on the other hand, is the difference between total revenue and total cost, including both explicit and implicit costs.

B. Imputed cost is the rent of a hired building - False.

• Imputed costs are not actual expenses incurred by the firm, but rather the opportunity cost of using resources that the firm owns.
• Rent is a cost that a firm incurs when it hires a building, but it is not an imputed cost.

C. When AC = MC, AC is minimum - True.

•  When MC is equal to AC, i.e. when MC and AC curves intersect each other at point A, AC is constant and at its minimum point.

D. When MC is rising, AC > MC - False.

• When marginal cost (MC) is rising, it may cross the average cost (AC) curve at some point, but this does not mean that AC is greater than MC.
• In fact, if MC is rising and is above AC, then AC will also be rising.

E. Output is optimum when AC = MC - True.

• Output is optimized when marginal cost (MC) equals average cost (AC), which means that the firm is producing at the minimum possible cost per unit.

Mistake Points

• The answer to this question has been marked according to the official Answer key by UGC.
• The Statement A is also false as economic rent and economic profit is not same.
• However, due to the lack of option, the most relevant answer has been marked as correct.

The correct answer is B, C and E only.

Key PointsMonopoly Market

• Monopoly is a term used to describe a market structure in which the entire market is controlled by a single producer or seller.
• This one seller sells in goods that cannot be easily replaced and directly controls supply, demand, and prices.
• As a result, under a monopoly, one organisation effectively controls the whole industry.

Important PointsThe two requirements for determining price and output under monopoly and achieving the equilibrium of a monopoly market, which serve as the foundation for price-output decision-making, are as follows:

• MC=MR
• The MC curve needs to intersect the MR curve below.

The analysis for determining pricing and output under monopoly and profit of monopoly enterprises is dependent on the following propositions:

• To create a homogeneous product, there is just one producer or seller.
• The product cannot be substituted.
• Each input's price is set by the buyer since there is unbridled market competition. This is how monopolists naturally want to reduce costs to a minimum while maximising revenues.
• The demand side has a large number of consumers. Nobody has the power to influence the item's pricing through their activities. Consequently, the price the product declares to the customer
•  In a monopoly, all consumers are treated equally; the monopolist must charge the same price for all of his goods and incurs the same expenditures.
• The price of a monopoly is unlimited, and monopoly power is unrestricted.
•  There is no risk of competition from competing companies.

In the short run, when profits are highest and losses are at their lowest, the monopoly-owned company achieves price and output determination under monopoly and equilibrium. 

Conclusions:

1. During short run when a monopoly firm earns normal profit, it produces less than its optimum capacity.
2. The monopoly firm may choose its price and output, but it is restricted to a combination of price and output that lies on the demand curve.
3. The slope of monopoly's MR curve is twice the slope of its AR curve.
4. Equilibrium price of a monopolist is always higher than that of a perfectly competitive firm.

Hence, it can be concluded that B, C and E statements are true.

Additional Information

​Price Discrimination: The price-elasticity of the product should be different in different sub-markets. The monopolist fixes a high price for his product for those buyers whose price elasticity of demand for the product is less than one. This implies that, when the monopolist charges a higher price from them, they do not significantly reduce their purchases in response to high price.

The correct answer is A, C and E only.

Key PointsMcKinsey 7-S Framework

• Business executives can use the McKinsey 7-S Framework as a tool to evaluate and enhance the productivity, effectiveness, and long-term performance of their organisation.
• This paradigm focuses on building and sustaining seven important internal organisational variables that each improve an organization's capabilities and state of health.
• The framework also aids leaders in comprehending how seemingly unconnected elements of an organisation can interact and affect the general health of a business.

 Important PointsComponents of Mc Kinsey's 7-S framework

Hard Elements

• Strategy: The plan an organisation creates to succeed in its industry or market is referred to as its strategy. It defines the precise actions the company must take to stay competitive.
• Structure: A company's organisational hierarchy is determined by its structure. This guides how each department runs, what jobs employees carry out, and how managers oversee their teams.
• Systems: The daily practises and workflows that employees use make up an organization's systems. These systems may be referred to as standard operating procedures by some employers.

Soft Elements 

• Shared values: The social conventions, precepts, and standards that govern how team members and management interact with one another make up an organization's shared values. They specify what conduct is appropriate and have a significant impact on organisational culture.
• Skills: All of the team members' abilities and talents fall under the category of skills. These abilities aid in determining if the business can meet its goals.
• Style: How a team's leaders communicate with one another is determined by the organization's management style. It influences employee performance and sets an example for the corporate culture.
• Staff: All individuals who work for an organisation or sit on its board are considered to be part of its staff. The number of employees at a company, their motivations, and their aptitude for performing their work successfully are a few of the staff traits the framework looks at.

Hence, it can be concluded that A, C and E only are the components of McKinsey 7-S Framework.

The correct answer is A, B, D and E only.

Key PointsMM hypothesis of Dividend theory

• The Miller and Modigliani Hypothesis, often known as the MM Approach, contends that the firm's investment philosophy, not its dividend policy, determines how much its shares are worth.
• As long as the returns exceed the equity capitalization rate "Ke," the investors are happy with the firm's retained earnings.
• What is a rate of equity capitalization? the rate at which profits, dividends, or cash flows are transformed into stock or the company's worth.
• The shareholders would prefer to get the profits in the form of dividends if the returns fall below "Ke".
• Miller and Modigliani have provided evidence to support their claim that dividend payments have no impact on a company's share price.

 Important PointsCritical Assumptions of MM hypothesis of Dividend Theory

1. A perfect capital market exists, if investors are rational and have unrestricted access to all available information. No investor is significant enough to affect the market price, there are no flotation or transaction fees, and the shares are infinitely divisible.
2. Taxes don't exist. Capital gains and dividends are both taxed at a same rate.
3. It is assumed that a business maintains a consistent investing policy. This suggests that the position of business risk and the rate of return on investments in new projects remain unchanged.
4. Since there is no risk involved, there is no uncertainty regarding the future profits; all investors are confident in their future investments, dividend payments, and business earnings.

Hence, it can be concluded that "All financing is done through retained earnings" is not the critical assumption of MM hypothesis of the irrelevance of dividends.

Important PointsThe properties of Binomial distribution are follows -

• There are just two clear outcomes: true or false, success or failure, and yes or no.
• In a certain experiment, there are a fixed number of trials that are repeated 'n' times.
• For each attempt or trial, the chance of success or failure is constant.
• Out of 'n' independent trials, only the successful efforts are calculated.
• The conclusion of one trial has no bearing on the conclusion of another since each trial stands alone as an independent trial.
• Given a success probability of "p" for each trial in the experiment, the binomial distribution represents the likelihood for "x" successes of an experiment in "n" trials.
• Both symmetrical and skewed binomial distributions are possible. No matter how big or little n is, the binomial distribution will always be symmetrical when p = 0.5.
• However, the distribution will be skewed if p 0.5. The binomial distribution utilized here has two parameters, n and p.

Thus, A and D only are the properties of Binomial distribution. 

The access, usage, and quality broad categories, each with a distinct weight, make up the FI-Index, according to the RBI.

Each parameter's weight is as follows -

• 30% for access
• 45% for usage
• 20% for quality

Important Points

• All 97 indicators of the Index' responsiveness to service quality, service availability, and service accessibility.
• A distinctive part of the Index is the Quality parameter, which measures the quality aspect of financial inclusion as demonstrated by consumer protection, financial literacy, and inequities and shortcomings in services.
• The FI-Index was created without using a "base year," and as a result, it accurately captures all stakeholders' cumulative efforts throughout time to promote financial inclusion.

Thus, 'B, C and E only' is correct.

Additional InformationThe objective of FII are as follows - 

• To measure the level of financial inclusion in the entire nation.
• The FI-Index, which consists of 97 indications, is responsive to service accessibility, usability, and quality.
• The FI-Index was created without using a "base year," and as a result, it accurately captures all stakeholders' cumulative efforts throughout time to promote financial inclusion.

1. Productivity measures how much work is performed.
2. Effectiveness is determined by the effort put forth in the work.

Important PointsForces are to push up the productivity of employees in an organization are as follows-

• ​Egoistic drive to accomplish: An individual's desire to achieve personal goals and accomplish tasks can motivate them to be more productive in their work.
• Desire for promotion: The desire to advance in one's career can be a powerful motivator for employees to work harder and be more productive in order to demonstrate their value to the organization and increase their chances of being promoted.
• Motive towards doing work: When employees are motivated by a genuine interest in their work and a desire to do it well, they are likely to be more productive and efficient.

Additional Information

•  Difficulty of work: While challenging work can be motivating for some employees, it can also be demotivating for others, especially if it is perceived as overwhelming or impossible. Therefore, the difficulty of work may not always push up productivity.
• While fear of losing one's job can be a powerful motivator for employees, it is not always the case that this fear will lead to increased productivity. In some cases, this fear can actually have the opposite effect and decrease productivity.

Here are some reasons why fear of working oneself out of a job may not push up productivity:

1. Anxiety and stress: Fear of losing one's job can create anxiety and stress in employees, which can lead to decreased productivity and lower job satisfaction.
2. Poor decision-making: Employees who are afraid of losing their jobs may make decisions that prioritize short-term gains over long-term success. This can lead to suboptimal decision-making and decreased productivity.
3. Lack of creativity and innovation: Fear can stifle creativity and innovation, as employees may be less likely to take risks or suggest new ideas if they believe their job is on the line.
4. Negative impact on teamwork and collaboration: Fear can also damage relationships between coworkers and decrease collaboration and teamwork, as employees may be more concerned with protecting their own job than working together to achieve shared goals.

Contingency Approach of management -

• The situational method, often known as the contingency approach to management, maintains that there is no one, universal guideline for the ideal way to run an organization.
• The "best" strategy will depend on the internal and external requirements of each company.

Important Points

The factors governing the Span of Management are as follows -

1.​Type of work to be managed -

• ​The type of work a manager does has the greatest impact on their level of control and management abilities.
• It is simple for a manager or superior to oversee all employees at once if all of the subordinates are performing the same task at the same time.

2.Geographical location - Managers will struggle to control their subordinates if the team is dispersed throughout a large geographic area. This will also result in a limited management span.

3.Skills of Managers - A skilled manager may oversee more employees, giving them a wider area of responsibility.

4.Task Assignment - The personnel will be experienced and need less monitoring and control if the duties are repeated and similar. Hence, the control's range will be wider.

5.Skills of Workers - Skilled employees will require less monitoring, making management simpler. Hence, managers will have a wider range of control.

Important Points

The Index takes into account all 97 factors and responds to accessibility, service availability and utilization, and service quality.

The Quality component, which measures the quality element of financial inclusion as demonstrated by

1. Financial literacy,
2. Consumer protection,
3. Inequities, and
4. Service shortcomings,

is a distinctive characteristic of the Index.

• The FI-Index was created without the use of a "base year," and as a result, it represents all stakeholders' cumulative efforts over time to promote financial inclusion.
• As opposed to 43.4 for the period ending March 2017, the annual FI-Index for the period ending March 2021 is 53.9. The FI-Index will be released every year in July.

Additional Information

1. The access, usage, and quality broad categories, each with a distinct weight, make up the FI-Index, according to the RBI.
2. Each parameter's weight is as follows -

• 30% for access
• 45% for usage
• 20% for quality

Key PointsPoint estimator - 

• The point estimator approach is a statistical method for estimating the value of a population's unobserved parameter.
• a method for estimating a population parameter's value from samples of the general population at random.

Important PointsProperties of a good point estimator are as follows -

1. Unbiasedness:

• The difference between a point estimator's expected value and the value of the parameter being estimated is known as bias.
• The estimator is regarded as impartial when the estimated value of the parameter and the parameter being estimated are equal.

2.Consistency:

• It claims that when population size grows, the estimator maintains a close relationship to the parameter's value.
• Thus, a high sample size is needed to keep the consistency level constant.
• Researchers say that the estimation is consistent when the expected value approaches the value of the parameter.

3.Efficiency:

• The point estimator that has the lowest variance among all unbiased and reliable estimators is the most effective one.
• The smallest variance should vary the least from one sample to the next because it represents the degree of dispersion from the estimate.

Hence, it can be concluded that Efficiency, Consistency and Unbiasedness are included in properties of a good point estimator.

Important PointsThe basic Elements of Business are as follows -

1. Production - In order to manufacture desired and useful items, business primarily modifies the number of natural resources. In this way, business is essential to the health of the economy.
2. Distribution - Taking the created commodities to the market and directing them towards consumers is the major activity of company because consumers are the target market for manufacturing things and providing services.
3. Profit - A firm's primary goal is to make a profit. To do this, business owners devote their time, talent, and money while also accepting some risk while starting or running a business.
4. Consumer Satisfaction - In business, businessmen try to meet the demands and preferences of their clients or customers by offering affordable prices, superior goods, and prompt services.
5. Functions: Since it involves the creation and distribution of commodities and services to satisfy human needs, business is fundamentally an economic activity.

Important Points The basic factors divided in psychographic segmentation are as follows -

1. Personality - Individuals frequently base their purchases on their personalities. Personality encompasses a wide range of traits, such as openness and responsibility as well as extrovert or introvert tendencies.
2. Attitudes - A buyer's attitudes will be influenced by their cultural background, family of origin, and other variables.
3. Lifestyle - Marketers look for customer input to better understand the issues consumers face on a daily basis.
4. Social status and values - people's choices of what to eat, wear, and even who to socialize with primarily reflect the social class to which they belong, whether consciously or unconsciously.
5. Activities, Interests, and Opinions (AIO) -

• Learning about the target audience's interests, hobbies, and opinions will help to understand their tastes and what attracts to them.
• While creating the buyer personas for business product or service, this information is useful to have.

Important Points

Issues covered in Social Marketing are as follows- 

• Contraceptive products are made available and affordable through private-sector outlets thanks to social marketing in family planning initiatives.
• Public health promotion is social marketing's main goal, and it aims to improve everyone's health. Thus, prevention is the main focus of its strategy.
• The social good is a topic covered by social marketing, which focuses on facilitating beneficial changes in local, national, and global societies.
• According to conventional utilitarian ethics, it is often believed that the major objective of marketing, including social marketing, is to improve businesses' financial wellbeing.
• Social workers conduct anti-tobacco campaigns in various rural parts of India in an effort to persuade residents to stop using tobacco. The most direct route to the general public is through social media marketing.

Hence, All the issues are covered in Social Marketing.

Important PointsThe Basic Features of LLPs are as follows -

• Separate legal entity - In contrast to conventional partnership firms, limited liability partnerships are treated as distinct legal entities. LLPs are able to hold assets and take on debt under their names.
• Limited Responsibility of the Parties - With an LLP, the partners' liabilities are restrained and distinct. If the LLP is facing or winding up due to legal repercussions from debt or repayments, their personal assets are not subject to the attachment.
• Profit Sharing – As partners in traditional corporations, all Limited Liability Partnership partners would split business profits equally. The profit ratios, however, are left up to each individual discretion.
• Limited Liability Partnership (LLP) Partners – LLPs should always have at least two partners. Also, there is no limit on how many partners can participate, in contrast to the normal partnership firms where the maximum number of partners is 50.
• The Number of designated Partners in LLP - The minimum number of partners for an LLP is two, and each LLP must also have a minimum of two Designated Partners, one of whom must be an Indian citizen.
• Designated members in a limited liability partnership (LLP) have certain additional rights and duties that are not shared by other members such as the power to appoint and remove other members, and the authority to make decisions on behalf of the LLP.

 Thus, Option 2 "A and B only" is correct answer.

The correct answer is A, B, C and E only.

Key PointsRTI Act, 2005

• The Indian Parliament passed the Right to Information (RTI) Act 2005, which lays out the guidelines and processes for citizens' access to information.
• The previous Freedom of Information Act of 2002 was replaced by it. Any Indian citizen may request information from a "public authority" (a body of government or "instrumentality of state") under the terms of the RTI Act, and the "public authority" is required to respond promptly or within thirty days.
• Information must be delivered within 48 hours if it pertains to the petitioner's life or freedom.
• The Act also mandates that all public authorities computerise their records for widespread distribution and proactively disseminate specific types of information, reducing the need for citizens to file formal requests for information.

 Important PointsWho can ask for information under RTI Act, 2005.

• These laws permit requests for information from any citizen.
• The Jammu and Kashmir State is included in the scope of the Act's application to all of India.
• Holders of PIO (Persons of Indian Origin) and OCI (Overseas Citizens of India) cards may also request information under the RTI Act.
• Citizens, OCIs, and PIOs who reside outside of India may submit an RTI application to the PIO of the Indian Embassy, Consulate, or High Commission in that country, who will provide information on the application fee in local currency and the preferred method of payment.

Hence, it can be concluded that under RTI Act, 2005 only citizen of India have right to get information, hence the correct answer is A, B, C and E only.

The correct answer is A, B, D and E only.

Key Points

• A salary is a type of fixed pay given to a person for performing labour during a specific term, as defined by section 17 (1) of the Income Tax Act.
• However, the term "salary" in the context of income tax also refers to a variety of additional payments made to employees by their employers.

 Important PointsAccording to Section 17 (1) of Income Tax Act, 1961, Salary include:

1. Wages: Wages are the contractual payments made by the employer to the employees in exchange for services done. Generally speaking, the employee may receive it as basic compensation, salary, remuneration, etc. Payments may be made for paid time off, actual work performed, or actual sums received or owed during the pertinent prior year.
2. Annuity or Pension: At reaching retirement age, an employee may receive an annuity or a pension from their current or former company. It can be a payment made from the pension plans the company established.
3. A current employer's annuity is taxed as "salary."
4. A former employer's annuity is taxed as "Profits in lieu of Wages."
5. Profits in lieu of Salary or Wages:  These payments include compensation for termination of work or compensation for changes to job terms.
6. Payment from an unrecognised provident fund or unrecognised superannuation fund that is owed or paid, up to the amount of the employer's contribution and interest on that contribution.
7. payments made under the keyman insurance policy and the bonus money assigned to that policy.
8. Profits in lieu of salary also refers to any money obtained from a person prior to employment or following termination.
9. Gratuity is a one-time payment made voluntarily by the employer to the employee as a sign of gratitude for the services provided to the company. The Payment of Gratuity Act of 1972 makes the idea of a gratuity legally recognised.
10. Fees - The notion of salary includes whatever money an employee receives from their employer as payment for services provided.
11. Commissions: Any commission payments made to the employee in exchange for services rendered must be included in the remuneration. It is considered salary if the employee receives a fixed commission that is calculated as a proportion of sales or profits.
12. Advance salary payments are those that are made in a fiscal year before the year in which they are really due. An advance salary is not what the company receives from a loan.
13. Leave Encashments: Paying employees for accrued vacation time is a practise that some public firms and the government support. Payments may be made at any time—during employment, after retirement, or upon resignation. The amount paid to redeem any unused leaves throughout the service period will be included in the employee's paycheck.
14. Employee Provident Fund: Contributions from the employer that are greater than 12 percent of pay or annual interest that is greater than the rate announced by the Central Government (EPF interest rate for FY 2021–22 is 8.1%).
15. Transfer PF balance: Transferring a balance from an unrecognised to a recognised provident fund will result in a salary deduction for the taxable portion of that balance.
16. National Pension System (NPS): Any contributions paid to an employee's NPS account during a fiscal year by the Central Government or any other employer will be included in the employee's pay.

Hence, it can be concluded that the correct answer is A, B, D and E only.

The correct answer is A, B, D and E only.H

Key Points

• The Income Tax (IT) Act permits HRA exemptions.
• A salaried person may claim tax benefits with regard to the house rent allowance from their employer, subject to meeting specific requirements, according to Section 10(13A) of the Act.

 Important PointsHRA tax exemption basically depends on four components:

1. Salary (Basic salary + DA)
2. HRA component of the salary
3. Rent paid and
4. Location of your rental accommodation/Place of Residence

The exemption for HRA benefit is the minimum of:

• The total amount of HRA received
• 50 percent of salary (Basic salary + Dearness Allowance) if living in metro cities or 40 percent for non-metro cities
• Excess of rent paid annually over 10% of annual salary (Basic salary + DA)

Hence, it can be concluded that the correct answer is A, B, D and E only.

The correct answer is A - III, B - II, C - 1,D - IV.

Key Points

 Important Points

1. Tariffication: Tariffication is an endeavour to turn all current non-tariff trade barriers (NTBs) into binding tariffs and gradually lower these tariffs. A bound tariff is one that has an upper limit that it cannot be raised over.
2. Prohibited Subsidies: The Subsidies Agreement forbids a government of a WTO member from providing a subsidy if it is legally or practically dependent on export performance or the usage of domestic as opposed to imported goods. Common names for these forbidden subsidies are export subsidies and import substitution subsidies, respectively. The Subsidies Agreement and US law both consider them to be specific and particularly detrimental. According to the WTO Agreement on Agriculture, agricultural subsidies are subject to special requirements.
3. Actionable Subsidies: The Agreement states that a government subsidy is "actionable" if it "injures" another country's domestic business or if it "causes severe prejudice" to the interests of another country (again, specific exclusions are allowed for agricultural subsidies).
4. Non-Actionable Subsidy: A subsidy for which a member state is not allowed to impose countervailing duties by the World Trade Organization. Most of the time, if an exporting country has subsidised it such that it is much less expensive than domestically produced goods, a country may impose a countervailing duty (which is a form of tariff) on the import. These tariffs, however, do not apply to nonactionable subsidies. For instance, subsidies for science and the environment cannot be implemented.

Hence, it can be concluded that the correct answer is A - III, B - II, C - 1,D - IV.

The correct answer is A - II, B - IV, C - I, D - III.

Key Points

Important Points

1. Marginal Costing: In economics and managerial accounting, the term "marginal costing" describes an increase or decrease in the total cost of production as a result of a change in the desired output's quantity. It varies depending on whether or not the resources needed to make or deliver extra units of a good or service are included.
2. ABC Costing: Assigning indirect and overhead expenses to each of your products or services using the activity-based costing method will help you understand their true costs.
3. Target Costing: In order to generate the desired profitability at the product's anticipated selling price over a specific time in the future, target costing is defined as "a disciplined process for determining and achieving a full-stream cost at which a proposed product with specified functionality, performance, and quality must be produced."
4. Process Costing: A cost accounting technique known as "process costing" involves allocating production expenses to processes and averaging them over all the units produced. In order to accomplish this, process accounts are set up in the books of accounts for each process, and any associated expenses for the period are charged to the appropriate process account.

Hence, it can be concluded that the correct answer is A - II, B - IV, C - I, D - III.

The correct answer is A - III, B - IV, C - I, D - II.

Key Points

Important PointsSales Revenue Maximisation Model:

• An alternate approach to profit maximisation is the model of sales maximisation. American economist Prof. Boumol created this model.
• The importance of this alternate objective has increased in light of the expansion of oligopolistic enterprises.
• The primary goal of a business is to maximise sales, not profits, according to Baumol's sales revenue maximisation model.
• It states that the company's objective is to maximise sales revenue while maintaining a minimum level of profit.
• The expectations of the share holders set the minimal profit restriction. This is due to the fact that no corporation may offend its shareholders.

Maximization of Firm's growth rate:

• The Economic Theory of "Managerial" Capitalism by Robin Marris, published in 1964, presents a dynamic, balanced model of the corporation that maximises growth.
• He focuses on the idea that shareholders, who act as the owners and make management decisions for the businesses, manage the majority of today's large corporations.

Long-term survival:

• K.W. Rothschild advised that the company pursue long-term survival as a different goal or mission.
• The company wants to increase the likelihood that it will survive into the future in order to achieve this purpose.
• The company wants to be around the longest.

Satisfying Behaviour:

• In comparison to Simon's hypothesis, the model created by Cyert and March is more advanced.
• In addition to coping with incomplete information and uncertainty, it was emphasised that firms also had to appease a range of stakeholders that had various and competing objectives.
• According to this idea, a firm is a coalition of organisations with several goals and multiple decisions.
• A firm, according to Cyert and March, is an organised alliance of several stakeholders.
• These stakeholders would include the government, other social interest groups, shareholders, managers, workers, stockholders, supplies, customers, bankers, etc.

Hence, it can be concluded that the correct answer is A - III, B - IV, C - I, D - II.

The correct answer is A - III, B - IV, C - II, D - I.

Key Points

Important PointsStackelberg Model: 

• The Stackelberg model, a game theory model that explains how to maximise profits, was created by two economists, Oskar Morgenstern and John von Neumann.
• A game theory model that aids in understanding how we might maximise profits is the Stackelberg model. It is employed in management, marketing, and economics.
• The Stackelberg concept is based on a game that involves two players competing against one another.
• The first player has two options: make an uncertain investment or make no commitment at all. The second player can decide whether to take an instant risk with the possibility of bigger rewards or to wait for the first player to make an investment (a gamble).
• If firms are disproportionately powerful, it can enjoy first mover advantage, and captures two-thirds of market share, while follower firm gets only a third of the market share.

Nash equilibrium:

• A player can obtain the desired outcome by sticking to their initial strategy, according to the Nash equilibrium, a decision-making theorem in game theory.
• Each player's approach in the Nash equilibrium is the best one given what the other players have decided. Because everyone receives the result they want, everyone wins.
• A typical example from game theory that effectively illustrates the impact of the Nash equilibrium is the prisoner's dilemma.
• The Nash equilibrium is frequently addressed in conjunction with dominant strategy, which holds that an actor's chosen approach will produce superior results than any other feasible strategy, independent of the opponent's strategy.

Peter's Strategic Framework: 

• Peter's Strategic Framework is a comprehensive tool that helps organizations develop a clear understanding of their business environment and their own capabilities, and use that knowledge to develop effective strategic plans.
• Conceptualisation for identifying the structural determinants of the intensity of competition and the probability of firms in oligopolistic industries.

Prisoner's Dilemma: 

• The Prisoner's Dilemma is a game theory model that is often used to analyze the behavior of firms in an oligopolistic market.
• In the Prisoner's Dilemma, two firms are faced with a decision to either cooperate or compete with each other.
• If both firms cooperate, they both receive a moderate payoff. If one firm cooperates and the other competes, the competing firm receives a high payoff while the cooperating firm receives a low payoff.
• If both firms compete, they both receive a low payoff.
• A situation in oligopolistic market known as a "prisoner's dilemma" occurs when individuals always have an incentive to make decisions that have a negative impact on the group as a whole. There are numerous economic elements where the prisoner's dilemma arises.

Hence, it can be concluded that the correct answer is A - III, B - IV, C - II, D - I.