CA Foundation · Paper 4 · Business Economics

Chapter 4 · Unit 1 · Meaning and Types of Markets

MCQ Test Page · CA Foundation level · ICAI pattern · instant scoring and answer review

30 MCQs Foundation Level Past Exam Style

How to Use This Test

Select one option for each question.
Click Submit Test to see your score instantly.
Correct answers will be shown in green and wrong selections in red.
Explanations are shown below each question after submission.
Click Reset Test to attempt again.

Question 01

In economics, the term market refers mainly to:

a specific building where goods are sold a weekly fair in a village a set of conditions in which buyers and sellers interact for exchange only a wholesale mandi

In economics, market is not merely a place. It refers to the arrangement or set of conditions under which buyers and sellers come into contact for exchange.

Question 02

Which of the following is essential for the existence of a market?

a physical shop buyers and sellers in contact with each other government control in every case retailers only

A market exists when buyers and sellers are in contact and are able to enter into exchange relations.

Question 03

A market may exist even without:

a specific geographical place buyers sellers a commodity

Modern economics treats market as an arrangement, not necessarily a definite physical place.

Question 04

Classification of markets on the basis of area includes:

perfect and imperfect markets spot and future markets regulated and unregulated markets local, regional, national and international markets

On the basis of geographical area, markets are classified as local, regional, national and international.

Question 05

A market limited to a small locality is called:

local market national market international market future market

Local markets are confined to a limited area or locality.

Question 06

Which market covers the entire country?

local market regional market national market spot market

A national market extends over the whole country.

Question 07

A market in which goods are bought and sold across countries is called:

regional market local market national market international market

International markets involve exchange across national boundaries.

Question 08

Classification of markets on the basis of time includes:

regulated and unregulated markets very short period, short period, long period and very long period markets wholesale and retail markets perfect and monopoly markets

On the basis of time, markets are classified by the period allowed for adjustment in supply.

Question 09

In a very short period market:

supply cannot be increased all factors can be changed new firms can enter freely technology changes fully

In the market period or very short period, supply is fixed and cannot be increased.

Question 10

Perishable goods are commonly associated with:

very long period market long period market very short period market regulated market

Perishable goods like fish, vegetables and milk are classic examples used for market period analysis.

Question 11

In a short period market, producers can adjust:

plant size only all factors fully technology completely some variable factors

In the short period, some factors are variable while plant size generally remains fixed.

Question 12

In the long period market:

supply is perfectly fixed firms can change plant size and output no factor can be changed only demand changes matter

In the long period, all factors can be varied and firms can adjust scale.

Question 13

The very long period market is mainly associated with changes in:

technology, population and habits daily supply only current stock only wholesalers only

In the secular or very long period, factors like technology, population and tastes may change.

Question 14

Classification of markets on the basis of transaction includes:

local and national markets perfect and imperfect markets spot market and future market wholesale and retail markets

On the basis of nature of transactions, markets are classified into spot/cash and future/forward markets.

Question 15

In a spot market, delivery and payment take place:

at a future date immediately or on the spot after one year only after government approval only

Spot market means immediate contract, payment and delivery.

Question 16

A future market is one in which:

goods must be delivered immediately there are no contracts only consumers participate transactions are agreed now for delivery in future

Future market involves present agreement for future delivery and payment terms.

Question 17

Classification of markets on the basis of regulation includes:

regulated and unregulated markets local and international markets spot and future markets wholesale and retail markets

Markets can also be classified depending on whether they are officially regulated or not.

Question 18

A market supervised by rules and authorities is called:

future market unregulated market regulated market retail market

A regulated market works under prescribed rules and institutional supervision.

Question 19

Classification of markets on the basis of volume of business includes:

perfect and monopoly markets wholesale and retail markets short period and long period markets spot and future markets

On the basis of quantity or volume of business, markets are classified as wholesale and retail.

Question 20

A market where goods are sold in small quantities directly to final consumers is called:

wholesale market future market regulated market retail market

Retail market deals in small quantities and usually sells to final consumers.

Question 21

A market where goods are sold in bulk quantities is generally called:

wholesale market retail market spot market local market

Wholesale markets involve trade in bulk quantities.

Question 22

Classification of markets on the basis of competition includes:

local and regional markets spot and future markets perfect competition, monopoly, monopolistic competition and oligopoly regulated and unregulated markets only

A key ICAI classification is by market structure or degree of competition.

Question 23

A market with a large number of buyers and sellers dealing in a homogeneous product is:

monopoly perfect competition oligopoly monopsony

Perfect competition is characterised by many buyers, many sellers and homogeneous product.

Question 24

A market with a single seller is called:

perfect competition oligopoly monopolistic competition monopoly

Monopoly means one seller controlling the supply of a product with no close substitute in the standard textbook sense.

Question 25

Monopolistic competition is characterised by:

many sellers and product differentiation one seller only homogeneous product only absence of selling cost

Monopolistic competition has many sellers but products are differentiated.

Question 26

In oligopoly, the number of sellers is:

one very large few none

Oligopoly means a market dominated by a few sellers.

Question 27

Which of the following is not a classification of market on the basis of area?

local market regulated market regional market international market

Regulated market is a classification based on regulation, not geographical area.

Question 28

Which of the following pairs is correctly matched?

spot market - future delivery only retail market - sale in bulk only monopoly - many sellers perfect competition - many buyers and many sellers

Perfect competition is correctly identified by the presence of many buyers and sellers.

Question 29

Which market classification is most closely related to quantity traded?

wholesale and retail local and national spot and future perfect and monopoly

Wholesale and retail classification depends on the volume of business.

Question 30

Which statement is most accurate from the economist’s point of view?

market always means a physical place market exists only where wholesalers meet market means the whole set of conditions for buying and selling of a commodity market can exist without any commodity being exchanged

This is the standard economics meaning of market used in CA Foundation theory questions.

Test Result

Your performance summary will appear here.

Total

Attempted

Correct

Wrong

Unanswered