NTA UGC NET/JRF Exam, December 2022 (Commerce) Shift-II

Total Questions: 100

11. A situation, in which economic actors interacting with one another, each choose their best strategy, given the strategies that all the other actors have chosen, is called

Correct Answer: (a) Nash equilibrium
Solution:

• The nash equilibrium is a decision making theorem within game theory that states a player can achieve the desired outcome by not deviating from their initial strategy.
• In the nash equilibrium, each player's strategy is optimal when considering the decisions of other players. Even player wins because everyone gets the outcome that they desire.
• The prisoners dilemma is a common game theory example and one that adequately showcases the effect of the Nash equilibrium.
• The Nash equilibrium is often discussed in conjunction with dominant strategy, which state that the chosen strategy of an actor will lead to better results out of all the possible strategies that can be used, regardless of the strategy the opponent uses.
• The Nash equilibrium does not always mean that the most optimal strategy is chosen.

12. In the Cobb - Douglas production function, Q = AKᵃ Lᵇ, where ‘a’ and ‘b’ are output elasticities of capital and labour, respectively. If a + b > 1, the underlying return to scale will be

Correct Answer: (a) increasing 
Solution:The Cobb - Douglas production function, named after Paul H. Douglas and C.W. Cobb, is a famous statistical production function. It is derived to study the whole of American manufacturing industries.
In the Cobb - Douglas production function, Q = AKᵃ Lᵇ, where ‘a’ and ‘b’ are output elasticity of capital and labour, respectively. If a + b > 1, the underlying return to scale will be increasing.

13. Which one of the following institutions is not a part of the World Bank Group?

Correct Answer: (d) The Bank for International Settlements (BIS)
Solution:

Following institutions are part of World Bank Group:

  1. The International Bank for Reconstruction and Development (IBRD)
  2. The International Development Association (IDA)
  3. The International Finance Corporation (IFC)
  4. The Multilateral Investment Guarantee Agency (MIGA)
    The International Centre for Settlement of Investment Disputes (ICSID)
    Whereas the Bank for International Settlements (BIS) is not a part of the world Bank Group.

14. According to the traditional approach, what is the effect of increase in degree of leverage on the valuation of a firm?

Correct Answer: (d) Increases first and then decreases
Solution:

The Net Income Approach Suggests that with the increase in leverage (proportion of debt), the WACC decreases and the value of firm increases. On the other hand, if there is a decrease in the leverage, the WACC increases and thereby the value of the firm decreases.

15. An economic enterprise requires 90,000 units of certain item annually. The cost per unit is Rs. 3. The cost per purchase order is Rs. 300 and the inventory carrying cost is Rs. 6 per unit per year. What is EOQ? (a) 3000 units

Correct Answer: (a) 3000 units
Solution:

16. Dell Ltd. has Rs. 100 preference shares redeemable at a premium of 10% in 15 years maturity. The coupon rate is 12%; the flotation cost is 5%. The current market price is Rs. 95. Calculate the cost of preference shares and select the correct option.

Correct Answer: (d) 13.33%
Solution:Kₚ cost of redeemable preference shares is calculated as

17. Which of the following is not a characteristic of normal distribution?

Correct Answer: (d) The kurtosis of the distribution is always less than 3
Solution:

Following are the characteristic of normal distribution :
(i) The mean of the normal distribution may be negative or positive.
(ii) For any normal random variable x, P (x ≤ μ) = P (x ≥ μ) = 0.50
(iii) For every pair of values μ and σ, the curve of the distribution is bell-shaped and symmetric.
While “The Kurtosis of the distribution is always less than 3” is not the characteristic of normal distribution.

18. For a Poisson distribution P(x) = e⁻⁵ (5)ˣ / x! the mean value is:

Correct Answer: (b) 5
Solution:In Poisson distribution, mean is denoted ‘m’ or ‘λ’, the numerical formula for Poisson distribution is:-Here as per the given equation, the value of mean or m or λ = 5.

19. Which of the following is used to assess the relationship between two ordinal variables?

Correct Answer: (a) Spearman’s rho
Solution:Spearman’s rho is a non-parametric statistical test of correlation that allows a researcher to determine the significance of their investigation. It is used in studies that are looking for a relationship, where the data is at least ordinal.

20. “Spurious” relationship between two variables is expressed as:

Correct Answer: (b) A relationship that appears to be true because each variable is related to a third one.
Solution:

An apparent relationship between two variables that is actually caused by a third variable affecting both of the others.
When two variables are statistically correlated, but not causally linked, a third variable creates the spurious relationship. A spurious correlation, or spurious relationship, is one in which a third variable – sometimes identified, at other times unknown – is influencing the variables tested.