40. As output increases, AC curve

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A) Falls
B) Rises
C) Remains constant
D) All of the above
✅ ANSWER: D
The average cost is U-shaped because an increase in output increases the returns and reduces the total cost. As the curve continues to slope downwards, it enters a phase of constant returns where the returns and output are at their optimum level. After the constant level, continued increase in output stops yielding any further increments in the returns (diminishing returns) and the costs begin to rise, forcing the curve to start sloping upwards.

77. Which one of the following is the task of the Planning Commission?

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A) Preparation of the plan
B) Implementation of the plan
C) Financing of the plan
D) None of the above
✅ ANSWER: A
Preparation of the plan is the task of the Planning Commission. The Planning Commission is charged with the responsibility of making assessment of all resources in the country, augmenting deficient resources, formulating plans for the most effective and balanced utilisation of resources and determining priorities.

74. _________ as a profession refers to the act of inducing a commercial transaction through inducing the purchase of a product or service. Such act is carried out with the intent of earning remuneration.

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A) Marketing
B) Selling
C) Advertising
D) Promotion
✅ ANSWER: B
Selling as a profession refers to the act of inducing a commercial transaction through inducing the purchase of a product or service. Such act is carried out with the intent of earning remuneration.

68. Which is not the product of general insurance?

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A) Motor insurance
B) Personal accident insurance
C) Medical and health insurance
D) Life insurance
✅ ANSWER: D
Life insurance is not the product of general insurance. General Insurance is a contract of indemnity which promises to make good your losses. In Life Insurance, the sum assured along with benefits is paid either on the event of death of the policy holder or on maturity of the policy.

65. Risk of fall in income due to fall in interest rates in future is classified as

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A) income risk
B) investment risk
C) reinvestment risk
D) mature risk
✅ ANSWER: C
Risk of fall in income due to fall in interest rates in future is classified as reinvestment risk. Reinvestment risk is the probability that an investor will be unable to reinvest cash flows (e.g., coupon payments) at a rate comparable to the current investment’s rate of return.

59. In case of perfect competition in the market

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A) Marginal revenue curve always slopes upward
B) Marginal revenue curve always slopes downwards
C) Marginal revenue is always equal to average revenue
D) Marginal revenue is always less than average revenue
✅ ANSWER: C
In case of perfect competition in the market marginal revenue is always equal to average revenue. They coincide because marginal revenue is equal to average revenue at every output quantity. The equality between marginal revenue and average revenue is the result of perfect competition.

46. Identify the correct statement

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A) Bonus is not allowed on surrender of a policy
B) In compound reversionary bonus it is a percentage of basic benefit and already attached bonus
C) Terminal bonus and compound bonus are one and the same
D) Persistence bonus is allowed by the insurer at its discretion in certain cases
✅ ANSWER: B
In compound reversionary bonus it is a percentage of basic benefit and already attached bonus. Compound reversionary bonuses are a percentage rate, which apply to the sum assured in respect of the basic policy benefit, and to the reversionary bonuses already attached to the policy. The difference is in the way the bonuses are accrued.

25. Which of the below option is correct with regards to a term insurance plan?

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A) Term insurance plans come with life-long renewability option
B) All term insurance plans come with a built-in disability rider
C) Term insurance can be bought as a stand-alone policy as well as a rider with another policy
D) There is no provision in a term insurance plans to convert it into a whole life insurance plan
✅ ANSWER: C
Term insurance can be bought as a stand-alone policy as well as a rider with another policy. Term insurance is a life insurance product offered by an insurance company which offers financial coverage to the policy holder for a specific time period. In case of death of the insured individual during the policy term, the death benefit is paid by the company to the beneficiary.