UGCNET/JRF/SET/WBSET 2025 Commerce PYQs Questions with Answer | UGCNET Paper 2 Commerce PYQ Solution

Introduction to the Session

Welcome and Class Overview

• The instructor greets the audience, confirming audio and video functionality before starting the session.

• Emphasizes the urgency of studying for the upcoming WB set exam, which is only 10-12 days away.

• Clarifies that today's session will focus on previous year questions (PYQs) related to commerce, beneficial for various exams.

Preparation Strategies

Importance of Practice

• Highlights the necessity of practicing PYQs and MCQs as part of effective last-minute preparation.

• Encourages students to engage with the content actively by sharing links and liking videos after class.

Course Offerings

• Mentions available resources such as mock tests, PDFs from GRF application, and a capsule course focusing on key topics for revision.

• Introduces two types of packages (Gold and Silver) for comprehensive preparation including both online and offline classes.

Course Structure

Units Coverage

• Outlines that four units of paper two in commerce will be covered today, with plans to address remaining units later.

• Discusses additional efforts being made for RPSC's third paper alongside other courses offered.

Interactive Learning Session

First Question Engagement

• Initiates an interactive segment where students are given 20 seconds to answer a question about SAARC membership.

Understanding SAARC

Membership Details

• Explains that SAARC has eight member nations; Mauritius is identified as an observer nation rather than a member.

• Lists member countries: Maldives, Bangladesh, Bhutan, Sri Lanka, Pakistan, Afghanistan, India, Nepal; mentions its formation date (December 8th, 1985).

Quick Revision on ASEAN

Member Nations Overview

• Engages students in recalling ASEAN's formation date and its ten original member nations plus recent additions.

Current Members

• Confirms current members include Malaysia, Brunei, Cambodia, Indonesia, Philippines, Singapore, Thailand, Vietnam; notes new addition is Timor-Leste.

Overview of L-E-S-T-E and Its Significance

Introduction to L-E-S-T-E

• The acronym L-E-S-T-E represents the 11 member nations, which is crucial for understanding regional cooperation.

• Established on August 8, 1967, the organization initially had its headquarters in Bangkok, Thailand, before moving to Jakarta, Indonesia.

Importance of Key Details

• It is essential to remember the founding date, member nations, and current headquarters for clarity in discussions about regional economic integration.

• The South Asian Association for Regional Cooperation (SAARC) is mentioned as a point of reference regarding Free Trade Agreements (FTAs).

Understanding IMF Functions and Membership

Main Functions of IMF

• The International Monetary Fund (IMF) plays a critical role in addressing balance of payment problems among member nations.

• As of October 2023, there are 91 countries in the IMF; it was established in 1944 but began operations in 1945.

Membership Dynamics

• India was a founding member of the IMF when it started operating. Currently, there are 191 member countries.

• To join the World Bank, one must first be a member of the IMF; this relationship underscores their interconnectedness.

Non-Tariff Barriers Explained

Types of Trade Barriers

• Non-tariff barriers include various forms such as countervailing duties aimed at offsetting export subsidies from other countries.

• Countervailing duties are imposed to prevent dumping and protect domestic industries by nullifying benefits gained through export subsidies.

Implications for Trade Policy

• Export subsidies encourage domestic production for international markets; however, they can lead to retaliatory measures like countervailing duties from importing countries.

• Understanding these trade dynamics is vital for navigating international trade agreements and policies effectively.

Countervailing Measures and International Trade Theories

Countervailing Measures in India

• The Director General of Anti-Dumping and Allied Duties (DGAD) administers countervailing measures in India, overseen by the Ministry of Commerce and Industry.

• These measures are crucial for regulating anti-dumping duties to protect domestic industries from unfair competition.

Overview of International Trade Theories

• Discussion on various international trade theories including:

• Absolute Advantage (Adam Smith, 1776)

• Factor Proportion Theory (Heckscher-Ohlin, 1919)

• Country Similarity Theory (Stefan Lindner, 1961)

• Product Life Cycle Theory (Raymond Vernon, 1960).

Key Insights on Absolute Advantage

• Adam Smith's theory emphasizes selling products where a country has an advantage.

• Limitations arise when both countries have advantages in different products; this leads to questions about mercantilism and trade balance.

Comparative Cost Advantage Theory

• David Ricardo introduced the Comparative Cost Advantage theory in 1817, which builds upon earlier theories.

• Historical timeline: Mathematical theory (1630), Absolute Advantage (1776), Comparative Cost Advantage (1817), Heckscher-Olin theory with its paradox introduced later.

Discount Rates on Share Issues

Regulations on Share Discounts

• The maximum discount rate allowed on share issues cannot exceed 10% of the nominal value.

• Exceptions exist under Section 53 for Employee Stock Ownership Plans (ESOP).

Demand Types in Economics

Composite vs. Joint Demand

• Composite demand refers to a commodity used for multiple purposes, such as milk being used for ghee or butter.

• Joint demand involves several goods needed together for a single purpose, like ingredients required to bake a cake.

Direct and Autonomous Demand

• Direct demand is when consumers want a product outright, e.g., wanting bread directly.

• Autonomous demand relates to basic needs that are independent of each other but necessary for survival.

Indifference Curves Explained

Properties of Indifference Curves

• Indifference curves illustrate consumer preferences; they can be concave or convex based on substitution effects.

Convexity Reasoning

• Indifference curves are typically convex due to declining Marginal Rate of Substitution (MRS); this reflects imperfect substitutes among commodities.

Understanding Utility and Information Access

The Concept of Diminishing Marginal Utility

• When consuming more than one unit of a good, individuals must reduce consumption of another due to limited income while aiming to maintain satisfaction.

• Increasing the consumption of one unit leads to sacrificing others; this reflects the principle of diminishing marginal utility, where additional units provide less satisfaction.

• The shape of the marginal rate of substitution (MRS) is convex to the origin due to decreasing MRS, which is crucial for understanding consumer behavior.

Information Accessibility Under RTI Act

• Certain types of information are classified and cannot be accessed under the Right to Information (RTI) Act, including those affecting parliamentary privileges and national integrity.

• Specific examples include breaches of parliamentary privileges and cabinet papers that impact India's sovereignty; these will never be disclosed.

Rights of Citizens in Seeking Information

• Non-residents can seek information under RTI if they are Indian citizens; residency is not a requirement for accessing information.

• Citizens do not need to provide reasons when requesting information; if denied, authorities must justify their refusal.

Legal Concepts: Quantum Meruit and Caveat Emptor

• "Quantum meruit" refers to compensation based on work performed; payment should reflect effort even if work remains incomplete.

• "Caveat emptor," or "let the buyer beware," emphasizes buyer responsibility unless specific assurances about product quality are made by sellers.

Ownership and Title Transfer Principles

• Only an owner can transfer title; transferring a bad title does not confer ownership rights.

• Exceptions exist where someone without good title can still transfer rights, highlighting legal nuances in property transactions.

Revision Techniques for Effective Learning

• Engaging actively with material through questioning enhances retention; revising concepts incrementally builds understanding over time.

Understanding the Rights of an Unpaid Seller

Key Concepts of Unpaid Seller's Rights

• An unpaid seller retains possession of sold goods until payment is received, exercising their right to keep the luggage as a form of security.

• The concept of a mercantile agent is introduced; they can sell goods without being the actual owner, provided they have authorization from the owner.

• In cases involving voidable contracts, if someone possesses goods under such a contract and sends them forward, the recipient may still acquire good title despite not knowing about the original contract.

Joint Ownership and Sales by Stoppers

• The discussion includes scenarios with joint ownership where one owner sells goods without consent from the other; this leads to complexities in ownership rights.

• A finder of lost goods can also claim rights if they have made reasonable efforts to locate the original owner but were unsuccessful.

Responsibilities and Rights of Finders

• If a finder has incurred significant costs (e.g., two-thirds of value spent on preservation), they may sell the item to recover expenses after failing to find the original owner.

• It’s crucial for finders to document their expenditures when attempting to return lost items, as this could affect claims against original owners.

Legal Framework: ITX Applicability

Understanding ITX Exemptions

• Discussion revolves around which legal instruments are exempt from ITX regulations; negotiable instruments like checks are highlighted as exceptions.

• Clarification that while checks fall under specific rules, power of attorney and trust documents do not apply under ITX guidelines.

Production Function Insights

Production Budget Governance

Returns to Scale in Production Functions

• When discussing production functions with constant elasticity, it is noted that returns increase when R > 1, indicating increasing returns to scale due to effective labor-capital substitution.

Budgeting Fundamentals

• The production budget is primarily governed by sales forecasts; accurate sales predictions dictate necessary production levels for efficiency.

• Different types of budgets (flexible vs. fixed budgets) are discussed regarding how they adapt based on changing circumstances in production needs.

Sales and Break-Even Analysis

Understanding Sales and Variable Costs

• The speaker begins by discussing a sales scenario where the unit price is 200 rupees, leading to total sales of 20 lakhs. They express uncertainty about calculating the number of units sold.

• The variable cost is mentioned as 120 rupees per unit. The speaker calculates the contribution margin, which is derived from subtracting variable costs from sales price.

Break-Even Point Calculation

• The break-even point (BEP) is defined as the point where total revenue equals total costs, resulting in no profit or loss. Fixed costs are stated to be 600,000 rupees.

• A calculation reveals that 7,500 units must be sold to reach the break-even point out of a total capacity of 15,000 units, indicating a utilization rate of 50%.

Capacity Utilization Insights

• The discussion shifts to how much capacity has been utilized at the break-even point. It emphasizes understanding BEP in terms of capacity usage rather than just profit/loss metrics.

Monopoly vs Monopolistic Competition

Key Characteristics Comparison

• The speaker compares monopoly and monopolistic competition, noting that both market structures have downward-sloping demand curves but differ in steepness.

• Monopoly's demand curve is steeper due to fewer substitutes available compared to monopolistic competition's flatter curve.

Elasticity and Demand Response

• A steeper demand curve indicates that significant price increases lead to substantial drops in quantity demanded for monopolies; conversely, small price changes in monopolistic competition result in large changes in demand.

• Price elasticity differs between these markets: monopoly has less than one elasticity due to lack of substitutes while monopolistic competition has greater than one elasticity because alternatives exist.

Understanding Average Revenue (AR) and Marginal Revenue (MR)

Relationship Between AR and MR Curves

• Discussion on AR and MR curves highlights that both fall but at different rates; MR falls faster than AR.

• Clarification on falling rates indicates that MR decreases at twice the rate compared to AR, emphasizing their distinct behaviors within market structures.

Interest Calculation Techniques

Doubling Rule Application

• Introduction of a practical question regarding how long it takes for an amount deposited today at an interest rate of 14% per annum to double under simple or compound interest conditions.

Understanding Interest Rates and Working Capital

Simple vs. Compound Interest

• The discussion begins with the calculation of interest rates, emphasizing that while simple interest is typically used, compound interest may be necessary when options are limited.

• The "rule of doubling" is introduced as a method for calculating compound interest, specifically dividing 72 by time to find the rate.

Working Capital Dynamics

• A scenario is presented where account payables increased from Rs. 2000 to Rs. 3000 over one year, indicating a rise in liabilities.

• The impact of increased liabilities on working capital is explained; working capital decreases as current liabilities rise relative to current assets.

• An example illustrates how an increase in current liabilities affects working capital calculations, showing a decrease of Rs. 1000.

Cash Flow Statement Insights

• In cash flow statements, changes in working capital are analyzed; increasing assets or decreasing liabilities negatively impacts cash flow values.

• Conversely, if liabilities increase or assets decrease, this can lead to positive adjustments in cash flow.

Capital Asset Pricing Model (CAPM)

Understanding CAPM

• The relationship between expected return and risk-free return is outlined using the CAPM formula: Return = Risk-Free Return + Beta(Rm - RF).

• Beta represents systematic risk and indicates how market returns correlate with individual asset performance; higher returns come with higher risks.

Time Value of Money Concept

• The concept emphasizes that money's value diminishes over time due to inflation and opportunity costs associated with risk-free investments.

Statistical Independence Testing

Chi-Square Test for Independence

• To assess independence between two attributes in statistics, the chi-square test is employed using observed versus expected frequencies.

• This non-parametric test helps determine whether there’s a significant relationship between variables or if they operate independently.

Practical Example of Independence

• An analogy involving drawing cards from a deck illustrates how removing one card affects probabilities—demonstrating dependence versus independence based on outcomes.

• Replacing the drawn card before drawing again exemplifies independence since it resets total outcomes back to 52 cards.

Understanding Chi-Square Test and Data Collection

Chi-Square Test for Independence

• The chi-square test is utilized to determine the independence of two attributes, with option D being identified as the correct answer.

Secondary Data Advantages

• Secondary data can be collected rapidly, easily, economically, and within a short timeframe. This highlights its advantages over primary data collection methods.

Learning from Mistakes

• Emphasis on self-assessment: learners are encouraged to provide their best answers without feeling sorry for mistakes; understanding concepts is more important than simply getting the right answer.

Comparison of Primary and Secondary Data

• Collecting secondary data is less time-consuming and costly compared to primary data collection, which often involves extensive fieldwork and expenses.

In-Basket Training Methodology

Overview of In-Basket Training

• In-basket training involves simulation techniques that provide real work experience in a controlled environment, allowing trainees to practice decision-making skills.

Key Features of In-Basket Training

• The training simulates real-life scenarios where participants must make quick decisions while managing tasks like writing emails or handling documents under time constraints.

Authority Flow in Organizations

Understanding Authority Structures

• Authority flows from top to bottom in an organization according to formal authority theory. Top-level managers dictate actions that lower levels must follow.

Functions of NABARD

NABARD's Role in Agriculture Development

• NABARD does not grant long-term loans directly to the central government for agricultural development; instead, it focuses on promoting rural development and inspecting state cooperative banks' operations.

Clarification on Misconceptions

• It's crucial not to confuse agriculture with development functions when discussing NABARD's responsibilities; understanding its specific roles helps avoid misconceptions.

Understanding IMPS and NPCI

Overview of IMPS

• The Immediate Payment Service (IMPS) is a 24/7 payment service managed by the National Payments Corporation of India (NPCI).

• Established under the Digitization Payment Services Act, NPCI oversees various digital payment systems including NEFT, RTGS, and UPI.

Importance of NPCI

• NPCI serves as an umbrella organization for all retail payments and settlement systems in India.

• The concept of service marketing is highlighted as crucial within this context, emphasizing quality and customer satisfaction.

Service Quality Models

Serviqual Model Insights

• The Serviqual model focuses on assessing service quality through five key dimensions: Reliability, Assurance, Tangibles, Empathy, and Responsiveness.

• These dimensions help evaluate the gap between customer expectations and perceived service quality.

RATER Model Breakdown

• RATER stands for:

• Reliability: Consistency in performance.

• Assurance: Confidence instilled in customers.

• Tangibles: Physical aspects of the service environment.

• Empathy: Understanding customer needs.

• Responsiveness: Willingness to help customers promptly.

Types of Goods in Marketing

Classification of Goods

• Future goods are defined as products that will be manufactured or acquired after a contract is made; they are not available immediately.

• Contingent goods depend on specific events occurring before they can be delivered (e.g., rewards based on passing exams).

Formal vs. Informal Organizations

• A formal organization is deliberately created by management while informal organizations arise spontaneously among individuals without official sanction.

Consumer Behavior Towards Goods

Types of Consumer Goods

• Convenience goods are everyday items purchased with minimal effort; examples include basic groceries or toiletries.

• Shopping goods require comparison across different options based on factors like price and quality before purchase.

• Specialty goods possess unique features that distinguish them from competitors, often leading consumers to prefer specific brands.

Understanding Unsought Goods and Statutory Meetings

Unsought Goods

• Unsought goods are items that consumers do not actively think about purchasing until a specific need arises, such as medical equipment for a particular disease.

• These goods exist but are often overlooked by consumers; they only consider them when faced with a necessity.

Statutory Meetings

• Statutory meetings are mandatory gatherings dictated by law, particularly for public companies limited by guarantee and having share capital.

• The requirement to conduct statutory meetings applies specifically to certain types of companies, including those where the liability of members is unlimited.

Taxation on Income Accrued Outside India

Tax Implications for Residents

• Income accrued outside India and received outside India is taxable primarily for residents (ROR), while non-residents (NRR) may be exempt under certain conditions.

• If income is accrued in India, it becomes taxable regardless of where it is received; this includes cases where effective management occurs in India.

Calculating Expected Rent for House Property

Methodology for Calculation

• The expected rent calculation involves comparing fair rental value and municipal rental value, taking the higher amount or standard rent into account.

• The correct approach considers both municipal value minus standard rent and the maximum between municipal value and fair rental value.

Key Deductions from Gross Total Income (GTI)

Important Deductions

• Deductions related to treatment expenses for specified diseases under section 11DD are crucial, especially for senior citizens.

• Other significant deductions include those applicable to eligible startups under section ATIAC and biodegradable waste business deductions under section ATJJA.

Regional Economic Integration: ASEAN vs. SAARC

Trade Agreements Explained

• ASEAN represents a Free Trade Agreement (FTA), which eliminates internal tariffs among member nations, promoting free trade.

• In contrast, SAARC operates as a Preferential Trade Agreement (PTA), offering minimum tax rates among member countries rather than complete tariff elimination.

Understanding Trade Agreements and Economic Unions

Free Trade Agreements (FTA) and Customs Unions (CU)

• The concept of Free Trade Agreements (FTA) allows member countries to trade without tariffs. Following this, a Customs Union (CU) introduces a common external tariff for non-member countries.

• In a CU, all member countries charge the same tariff rate on goods imported from outside the union, unlike in an FTA where individual rates may vary.

Common Markets and Economic Policies

• A Common Market builds upon the CU by allowing free movement of factors of production across member states, enhancing economic integration.

• The European Union exemplifies a Common Market with shared economic policies including monetary and fiscal regulations among its members.

Political Unions and Examples

• A Political Union combines features of an Economic Union with unified political systems, such as shared judiciary processes and visa regulations across member nations.

• Examples include Mercosur as a Customs Union in South America and NAFTA, now known as USMCA, which is an example of an FTA.

Induction vs. Orientation in Organizations

• Induction refers to the process that integrates new employees into an organization by explaining roles, values, mission, and vision.

• Orientation focuses on creating a welcoming environment for new employees to feel comfortable within their team and organization.

Goals of Induction and Orientation

• Induction occurs on the first day of employment as part of a thorough process aimed at familiarizing employees with expectations.

• Both induction and orientation aim to ensure that employees understand their roles while fostering a supportive workplace culture.

Conclusion

• The session concludes with encouragement for continued study and preparation for upcoming assessments. Information about additional resources like capsule courses is also provided.

Course Overview and Options for Preparation

Course Selection and Structure

• The speaker discusses two course options available for students preparing for an exam: a Capsule course focusing on the top 100 topics through questions, and a Selection package that includes comprehensive revision.

• The Selection package offers complete revision across 10 units, with handwritten notes and flow charts to aid understanding.

• It includes access to past year questions (PYQs) from the last ten years, covering both Paper 1 and Paper 2, along with important MCQs in dedicated classes.

Class Format and Content Delivery

• The course spans approximately two and a half months, emphasizing the need for efficient study methods due to time constraints.

• Classes are structured around intensive sessions of 3 hours each, allowing coverage of one unit every two days while integrating important MCQs into the learning process.

Revision Strategy

• Students will have access to organized PYQs categorized by date from June 2015 to December 2023, facilitating targeted revision based on previous exams.

• A total of about 300 hours of content is planned, including mock tests designed to simulate real exam conditions.

Additional Resources and Support

• The speaker encourages students interested in detailed courses or live classes starting June 26th to reach out to the support team for more information.

• Emphasis is placed on utilizing YouTube resources alongside class materials for effective revision strategies.

Final Thoughts and Encouragement

• The speaker reassures students about the extensive resources available, including handwritten notes shared via YouTube as part of their preparation strategy.

• Students are encouraged to engage actively with their teams regarding any queries or clarifications needed about the courses before proceeding with their studies.