| Re: TANCET MBA Exam Model Question Paper
This is the TANCET MBA Exam Model Question Paper:
Directions for questions 1 – 20:
This section comprises two passages. After each passage questions consisting of items relating to the
preceding passage are given. Evaluate each item separately in terms of the respective passage and choose
your answer
PASSAGE – I (Questions 1 – 10)
The Shop-O-shelf Company's supermarkets are situated in Bangalore, Coimbatore and Vellore. The company
is dynamic and aggressive having grown from 8 stores ten years ago to 26 today.
Kanchipuram is a town 60 miles from Vellore. It has not shown the spectacular growth of other suburbs, but its
population has increased from around 56,000 to 1, 30,000 in the past decade. With no other Shop-O-Self
supermarket within 20 miles of the area, Shop-O-Self Company is considering opening a store in
Kanchipuram.
The Arguments against: some Shop-O-Self executives oppose the project as a poor risk. They point to the
proposed site, which is in a shopping centre three miles from Kanchipuram business district. Two other food
chains have failed on this site because they claim; most new residences are on the other side of the
community.
Moreover, the shopping centre owners demand a five year lease. Shop-O-Self would have to try to find
another business to take over the lease should its own store fail before the end of that time.
If a Shop-O-Self market must be opened in Kanchipuram, it would be far better, these executives argue, to
build it in the heart of the community. But they point out, another supermarket is already there.
The Arguments for: The Majority of the executives maintain that the site has great potential. A new east-west
highway is being built which will pass Kanchipuram to the north and force the car commuters to Kanchipuram
to pass by the shopping centre. A housing project of 3, 000 units is going to be constructed nearby. The
average household is expected to consist of five people with over Rs. 30,000 of income to dispose of
annually.
They also argue that the centre of Kanchipuram is now congested with traffic and has extremely poor parking
facilities, while there is excellent parking in the shopping centre. Investment in a new building in Kanchipuram,
proper than a five year lease should the store fail.
They are not too concerned about the other supermarket in Kanchipuram. There is enough business for both.
Besides, the competitor's prices are higher than shop-o-self.
They also discount past supermarket failures in the shopping certre. They claim these were caused more by
poor management than by the shopping centre's being slightly off the beaten path.
The Decision: The board of directors listens to both sides and then votes to open a Shop-o-self store at the
Kanchipuram shopping centre.
1. The residents at the projected residential development will shop in the Kanchipuram store
(a) If the item is a Major Objective in making the decision: that is, the outcome or result sought by
the decision maker
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
2. Poor management causing past supermarket failures.
(a) If the item is a Major Objective in making the decision: that is, the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
3. New east-west highway.
(a) If the item is a Major Objective in making the decision: that is, the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
4. Expansion of dynamic company.
(a) If the item is a Major Objective in making the decision: that is , the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
5. Failure of two supermarkets due to poor site selection.
(a) If the item is a Major Objective in making the decision: that is , the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
6. Establishing a new store
(a) If the item is a Major Objective in making the decision: that is, the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
7. New housing development.
(a) If the item is a Major Objective in making the decision: that is , the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
8. Car commuters will shop at Kanchipuram supermarket.
(a) If the item is a Major Objective in making the decision: that is, the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
9. High disposable income of expected new residents.
(a) If the item is a Major Objective in making the decision: that is, the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
10. Kanchipuram's prices are lower than those of competitors.
(a) If the item is a Major Objective in making the decision: that is, the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
PASSAGE II (Questions 11 – 20)
In 1997 Mr. Deepak, a chemical engineer, began experimenting in his spare time with a new method for
processing fresh orange juice. By 2000, he had perfected the process to such an extent that he was ready to
begin production in a small way. His process enabled him to extract 18 percent more juice from oranges than
was typically extracted by a pressure juicer of the type currently used in cafes. His process also removed
some of the bitterness, which got into the juice from the peelings when oranges were squeezed without
peeling them.
Since many of the better quality restaurants preferred to serve fresh orange juice instead of canned or frozen
juice, Mr. Deepak believed he could find a ready market for his product. Another appeal of his product would
be that he could maintain more consistent juice flavor than haphazard restaurant juicing usually produced.
Mr. Deepak patented the process and then started production. Since his capital was limited, he began
production in a small building, which previously had been a woodworking shop. With the help of his brother,
Mr. Deepak marketed the juice through local restaurants. The juice was distributed in glass bottles, which
proved to be rather expensive because of high breakage. The new product was favourably accepted by the
public and the business proved to e a success.
Mr. Deepak began to receive larger and more frequent orders from his customers and their business
associates. In 2002, he quit his regular job in order to devote full time to his juice business. He soon reached
his capacity because of his inability to personally over a larger area with his pickup truck. Advertising was on a
small scale because of limited funds. Faced with the problems of glass bottle breakage and limited
advertisement and distribution, Mr. Deepak approached a regional food distributor for a solution Mr. Deepak
was offered a plan where by the distributor would advertise and distribute the product on the basis of 25
percent of gross sales. The distributor would assist Mr. Deepak in securing a loan from the local bank to
expand the production.
Before he had an opportunity to contact the bank to borrow money, Mr. Deepak was introduced to Mr. Sunil, a
plastics engineer, who produced plastic containers. Mr. Deepak mentioned his own problems in the expansion
of his business. Mr. Sunil wanted to finance expended juice production with the understanding that plastic
containers would be used for marketing the orange juice. He would lend the money interest free, but he was
to receive 40 percent of the net profits for the next ten years. Distribution and advertising agent for 25 percent
of gross sales. The principal on Mr. Sunil's invested money was to be repaid by Mr. Deepak on a basis of 10
percent of his share of the profits. Mr. Sunil was to retain an interest in the profits of the firm until the loan was
repaid, or at least for ten years.
Mr. Deepak's current sales were 10,000 litres of juice a month. If distribution could be expanded, sales could
be doubled, given the potential demand. Of the possible total sales of 20,000 a month, about 75 percent
would be sold to large restaurants and the reminder to small cafes and canteens. As soon as the juices were
bottled in plastic containers, sales could also be made to household consumers. Mr. Deepak was very
optimistic that sales to the final consumer through retail shops would succeed. Some initial contacts were
made with a local manager of a food chain supermarket. The manager was sure that he could sell 4,000 litres
a month through his outlets.
Mr. Deepak also calculated his potential profits. His goal was to increased sales while at the same time
earning a 10 percent rate of return on his prior capital investment in equipment and other assets. The present
value of Mr. Deepak's investment was Rs. 2,50,000. Of this sum, machinery and equipment were valued at
Rs. 1,00,000; building was worth Rs. 50,000 and his patent and know-how were valued at Rs. 1,00,000. On
the basis of this evaluation, Mr. Deepak desired a return of Rs. 25,000 above salaries and other expenses
after the first year of operation.
Both the regional distributor and Mr. Sunil believed that Mr. Deepak's sales could be increased to 15,000 litres
of juice per month by the end of the first year of expanded operations. However, the extent to which
production could be expanded to meet demand depended on the availability of plastic containers (which
would be supplied at factory cost under Mr. Sunil's proposal), and additional machinery. Increased market
coverage would be obtained both under the regional food distributor and Mr. Sunil's proposals. The critical
deciding factor, as Mr. Deepak understood, was which plan would maximize his return on investment beyond
the minimum figure of 10 percent.
11. Cost of securing a loan
(a) If the item is a Major Objective in making the decision: that is , the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) The item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
12. High breakage rate of glass bottles.
(a) If the item is a Major Objective in making the decision: that is , the outcome or result sought by
the decision maker
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
13. Expansion of the business
(a) If the item is a Major Objective in making the decision: that is , the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
14. Continued demand by the public for Mr. Deepak's orange juice
(a) If the item is a Major Objective in making the decision: that is, the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
15. Possibility of doubling sales through expanded distribution
(a) If the item is a Major Objective in making the decision: that is , the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
16. Previous use of Mr. Deepak's building as a woodworking shop
(a) If the item is a Major Objective in making the decision: that is , the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
17. Ten percent return of investment
(a) If the item is a Major Objective in making the decision: that is , the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
18. Small scale of current advertising
(a) If the item is a Major Objective in making the decision: that is, the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
19. Value of patent held by Mr. Deepak.
(a) If the item is a Major Objective in making the decision: that is , the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
20. Mr. Deepak's current level of sales.
(a) If the item is a Major Objective in making the decision: that is , the outcome or result sought by
the decision maker.
(b) If the item is a Major Factor in arriving at the decision; that is consideration, explicity mentioned
in the passage that is basic in determining the decision.
(c) If the item is a Minor Factor in making the decision: a less important element bearing on or
affecting a Major Factor, rather than a Major Objective directly.
(d) If the item is a Major Assumption made deliberately; that is a supposition or projection made by
the decision maker before considering the factors and alternatives.
(e) If the item is an unimportant issue in getting to the point; that is a factor that is insignificant or not
immediately relevant to the situation.
SECTION II
READING COMPREHENSION
Direction: This section contains two reading passages. You have to read each carefully. Each passage is
followed by questions based on its content. After reading each passage, choose the best answer to each
question. The questions are based on what is stated or implied in each passage.
PASSAGE I (Questions 21 – 30)
The concept of "standard of living" is a wide and multifaceted one. In the absence of comprehensive
measurement, it is commonly expressed empirically in terms of consumption or in terms of income.
One of the most comprehensive expressions of standard of living is total consumption over an extended
period, where consumption is defined not only as family purchases but also as (1) consumption of goods and
services produced by the family; (2) consumption of public services provided without payment; and (3)
consumption of goods and services received as compensation for labor, over and above wages and salary. It
may be assumed that total consumption is less subject to incidental fluctuations than income. Moreover, it
reflects not only current income but also past income and savings, windfalls, and expectations regarding
future income.
Current monetary income constitutes the main indictor for the standard of living; however, standard of living is
not determined solely by current income, but also by past income, accumulated assets and expectations for
future income. Moreover, the standard of living of a family is influenced by the value of the public services
from which it benefits and the rate of taxes which it has to pay.
In the period under review, the standard of living of families originating from Asia and Africa improved relative
to that of all families. This improvement found expression in higher income levels, better housing, higher
ownership rate of consumer durables and an increase in the proportion of families in higher income brackets.
However, even after the improvement in their relative position during the past decade, their average income is
still only 70% of the overall average for all families.
One of the important factors behind the income differential between families of African and Asian originals and
the rest of the populations is the level of education. In rent years the gap between these two groups has
narrowed among the younger generation, but it is still substantial. Unless the education gap is significantly
reduced between these two groups, other means employed in an attempt to produce more income equality
will be thwarted. More resources must be immediately put to the task of improving educational opportunities
for families of African and Asian origin, without of course, reducing the education facilities and opportunities
open to the rest of the population.
21. The author defines 'standard of living' in terms of
(a) Total goods and services produced (b) Consumption of goods and services
(c) Real income (d) Per capita income
(e) Discretionary income.
22. Which income period (s) would be included in the author's definition of 'standard of living;?
I. Past income II. Current Income III. Future income
(a) I only (b) II only (c) I and II only (d) I, II and III
(e) Neither I, II and III
23. Consumption is defined as
(a) Total family purchases
(b) Total family purchases plus goods and services produced by the family
(c) Public services provided by the state.
(d) Income minus expenditure on necessities
(e) Total family purchases plus other goods and services consumed
24. Between 1994 and 2000, average real income
(a) Remained stable
(b) Increased by about 5% annually
(c) Decreased slightly
(d) Decreased during the recession
(e) Decreased by 5% annually
25. According to the passage, between 1997 and 2000, income equality
(a) Declined among all strata
(b) Declined most significantly among lower income groups
(C) Widened between the rich and the poor strata
(d) Did not change appreciably
(e) Declined among older groups in the population.
26. The author believes that inequality of income might be narrowed if
(A) The tax structure was reformed
(b) The educational gap between different population groups was reduced
(c) More jobs could be found for people of Asian-African origin
(d) Real income increased
(e) A system of price controls was implemented
27. The standard of living of Asian - African immigrants has improved as measured by all of the following
factors except
(a) Higher income levels
(b) Better housing
(c) Increased ownership of consumer durables
(d) A shift in population centres
(e) An increased proportion of Asian - African families in higher income brackets.
28. It may be inferred that the author of the passage is an
(a) Engineer (b) Food specialist (c) Economist
(d) Bank president (e) Efficiency expert
29. Even though the income level of families of Asian - Africa origin increased relatively, their average
income is still
(a) Only about equal to that of other groups
(b) About 70 percent of the overall national average
(c) Close to the national average, but slightly below
(d) About 50 percent of the national average
(e) About 25 percent of the national average
30. Between 1997 and 2000, the standard of living of the urban population
(a) Declined (b) Increased (c) Stagnated (D) Remained constant (e) Doubled
Remaining questions are in the attachment, download it freely from here:
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