4. There is inverse relation between price and demand for the product of a firm under:
Correct : C. Both under monopoly and monopolistic competition
5. A firm is able to sell any quantity of a good at a given price. The firm’s marginal revenue
will be:
Correct : C. Equal to Average Revenue
6. Differentiated products is a characteristic of:
Correct : C. Both monopolistic competition and oligopoly
7. Demand curve of a firm is perfectly elastic under:
Correct : A. Perfect competition
8. Marginal revenue of a firm is constant throughout under:
Correct : A. Perfect competition
9. A seller cannot influence the market price under
Correct : A. Perfect Competition
10. There are only a few sellers under
Correct : D. Oligopoly
11. Under perfect competition, MR curve is:
Correct : A. Horizontal
12. When AR is above AC, firm earns:
Correct : A. Supernormal profit
13. When AR = AC, firm is at:
Correct : C. Breakeven point
14. When AC is more than AR, what is the firm doing?
Correct : B. Incurring loss
15. When AR passes through some point between minimum AVC and AC, it is called:
Correct : D. Minimising losses
16. When AR passes through minimum point of AVC, it is called:
Correct : B. Shutdown point
17. Breakeven point means:
Correct : D. All of the above
18. Which of the following industries most closely approximates the perfectly competitive
model?
Correct : D. wheat farming.
19. Given the supply of a commodity in the market period, the price of the commodity is
determined by
Correct : A. the market demand curve alone
20. Total profits are maximized where
Correct : D. the TR curve and the TC curve are parallel and TR exceeds TC.
21. The best, or optimum, level of output for a perfectly competitive firm is given by the point
where
Correct : D. MR equals MC and MC is rising.
22. At the best, or optimum, short-run level of output, the firm will be
Correct : C. either maximizing total profits or minimizing total losses
23. If P exceeds AVC but is smaller than AC at the best level of output, the firm is
Correct : B. incurring a loss but should continue to produce in the short run
24. At the shut-down point,
Correct : D. all of the above.
25. The short-run supply curve of the perfectly competitive firm is given by
Correct : A. the rising portion of its MC curve over and above the shut-down point
26. When the perfectly competitive firm and industry are both in long-run equilibrium
Correct : D. all of the above.
27. When the perfectly competitive firm but not the industry is in long-run equilibrium,
Correct : C. P = MR = SMC = LMC = SAC =LAC
28. An increase in output in a perfectly competitive and constant cost industry which is in longrun equilibrium will come
Correct : A. entirely from new firms
29. If factor prices and factor quantities move in the same direction, we have
Correct : B. an increasing cost industry
30. When the D curve is elastic, MR is
Correct : C. positive
31. If P = Rs.10 at the point on the D curve where e = 0.5, MR is
Correct : D. 2Rs.10.
32. The best, or optimum, level of output for the pure monopolist occurs at the point where
Correct : D. the TR and STC curves are parallel.
33. At the best, or optimum, level of output for the pure monopolist,
Correct : A. MR = SMC
34. If the monopolist incurs losses in the short run, then in the long run
Correct : D. any of the above is possible.
35. The imposition of a maximum price at the point where the monopolist’s SMC curve
intersects the D curve causes the monopolist to
Correct : D. any of the above.
36. Price discrimination is an essential feature of
Correct : D. monopoly
37. Under monopoly the slope of AR curve is:
Correct : B. downward sloping
38. In a monopsony market there is:
Correct : B. single buyer
39. Third degree price discrimination occurs when the monopolist charges different prices for
the same commodity in different
Correct : A. Markets
40. Price discrimination is possible:
Correct : B. only under monopoly
41. Monopolist maximizes profit at the point where
Correct : B. MC = MR
42. At the point of equilibrium of a monopolist MC cuts MR curve
Correct : A. From below
43. A multiplant monopolist maximizes his profit at the point where:
Correct : D. MR = MC1 = MC2
44. Lerner Index is a measure of:
Correct : B. Monopoly power
45. For a firm with monopoly power
Correct : C. Price exceeds MC
46. Railways is an example of :
Correct : C. Natural monopoly
47. A market with only one buyer and one seller is called
Correct : C. Bilateral monopoly
48. Bilateral monopoly is a market with
Correct : C. Single buyer and single seller
49. The dual pricing system of charging high price during peak time and low price during of
peak time is called
Correct : D. peak load pricing
50. Selling more than one product at a single price
Correct : B. Bundling
51. An international price discrimination
Correct : A. Dumping
52. The market structure which has large number of sellers selling differentiated product is
called
Correct : A. Perfect competition
53. The market structure which number of sellers is small with interdependence is called
Correct : D. Oligopoly
54. The condition of short run equilibrium under monopolistic competition is
Correct : A. MC=MR
55. Kinked demand curve explain which of the following features of oligopoly
Correct : B. Price rigidity
56. Demand curve of a firm under monopolistic competition is
Correct : C. Downward slopping
57. Which of the following is not a feature of monopolistic competition?
Correct : A. Homogenous product
58. In the long run, a monopolistically competitive firm earn
Correct : C. Normal profit
59. In the short run, a monopolistically competitive firm can have
Correct : D. Any of the above are possible
60. Selling cost is a feature of
Correct : A. Monopolistic competition
61. The concept of group equilibrium is related to
Correct : C. E H Chamberline
62. The concept of kinked demand curve is related to
Correct : A. Paul M sweezy
63. Refrigerator company is an example of
Correct : A. Oligopoly
64. Cross elasticity of demand under monopolistic competition is?
Correct : A. Zero
65. The concept of group equilibrium is related to
Correct : C. Monopolistic competition
66. Excess capacity is a feature of equilibrium under
Correct : C. Monopolistic competition
67. Which of the following is an important form collusive oligopoly
Correct : C. cartel
68. OPEC is an example of
Correct : C. cartel
69. Comparing a monopoly and a competitive firm, the monopolist will
Correct : C. produce less at a higher price
70. A natural monopoly has a declining ________ over a large range of output
Correct : C. long run average cost
71. Which form of monopoly control is most advantageous to consumer?
Correct : A. price controls
72. The market structure Perfect mobility of factors and products is called
Correct : A. Perfect competition
73. The market structure with Perfect knowledge is called
Correct : A. Perfect competition
74. The condition of perfect competition is fulfilled when
Correct : D. All the above
75. The following are conditions of perfect competition except
Correct : D. Commodity produced is differentiated
76. The following are conditions of perfect competition except
Correct : A. Strong barriers to entry
77. The following are conditions of perfect competition except
Correct : B. Single buyer
78. The condition of short run equilibrium under perfect competition is
Correct : A. MC=MR
79. The large number of firms producing the same commodity ensure that the individual firm
has no control over
Correct : C. Both of the above
80. Individual firm has no control on the price of the commodity in the market is a condition of
Correct : A. Perfect competition
81. In a Perfect competitive market
Correct : B. Firm is the price taker and the industry is a price giver
82. One of the essential conditions of perfect competition is
Correct : D. Only one price for identical goods at any one time
83. Under perfect market conditions the individual firm in the industry has control over the
price of the product.
Correct : C. No
84. The condition of short run equilibrium under perfect competition is
Correct : D. All the above
85. Under perfect market conditions mobility of resources and products are
Correct : A. Ensured
86. A firm under perfect competitions shall be in equilibrium when marginal cost will be equal to marginal revenue and marginal cost curve is still
Correct : B. Rising
87. Cross elasticity of demand under Perfect competition is?
Correct : A. Zero
88. Which of the following is not a type of market structure?
Correct : A. Competitive monopoly
89. If the market demand curve for a commodity has a negative slope then the market structure
must be
Correct : D. The market structure cannot be determined from the information given
90. If a firm sells its output on a market that is characterized by many sellers and buyers, a homogeneous product, unlimited long-run resource mobility, and perfect knowledge, then
the firm is a
Correct : C. a perfect competitor
91. If a firm sells its output on a market that is characterized by a single seller and many
buyers of a homogeneous product for which there are no close substitutes and barriers to long-run resource mobility, then the firm is
Correct : A. a monopolist
92. If a firm sells its output on a market that is characterized by many sellers and buyers, a
differentiated product, and unlimited long-run resource mobility, then the firm is
Correct : D. a monopolistic competitor
93. If a firm sells its output on a market that is characterized by few sellers and many buyers
and limited long-run resource mobility, then the firm is
Correct : B. an oligopolist
94. If one perfectly competitive firm increases its level of output, market supply
Correct : C. and market price will both remain constant
95. Which of the following markets comes close to satisfying the assumptions of a perfectly
competitive market structure?
Correct : D. All of the above come close to satisfying the assumptions of perfect competition
96. A perfectly competitive firm should reduce output or shut down in the short run if market
price is equal to marginal cost and price is
Correct : D. less than average variable cost
97. The market demand curve for a perfectly competitive industry is QD = 12 - 2P. The
market supply curve is QS = 3 + P. The market will be in equilibrium if
Correct : D. P = 3 and Q = 6
98. Which of the following is a barrier to entry that typically results in monopoly?
Correct : C. Production of the industry\s product requires a large initial capital investment
99. In the short run, a monopolist will shut down if it is producing a level of output where
marginal revenue is equal to short-run marginal cost and price is
Correct : D. less than average variable cost
100. A natural monopoly refers to a monopoly that is defended from direct competition by
Correct : A. economies of scale over a broad range of output