Quiznetik

Micro Economics analysis | Set 2

1. Assertion (A) Many oligopolistic industries exhibit an appreciable degree of Price rigidity or stabilityReason (R) Oligopolists face a demand curve that is highly elastic for price increases and less elastic for price reductions

Correct : C. both (a) and (r) are true and (r) is the correct explanation of (a)

2. Match the following A B (i). Demand for inputs Hall and Hitch (ii). Oligopoly Single buyer (iii). Kinked demand theory Cartels (iv). Monopsony Derived demand Codes;

Correct : D. (iv) (iii) (i) (ii)

3. If the hourly wage is Rs.10, and the firm produces 5 additional units of the commodity with an additional hour of labour time, then marginal cost is

Correct : B. 2

4. The equilibrium level of output for a perfectly competitive marketis

Correct : B. mc = mr

5. The term ‘monopsony’ refers to

Correct : B. a single buyer

6. The demand curve for labour under perfectly competitive market is

Correct : A. downward sloping

7. The supply curve of the input that a firm faces under a perfectly competitive market is

Correct : B. horizontal supply curve

8. The supply curve of an input that a firm faces under an imperfectly competitive market is

Correct : C. upward sloping

9. Let labour is the only variable input, a monopsonist maximizes his or her profit when

Correct : A. mpl = mel

10. A profit maximizing firm under a perfectly competitive market employs more and more variable input labour until

Correct : C. mrpl = mel = w

11. To minimize cost of production at any level of output the monopsonist should continue to substitute labour and capital until

Correct : B. mel / mpl = mek / mpk

12. In Chamberlin and Kinked demand curve model, the oligoposist

Correct : D. all of the above

13. In the case of price leadership by the dominant firm all the firms in the purely oligopolistic industry will produce their best level of output

Correct : A. always

14. If an oligopolist incurs losses in the short run, then in the long run

Correct : D. any of the above

15. Existence of large number of buyers and sellers and homogenous product is a feature of :

Correct : C. perfect competition

16. Product differentiation is a characteristic of:

Correct : C. monopolistic competition

17. A firm under Perfect Competition is a:

Correct : B. price taker

18. Selling cost is a feature of :

Correct : C. monopolistic competition

19. Oligopoly is characterized by:

Correct : A. a few sellers

20. When there are only two sellers, the market is called as:

Correct : C. duopoly

21. Perfect competition is a market situation under which a commodity is sold at:

Correct : A. uniform price

22. The demand curve of a firm under perfect competition is :

Correct : C. infinitely elastic

23. The price of a commodity under the perfect competition is determined by:

Correct : D. market forces

24. Equilibrium literally means:

Correct : A. balance

25. The price at which the demand and supply are equal is called:

Correct : C. equilibrium price

26. Cost of advertisement and salesmanship is called:

Correct : B. selling cost