On This Page
This set of Micro economics 2 Multiple Choice Questions & Answers (MCQs) focuses on Micro Economics 2 Set 14
Q1 | If price is greater than average cost, in the short-run, thecompetitive firm can earn
- Normal profit
- Super normal profit
- Loss
- All of the above
Q2 | If price is less than average cost, in the short-run, the competitivefirm can earn
- Normal profit
- Super normal profit
- Loss
- All of the above
Q3 | Break-even point is a point where price is equal to
- AC
- AVC
- AFC
- MC
Q4 | Shut-down point is a point where price is equal to
- AC
- AVC
- AFC
- MC
Q5 | In the long run, a competitive firm can earn
- Normal profit
- Super normal profit
- Loss
- Any of the above
Q6 | The importance of time element in price determination was firstlyanalyzed by
- Adam smith
- Alfred Marshall
- David Ricardo
- J M Keynes
Q7 | In the short-period,
- All factors are fixed
- Some factors are fixed and others are variable
- All factors are variable
- None of the above
Q8 | In the long-period,
- All factors are fixed
- Some factors are fixed and others are variable
- All factors are variable
- None of the above
Q9 | At the optimum short-run level of output, the firm will be
- Maximizing total profit
- Minimizing total losses
- Either maximizing total profit or minimizing total losses
- Maximizing profit per unit
Q10 | When the perfectly competitive firm and industry are both in longrun equilibrium
- P = MR = SMC = LMC
- P = MR = SAC = LAC
- P = MR =Lowest point on the LAC curve
- All of the above
Q11 | Monopolistic competition is characterized by
- Few firms’ selling differentiated products
- Many firms selling homogeneous product
- Few firms selling homogeneous product
- Many firms selling differentiated products
Q12 | The theory of monopolistic competition was popularized by
- Marshall
- Keynes
- Chamberlin
- Pigou
Q13 | A monopolistically competitive market is distinguished from perfectcompetition by the fact that
- Few sellers
- It has few buyers
- It deals with differentiated products
- None of the above
Q14 | Excess capacity is a hallmark of
- Perfect competition
- Monopoly
- Oligopoly
- Monopolistic competition
Q15 | Monopolistically competitive firms
- Are small in size
- Have small share in the market
- Are large in the size
- Both A and B
Q16 | Selling cost assumes paramount importance in
- Perfect competition
- Monopoly
- Monopolistic competition
- None of the above
Q17 | Under monopolistic competition, there can be freedom of entry inthe sense that there is freedom to produce
- Close substitutes
- Perfect substitutes
- Complements
- None of the above
Q18 | A firm under monopolistic competition advertise because
- To compete successfully with rival
- To lower cost of production
- To increase revenue and sales
- Since it cannot raise price
Q19 | In the case of monopolistic competition,
- Short run supply curve cannot be defined
- MR curve cannot be defined
- AR curve cannot be defined
- None of the above
Q20 | Under monopolistic competition, super normal profit arise when
- AR=AC
- MR=MC
- AR>AC
- AR
Q21 | Which of the following condition are met in the long run equilibriumof the monopolistic competitor earning only normal profit
- MC=AC
- P=AC
- P=MR
- P=MC
Q22 | The term group equilibrium is referred to
- Duopoly
- Monopolistic competition
- Perfect competition
- Oligopoly
Q23 | Increase or decrease in the level of production by a monopolistically competitive firm have ------- impact on price and output decisionsof other firms
- Very significant
- Significant
- Small
- Negligible
Q24 | Monopolistic competitive firm fixes the price of its product
- Independent of the price of close substitutes
- Close to the prices of close substitutes
- At a very high level
- None of the above
Q25 | Under monopolistic competition, an increase in the number of firms producing close substitutes will make the demand curve ofeach firm
- Inelastic
- Elastic
- Downward sloping
- Perfectly inelastic