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This set of Micro economics 2 Multiple Choice Questions & Answers (MCQs) focuses on Micro Economics 2 Set 15

Q1 | The demand curve faced by the a monopolistically competitive firmis very elastic if the degree of product differentiation is
  • Very low
  • Very high
  • Zero
  • Moderate
Q2 | Which one of the following is not a feature of monopolisticcompetition
  • Homogeneous products
  • Differentiated products
  • Selling cost
  • No uniform prices
Q3 | The book “The theory of Monopolistic Competition” is written by
  • Alfred Marshal
  • E H Chamberlin
  • Joan Robinson
  • J M Keynes
Q4 | The book “The Economics of Imperfect Competition” is written by
  • Alfred Marshal
  • E H Chamberlin
  • Joan Robinson
  • J M Keynes
Q5 | It is assumed that the cost curves of all the firms in themonopolistic competition are
  • Different due to product differentiation
  • Never considered in equilibrium
  • Never formulated
  • Same in spite of product differentiation
Q6 | Free entry into monopolistically competitive market ensures that all firms will produce at the lowest point of LAC
  • Always
  • Sometimes
  • Never
  • Cannot say
Q7 | Under monopolistic competition, the long run equilibrium of thefirm is established at the
  • Minimum point of LAC
  • Point where LAC is still falling
  • Point where LAC is rising
  • Minimum point of LMC
Q8 | In short run a firms in monopolistic competition
  • Always earns profit
  • Incurs loss
  • Earns normal profit only
  • May earn normal profit, abnormal profit or incur losses
Q9 | In long run all the firms in the monopolistic competition
  • Always earns profit
  • Incurs loss
  • Earns normal profit only
  • May earn normal profit, abnormal profit or incur losses
Q10 | The short run equilibrium level of output of the monopolisticcompetitor is given by
  • Price = MC
  • Price= AC
  • MC=MR
  • P=MR
Q11 | When a group of monopolistic competition attains the equilibrium,the firms in the group
  • Charge different prices, but produce identical outputs
  • Produce different output, but charge the same price
  • Charge different price and produce different output
  • None of the above
Q12 | The elasticity of average revenue curve of the monopolisticcompetitor, depends on
  • The extent of product differentiation
  • The number of firms
  • Number of buyers
  • Both A & B
Q13 | When demand curve is elastic, MR is
  • 1
  • 0
  • Positive
  • Negative
Q14 | The best or optimum level of output for the pure monopolist
  • MR=MC
  • P=MC
  • P=AC
  • Highest P
Q15 | Which type of competition leads to maximum exploitation ofconsumer
  • Perfect competition
  • Monopoly
  • Monopolistic competition
  • Oligopoly
Q16 | In the short run, the monopolist
  • Breaks even
  • Incurs loss
  • Makes profit
  • Any of the above
Q17 | The demand for the product of a monopoly firm is
  • Inelastic
  • Elastic
  • Unitary elastic
  • Perfectly inelastic
Q18 | If the monopolist incurs loss in the short run, then in the long run
  • The monopolist go out of business
  • The monopolist will stay in the business
  • The monopolist break even
  • Any of the above
Q19 | Which of the form of monopoly regulation is the most advantages tothe consumer
  • Price control
  • Lump sum tax
  • Per unit tax
  • All of the above
Q20 | The monopolist who is in
  • Short run equilibrium will also be in long run equilibrium
  • Long run equilibrium will also be in short run equilibrium
  • Long run equilibrium may or may not be in short run equilibrium
  • None of the above
Q21 | In long run the monopolist can earn abnormal profit because of
  • Blocked entry
  • High selling price
  • Low cost
  • Economies of scale
Q22 | Price discrimination under monopoly is of
  • One
  • Two
  • Three
  • Four
Q23 | The market in which there is a single seller is called
  • Oligopoly
  • Monopsony
  • Monopoly
  • Nine of the above
Q24 | Monopsony refers to
  • Single seller
  • A few sellers
  • Single buyer
  • A few buyers
Q25 | Discriminating monopoly is possible if two markets have
  • Differing elasticity of demand
  • Differing average cost
  • Same elasticity
  • Different average cost