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This set of Micro economics 2 Multiple Choice Questions & Answers (MCQs) focuses on Micro Economics 2 Set 2
Q1 | A firm under perfect competition will maximize profits when its
- total revenue is equal to its total cost
- marginal revenue is equal to its marginal cost
- the difference between marginal revenue and marginal cost is the greatest
- total cost is greater than total revenue
Q2 | The short-run supply curve of a firm in perfect competition is the segment of its:
- marginal cost curve that lies above the minimum average total cost
- marginal revenue curve that lies above the minimum average total cost
- marginal cost curve that lies above the minimum average variable cost
- marginal revenue curve that lies above the minimum average variable cost
Q3 | In perfect competition the shutdown point is defined by
- where price = avc
- where price = ac
- where price = mc
- when the firm starts to incur loss
Q4 | The demand curve faced by a monopoly is:
- vertical
- horizontal
- upward sloping
- downward sloping
Q5 | A monopoly is a ________
- price taker
- price accepter
- price maker
- price neutral
Q6 | A monopoly is a ________, therefore the demand curve it faces is ________
- price taker, downward-sloping
- price taker, horizontal
- price setter, downward-sloping
- price setter, horizontal
Q7 | As output increases in a monopoly, the firm's total revenue:
- first increases and then decreases
- first decreases and then increases
- increases continuously
- decreases continuously
Q8 | Marginal revenue in a monopoly is:
- always greater than the price
- always equal to the price
- always smaller than the price
- sometimes greater and sometimes smaller than the price
Q9 | Which of the following statements is true regarding a profit maximizing monopoly
- it will cause a deadweight loss
- it will produce less than perfect competition
- it will sell at a higher price than perfect competition
- all of the above
Q10 | In India, which law deals with monopolies
- fera
- fema
- mrtp
- mnrgea
Q11 | Which of the following is NOT a characteristic of monopolistic competition?
- there are many sellers
- there are many buyers
- everybody is perfectly informed
- the goods are identical
Q12 | The diagram depicting monopolistic competition in the short run:
- is very similar to the short run monopoly diagram
- is very similar to the short run perfect competition diagram
- is very similar to the short run oligopoly diagram
- is completely different to the diagrams of all the other types of markets
Q13 | If the Average Total Cost curve of a firm in monopolistic competition happens to beabove the demand curve, it means:
- the firm will have to sell a lot in order to make a profit
- the firm will have to sell at a very high price in order to make a profit
- other firms are performing better in the market than the firm depicted in the diagram
- that firms in that industry will be incurring losses in the short run
Q14 | If firms in monopolistic competition are enjoying positive economic profits, in the longrun
- they will continue enjoying such profits, since new firms will be unable to enter the industry
- consumers will cease wanting to buy such expensive goods and will switch to cheaper alternatives
- this will attract new firms into the industry, causing prices to drop and profits to disappear
- the government will have to step in and regulate the price
Q15 | Firms in monopolistic competition in long run equilibrium ________ than firms in perfectcompetition.
- produce less
- charge a lower price
- have bigger profits
- have lower costs
Q16 | In monopolistic competition in long run equilibrium, the price will be equal to:
- the marginal cost
- marginal revenue
- average variable cost
- average total cost
Q17 | A major critique of advertising is that
- it provides information to consumers that they would be better off without
- it manipulates people\s tastes, leading people to make bad choices
- it promotes excessive competition among firms in the industry
- it is usually linked to promotions, which undermine the market\s price
Q18 | A major argument in favour of advertising is that:
- it provides information to consumers that allows them to make better choices
- it helps people reaffirm their tastes and preferences
- it reduces competition among firms in the industry, leading to lower prices
- it is usually linked to promotions, which help lower the market\s price
Q19 | Branding can be good for society because:
- it allows people to show off the branded goods they use or wear
- it keeps generic goods from taking over the market
- it provides useful information to consumers about the quality of branded goods
- it helps firms enjoy higher prices and profits
Q20 | Which of the following statements is FALSE?
- a monopoly is an industry with only one seller
- an oligopoly is an industry with only a few sellers
- perfect competition is an industry with many sellers
- monopolistic competition is an industry with only a few sellers
Q21 | Monopsony is a market with
- one buyer
- one seller
- many buyers
- one buyer and one seller
Q22 | A bilateral monopoly is a market structure consisting of
- one buyer
- one seller
- many buyers
- one buyer and one seller
Q23 | A bilateral monopoly is a market structure consisting of both a ______and a _____
- oligopoly and monopoly
- monopoly and monopsony
- oligopoly and perfect competition
- monopoly and perfect competition
Q24 | Monopsony is a market with ______ buyers
- many
- few
- one
- one hundred
Q25 | A ___________occurs in an industry where there is only one producer of a good and onlyone supplier.
- bilateral monopoly
- monopoly
- monopsony
- duopoly