On This Page

This set of Micro economics 2 Multiple Choice Questions & Answers (MCQs) focuses on Micro Economics 2 Set 5

Q1 | Homogenous product means products are:
  • Similar
  • Close substitutes
  • Quite alike
  • None of the above
Q2 | Monopoly means:
  • Single firm
  • No close substitutes
  • Barriers to entry
  • All of the above
Q3 | ‘Homogenous products’ is a characteristic of:
  • Perfect competition only
  • Perfect oligopoly only
  • Both (a) and (b)
  • None of the above
Q4 | There is inverse relation between price and demand for the product of a firm under:
  • Monopoly only
  • Monopolistic competition only
  • Both under monopoly and monopolistic competition
  • Perfect competition only
Q5 | A firm is able to sell any quantity of a good at a given price. The firm’s marginal revenuewill be:
  • Greater than Average Revenue
  • Less than Average Revenue
  • Equal to Average Revenue
  • Zero
Q6 | Differentiated products is a characteristic of:
  • Monopolistic competition only
  • Oligopoly only
  • Both monopolistic competition and oligopoly
  • Monopoly
Q7 | Demand curve of a firm is perfectly elastic under:
  • Perfect competition
  • Monopoly
  • Monopolistic competition
  • Oligopoly
Q8 | Marginal revenue of a firm is constant throughout under:
  • Perfect competition
  • Monopolistic competition
  • Oligopoly
  • All the above
Q9 | A seller cannot influence the market price under
  • Perfect Competition
  • Monopoly
  • Monopolistic competition
  • All of the above
Q10 | There are only a few sellers under
  • Perfect Competition
  • Monopolistic competition
  • Monopoly
  • Oligopoly
Q11 | Under perfect competition, MR curve is:
  • Horizontal
  • Vertical
  • Falling
  • Rising
Q12 | When AR is above AC, firm earns:
  • Supernormal profit
  • Loss
  • Breakeven point
  • Minimise losses
Q13 | When AR = AC, firm is at:
  • Supernormal profit point
  • Loss making point
  • Breakeven point
  • Minimise losses point
Q14 | When AC is more than AR, what is the firm doing?
  • Making supernormal profit
  • Incurring loss
  • Having breakeven point
  • Minimising losses
Q15 | When AR passes through some point between minimum AVC and AC, it is called:
  • Supernormal profit
  • Loss
  • Breakeven point
  • Minimising losses
Q16 | When AR passes through minimum point of AVC, it is called:
  • Breakeven point
  • Shutdown point
  • Normal profit point
  • Supernormal profit point
Q17 | Breakeven point means:
  • AR = AC
  • TR = TC
  • No profit, no loss
  • All of the above
Q18 | Which of the following industries most closely approximates the perfectly competitivemodel?
  • Automobile
  • cigarette
  • newspaper
  • wheat farming.
Q19 | Given the supply of a commodity in the market period, the price of the commodity isdetermined by
  • the market demand curve alone
  • the market supply curve alone
  • the market demand curve and the market supply curve
  • none of the above.
Q20 | Total profits are maximized where
  • TR equals TC
  • the TR curve and the TC curve are parallel
  • the TR curve and the TC curve are parallel and TC exceeds TR
  • the TR curve and the TC curve are parallel and TR exceeds TC.
Q21 | The best, or optimum, level of output for a perfectly competitive firm is given by the pointwhere
  • MR equals AC
  • MR equals MC
  • MR exceeds MC by the greatest amount
  • MR equals MC and MC is rising.
Q22 | At the best, or optimum, short-run level of output, the firm will be
  • maximizing total profits
  • minimizing total losses
  • either maximizing total profits or minimizing total losses
  • maximizing profits per unit.
Q23 | If P exceeds AVC but is smaller than AC at the best level of output, the firm is
  • making a profit
  • incurring a loss but should continue to produce in the short run
  • incurring a loss and should stop producing immediately
  • breaking even.
Q24 | At the shut-down point,
  • P =AVC
  • TR = TVC
  • the total losses of the firm equal TFC
  • all of the above.
Q25 | The short-run supply curve of the perfectly competitive firm is given by
  • the rising portion of its MC curve over and above the shut-down point
  • the rising portion of its MC curve over and above the break-even point
  • the rising portion of its MC curve over and above the AC curve
  • the rising portion of its MC curve.