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This set of Micro economics 2 Multiple Choice Questions & Answers (MCQs) focuses on Micro Economics 2 Set 8
Q1 | The following are conditions of perfect competition except
- Strong barriers to entry
- Sellers are large in number
- Commodity produced is Homogenous
- Buyers are large in number
Q2 | The following are conditions of perfect competition except
- Sellers are large in number
- Single buyer
- Commodity produced is homogenous
- Freedom to Entry and exit
Q3 | The condition of short run equilibrium under perfect competition is
- MC=MR
- AC=MR
- AC=AR
- AR=Selling cost
Q4 | The large number of firms producing the same commodity ensure that the individual firmhas no control over
- Price of the commodity
- The quantity of the commodity
- Both of the above
- None of the above
Q5 | Individual firm has no control on the price of the commodity in the market is a condition of
- Perfect competition
- Monopoly
- Monopolistic competition
- Bilateral monopoly
Q6 | In a Perfect competitive market
- Firm is the price giver and the industry is a price taker
- Firm is the price taker and the industry is a price giver
- Both are price makers
- Both are price takers
Q7 | One of the essential conditions of perfect competition is
- Product Differentiation
- Multiplicity of prices for identical product at any one Time
- Many sellers and few buyers
- Only one price for identical goods at any one time
Q8 | Under perfect market conditions the individual firm in the industry has control over theprice of the product.
- Some
- Full
- No
- None of the above
Q9 | The condition of short run equilibrium under perfect competition is
- MC=MR
- MC cuts MR from below
- MC is rising when it cuts AR
- All the above
Q10 | Under perfect market conditions mobility of resources and products are
- Ensured
- Not ensured
- Not considered
- None of the above
Q11 | A firm under perfect competitions shall be in equilibrium when marginal cost will be equal to marginal revenue and marginal cost curve is still
- Declining
- Rising
- Constant
- None of the above
Q12 | Cross elasticity of demand under Perfect competition is?
- Zero
- Infinitely elastic
- Highly elastic
- Highly inelastic
Q13 | Which of the following is not a type of market structure?
- Competitive monopoly
- Oligopoly
- Perfect competition
- All of the above are types of market structures.
Q14 | If the market demand curve for a commodity has a negative slope then the market structuremust be
- perfect competition
- monopoly
- imperfect competition
- The market structure cannot be determined from the information given
Q15 | If a firm sells its output on a market that is characterized by many sellers and buyers, a homogeneous product, unlimited long-run resource mobility, and perfect knowledge, thenthe firm is a
- a monopolist
- an oligopolist
- a perfect competitor
- a monopolistic competitor
Q16 | If a firm sells its output on a market that is characterized by a single seller and manybuyers of a homogeneous product for which there are no close substitutes and barriers to long-run resource mobility, then the firm is
- a monopolist
- an oligopolist
- a perfect competitor
- a monopolistic competitor
Q17 | If a firm sells its output on a market that is characterized by many sellers and buyers, adifferentiated product, and unlimited long-run resource mobility, then the firm is
- a monopolist
- an oligopolist
- a perfect competitor
- a monopolistic competitor
Q18 | If a firm sells its output on a market that is characterized by few sellers and many buyersand limited long-run resource mobility, then the firm is
- a monopolist
- an oligopolist
- a perfect competitor
- a monopolistic competitor
Q19 | If one perfectly competitive firm increases its level of output, market supply
- will increase and market price will fall
- will increase and market price will rise
- and market price will both remain constant
- will decrease and market price will rise
Q20 | Which of the following markets comes close to satisfying the assumptions of a perfectlycompetitive market structure?
- The stock market
- The market for agricultural commodities such as wheat or corn
- The market for petroleum and natural gas
- All of the above come close to satisfying the assumptions of perfect competition
Q21 | A perfectly competitive firm should reduce output or shut down in the short run if marketprice is equal to marginal cost and price is
- greater than average total cost
- less than average total cost
- greater than average variable cost
- less than average variable cost
Q22 | The market demand curve for a perfectly competitive industry is QD = 12 - 2P. Themarket supply curve is QS = 3 + P. The market will be in equilibrium if
- P = 6 and Q = 9
- P = 5 and Q = 2
- P = 4 and Q = 4
- P = 3 and Q = 6
Q23 | Which of the following is a barrier to entry that typically results in monopoly?
- The firm controls the entire supply of a raw material
- Production of the industry\s product is subject to economies of scale over a broad range of output
- Production of the industry\s product requires a large initial capital investment
- The firm holds an exclusive government franchise
Q24 | In the short run, a monopolist will shut down if it is producing a level of output wheremarginal revenue is equal to short-run marginal cost and price is
- greater than average total cost
- less than average total cost
- greater than average variable cost
- less than average variable cost
Q25 | A natural monopoly refers to a monopoly that is defended from direct competition by
- economies of scale over a broad range of output
- a government franchise
- control over a vital input
- a patent or copyright