Micro Economics 2 Set 5 MCQs

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.