Micro Economics analysis Solved MCQs

1.

Which of the following industry is most closely approximates the perfectly competitive model.

A. automobiles
B. cigarette
C. newspaper
D. wheat farming
Answer» D. wheat farming
2.

Under perfectly competitive market an individual seller is a

A. price taker
B. price maker
C. individual seller can influence the price
D. none of the above
Answer» A. price taker
3.

Uniform price is a feature of

A. perfect competition
B. monopoly
C. monopolistic competition
D. oligopoly
Answer» A. perfect competition
4.

Which of the following is not a feature of a perfectly competitive market

A. large number of buyers and sellers
B. homogeneous product
C. group behaviour
D. perfect competition
Answer» C. group behaviour
5.

A perfectly competitive firm gets only normal profit when

A. mc = mr
B. ac = ar
C. ac < ar
D. mc = ar
Answer» B. ac = ar
6.

Which one of the following is a feature of a perfect competition

A. group behavior
B. selling cost
C. homogeneous product
D. differentiated product
Answer» C. homogeneous product
7.

Average revenue curve under perfect competition is

A. upward sloping
B. downward sloping
C. horizontal straight line
D. vertical straight line
Answer» C. horizontal straight line
8.

Marginal revenue curve under perfect competition is

A. upward sloping
B. downward sloping
C. horizontal straight line
D. vertical straight line
Answer» C. horizontal straight line
9.

Average revenue curve under imperfect competition is

A. upward sloping
B. downward sloping
C. horizontal straight line
D. vertical straight line
Answer» B. downward sloping
10.

Marginal revenue curve under imperfect competition is

A. upward sloping
B. downward sloping
C. horizontal straight line
D. vertical straight line
Answer» B. downward sloping
11.

Perfect competition prevails when the demand for the output of each producer is

A. elastic
B. perfectly elastic
C. inelastic
D. perfectly inelastic
Answer» D. perfectly inelastic
12.

Equilibrium price is determined under perfect competition by

A. the market demand
B. the market supply
C. the interaction between market demand and market supply
D. none of the above
Answer» C. the interaction between market demand and market supply
13.

In the market period, market supply curve is

A. perfectly elastic
B. perfectly inelastic
C. elastic
D. inelastic
Answer» B. perfectly inelastic
14.

Given the supply of a commodity, in the market period, the price of a commodity is determined by

A. the market demand curve alone
B. the market supply curve alone
C. the market demand curve and the market supply curve
D. none of the above
Answer» A. the market demand curve alone
15.

Total profit is maximum when

A. total revenue is equal to total cost
B. total revenue is greater than total cost
C. the positive difference between total revenue and total costs is largest.
D. all of the above
Answer» C. the positive difference between total revenue and total costs is largest.
16.

Total profits are maximized where

A. tr equals tc
B. tr curve and tc curve are parallel
C. tr curve and tc curves are parallel and tc exceeds tr
D. tr curve and tc curves are parallel and tr exceeds tc
Answer» D. tr curve and tc curves are parallel and tr exceeds tc
17.

The equality between MC and MR is

A. a necessary condition for equilibrium of the firm under perfect condition
B. a sufficient condition for equilibrium of the firm under perfect competition
C. a necessary but not sufficient condition for equilibrium of the firm under perfect condition
D. a necessary and sufficient condition for equilibrium of the firm under perfect condition
Answer» C. a necessary but not sufficient condition for equilibrium of the firm under perfect condition
18.

The condition of equilibrium of the industry under perfect competition is

A. mc = mr
B. mc = ac
C. mc = mr = ar
D. mc = ac = ar
Answer» D. mc = ac = ar
19.

In the short-run, a competitive firm can earn

A. normal profit
B. super normal profit
C. loss
D. either a or b or c depending upon the level of average cost.
Answer» D. either a or b or c depending upon the level of average cost.
20.

If price is equal to average cost, in the short-run, the competitive firm can earn

A. only normal profit
B. super normal profit
C. loss
D. all of the above
Answer» A. only normal profit
21.

If price is greater than average cost, in the short-run, the competitive firm can earn

A. normal profit
B. super normal profit
C. loss
D. all of the above
Answer» B. super normal profit
22.

If price is less than average cost, in the short-run, the competitive firm can earn

A. normal profit
B. super normal profit
C. loss
D. all of the above
Answer» C. loss
23.

Break-even point is a point where price is equal to

A. ac
B. avc
C. afc
D. mc
Answer» A. ac
24.

Shut-down point is a point where price is equal to

A. ac
B. avc
C. afc
D. mc
Answer» B. avc
25.

In the long run, a competitive firm can earn

A. normal profit
B. super normal profit
C. loss
D. any of the above
Answer» A. normal profit
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