| 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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