McqMate
These multiple-choice questions (MCQs) are designed to enhance your knowledge and understanding in the following areas: Bachelor of Arts in Economics (BA Economics) .
| 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 | |
| 26. |
The importance of time element in price determination was firstly analyzed by |
| A. | adam smith |
| B. | alfred marshall |
| C. | david ricardo |
| D. | j m keynes |
| Answer» B. alfred marshall | |
| 27. |
In the market period, price determination in the case of a perishable commodity is influenced by its |
| A. | demand |
| B. | supply |
| C. | demand as well as the supply |
| D. | none of the above |
| Answer» A. demand | |
| 28. |
In the short-period, |
| A. | all factors are fixed |
| B. | some factors are fixed and others are variable |
| C. | all factors are variable |
| D. | none of the above |
| Answer» B. some factors are fixed and others are variable | |
| 29. |
In the long-period, |
| A. | all factors are fixed |
| B. | some factors are fixed and others are variable |
| C. | all factors are variable |
| D. | none of the above |
| Answer» C. all factors are variable | |
| 30. |
Zero economic profit arises in the long run in the case of |
| A. | perfect competition |
| B. | monopoly |
| C. | monopolistic competition |
| D. | oligopoly |
| Answer» A. perfect competition | |
| 31. |
Zero economic profit includes |
| A. | zero normal profit |
| B. | normal profit |
| C. | super normal profit |
| D. | average profit |
| Answer» B. normal profit | |
| 32. |
Economic efficiency is achieved in the long run in the case of |
| A. | perfect competition |
| B. | monopoly |
| C. | monopolistic competition |
| D. | oligopoly |
| Answer» A. perfect competition | |
| 33. |
Consumer surplus will be maximum in the case of |
| A. | perfect competition |
| B. | monopoly |
| C. | monopolistic competition |
| D. | oligopoly |
| Answer» A. perfect competition | |
| 34. |
At the optimum short-run level of output, the firm will be |
| A. | maximizing total profit |
| B. | minimizing total losses |
| C. | either maximizing total profit or minimizing total losses |
| D. | maximizing profit per unit |
| Answer» C. either maximizing total profit or minimizing total losses | |
| 35. |
The short-run supply curve of a perfectly competitive firm is given by |
| A. | rising portion of the mc curve over and above the shut-down point |
| B. | rising portion of the mc curve over and above the break-even point |
| C. | rising portion of the mc curve over and above the ac curve |
| D. | rising portion of the mc curve |
| Answer» A. rising portion of the mc curve over and above the shut-down point | |
| 36. |
When the perfectly competitive firm and industry are both in long run equilibrium |
| A. | p = mr = smc = lmc |
| B. | p = mr = sac = lac |
| C. | p = mr =lowest point on the lac curve |
| D. | all of the above |
| Answer» D. all of the above | |
| 37. |
Monopolistic competition is characterized by |
| A. | few firms’ selling differentiated products |
| B. | many firms selling homogeneous product |
| C. | few firms selling homogeneous product |
| D. | many firms selling differentiated products |
| Answer» D. many firms selling differentiated products | |
| 38. |
The theory of monopolistic competition was popularized by |
| A. | marshall |
| B. | keynes |
| C. | chamberlin |
| D. | pigou |
| Answer» C. chamberlin | |
| 39. |
A monopolistically competitive market is distinguished from perfect competition by the fact that |
| A. | few sellers |
| B. | it has few buyers |
| C. | it deals with differentiated products |
| D. | none of the above |
| Answer» C. it deals with differentiated products | |
| 40. |
Excess capacity is a hallmark of |
| A. | perfect competition |
| B. | monopoly |
| C. | oligopoly |
| D. | monopolistic competition |
| Answer» D. monopolistic competition | |
| 41. |
Monopolistically competitive firms |
| A. | are small in size |
| B. | have small share in the market |
| C. | are large in the size |
| D. | both a and b |
| Answer» D. both a and b | |
| 42. |
Selling cost assumes paramount importance in |
| A. | perfect competition |
| B. | monopoly |
| C. | monopolistic competition |
| D. | none of the above |
| Answer» C. monopolistic competition | |
| 43. |
Under monopolistic competition, there can be freedom of entry in the sense that there is freedom to produce |
| A. | close substitutes |
| B. | perfect substitutes |
| C. | complements |
| D. | none of the above |
| Answer» A. close substitutes | |
| 44. |
A firm under monopolistic competition advertise because |
| A. | to compete successfully with rival |
| B. | to lower cost of production |
| C. | to increase revenue and sales |
| D. | since it cannot raise price |
| Answer» C. to increase revenue and sales | |
| 45. |
In the case of monopolistic competition, |
| A. | short run supply curve cannot be defined |
| B. | mr curve cannot be defined |
| C. | ar curve cannot be defined |
| D. | none of the above |
| Answer» A. short run supply curve cannot be defined | |
| 46. |
Under monopolistic competition, super normal profit arise when |
| A. | ar=ac |
| B. | mr=mc |
| C. | ar>ac |
| D. | ar<ac |
| Answer» C. ar>ac | |
| 47. |
Which of the following condition are met in the long run equilibrium of the monopolistic competitor earning only normal profit |
| A. | mc=ac |
| B. | p=ac |
| C. | p=mr |
| D. | p=mc |
| Answer» B. p=ac | |
| 48. |
The term group equilibrium is referred to |
| A. | duopoly |
| B. | monopolistic competition |
| C. | perfect competition |
| D. | oligopoly |
| Answer» B. monopolistic competition | |
| 49. |
Increase or decrease in the level of production by a monopolistically competitive firm have ------- impact on price and output decisions of other firms |
| A. | very significant |
| B. | significant |
| C. | small |
| D. | negligible |
| Answer» D. negligible | |
| 50. |
Monopolistic competitive firm fixes the price of its product |
| A. | independent of the price of close substitutes |
| B. | close to the prices of close substitutes |
| C. | at a very high level |
| D. | none of the above |
| Answer» B. close to the prices of close substitutes | |
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