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Q1: Normal profit occurs when

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Answer: Average revenue equals average cost

Q2: Oligopolistic industries are characterized by

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Answer: a few dominant firms and substantial entry barriers.

Q3: One would expect that collusion among oligopolistic producers would be easiest to achieve in which of the following cases

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Answer: a very few forms producing a homogeneous product.

Q4: Opportunity cost refers to

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Answer: The expected return from the second best alternative use of the resource

Q5: Price discrimination involves changing different prices for a commodity

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Answer: all of these—(a) for different quantities purchases (b) to different classes of customers (c) in different markets

Q6: Price discrimination refers to

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Answer: the seling of a given product at different prices that do not reflect cost differences

Q7: Price elasticity of demand is defined as

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Answer: Percentage change in quantity demanded due to percentage change in price

Q8: Price leadership refers to

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Answer: A form of price collusion

Q9: Pure monopoly may be based on

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Answer: all of these—(a) increasing returns to scale (b) control over the supply of raw materials (c) patent or government franchise

Q10: Short run in production function refers to ‘One factor of production varies keeping all other constant’

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Answer: Wrong – False

Q11: Short run in production function refers to ‘When all factors of production become variable’

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Answer: Wrong – False

Q12: Shut-down point is reached when

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Answer: price covers MC but not AC

Q13: The arger the number of firms and the smaer the degree of product differentiation, the

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Answer: More elastic is the monopolisticaly competitive firm’s demand curve.

Q14: The competitive seers short-run supply curve is

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Answer: that part of its marginal cost curve lying above average variable cost

Q15: The demand curve faced by a perfectly competitive firm is

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Answer: horizontal

Q16: The demand curve faced by a pure monopolist

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Answer: is less eastic than that faced by a single purely competitive firm

Q17: The demand curve facing the pure monopolist is

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Answer: negatively sloped

Q18: The demand curve for a commodity is more elastic

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Answer: all of these—(a) the greater the number of good substitutes available (b) the greater the proportion of income spent on he commodity (c) longer the period of time considered

Q19: The demand for most products varies directly with the change in consumer income. Such products are known as

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Answer: Normal goods

Q20: The elasticity of demand is measured by

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Answer: the percentage change in quantity for a given percentage change in price

Q21: The feature of monopolistic competition that drives a firms profit to zero in the long run is

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Answer: free entry

Q22: The horizontal demand curve for a firm is one of the characteristic features of

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Answer: Perfect competition

Q23: The interest paid by a firm to borrow money capital represents an

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Answer: explicit cost

Q24: The intersection of the market demand and supply curves for a commodity determines

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Answer: all of these–(a) the equilibrium price (b) the equilibrium quantity (c) the price at which there is neither a surplus nor a shortage of the commodity

Q25: The kinked demand curve is used to rationalize

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Answer: price rigidity

Q26: The LAC curve shows the

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Answer: minimum cost of producing various levels of output when plant size can be varied

Q27: The law of diminishing return begins to operate when the

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Answer: marginal product begins to fall

Q28: The law of diminishing return is

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Answer: Short-run law

Q29: The maximum profit condition for a monopoly firm is

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Answer: Marginal revenue is equal to marginal cost

Q30: The MC schedule is obtained by subtracting successive values of

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Answer: Either TC or TVC

Q31: The monopolistic competitor in the short run

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Answer: incurs a loss

Q32: The monopolistic firms demand curve

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Answer: is less eastic than a purely competitive firms demand curve.

Q33: The monopolisticaly competitive seer maximizes profits by producing at the point where

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Answer: marginal revenue equas marginal cost

Q34: The monopolisticaly competitive seers demand curve will tend to become more elastic, the

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Answer: larger the number of competitors

Q35: The nature and shape of AFC is

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Answer: A rectangular Hyperbola

Q36: The term “collusion” refers to

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Answer: A situation in which all firms in an industry decide the price and output

Q37: The term “differentiated product” denotes

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Answer: Same product used in different applications

Q38: The use of highly structured meeting agenda and restricted discussion or interpersonal communication during the decision making process is known as –

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Answer: Nominal Group Technique,

Q39: The wage that an entrepreneur would earn if he worked instead as a manager for someone else in best alternative employment represents

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Answer: implicit cost

Q40: This pricing strategy acts as a barrier to entry to new firms

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Answer: Limit Pricing

Q41: To maximise sales revenue a firm should produce where

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Answer: Marginal revenue is zero

Q42: Total revenue will increase if

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Answer: Demand is inelastic

Q43: Total variable costs remain constant as the output increases

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Answer: Wrong – False

Q44: Transfer payments refer to payments which are made

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Answer: without any exchange of goods and services

Q45: Under which of the following market structures will equilibrium price be equal to marginal cost

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Answer: pure competition

Q46: Variation in Data occurring due to regularly recurring fluctuations in economic activity during each year is

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Answer: Seasonal Variations

Q47: When average product is highest

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Answer: Marginal product is maximum (Note: Best Answer Should: Marginal product is equal to average product)

Q48: When income elasticity of demand for an essential commodity is less than unit, an increase in income leads to

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Answer: less than proportionate increase in demand

Q49: When setting its price, an oligopoly

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Answer: is uncertain about its rivas reaction

Q50: When the income elasticity of demand for a good is negative, the good is

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Answer: Inferior good

Q51: When the law of diminishing return begins to operate, the TVC curve begins to

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Answer: rise at an increasing rate

Q52: Which best describes price discrimination

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Answer: Charging different prices for the same products

Q53: Which of the follow is false in a monopolistic competition

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Answer: Identical products

Q54: Which of the following comes under the broad definition for factors of production

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Answer: Capital

Q55: Which of the following curves is called envelope curve

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Answer: Long run average total cost curve

Q56: Which of the following curves resembles supply curve under perfect competition in the short run

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Answer: Marginal cost curve above shut down point

Q57: Which of the following does not likely to lead to the failure collusive oligopoly

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Answer: Rapidly changing technology

Q58: Which of the following goods can be considered substitutes

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Answer: Tea and Coffee

Q59: Which of the following is a fixed cost

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Answer: cost of machinery and cost of plant

Q60: Which of the following is a unique feature of oligopoly

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Answer: product differentiation

Q61: Which of the following is common feature in both a monopolistic competitive market and oligopoly market

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Answer: Product differentiation

Q62: Which of the following is not a feature of perfect competition

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Answer: Low price; (Low price is not an assumption in the perfect competition, all the remaining are the assumptions under perfect competition. So correct answer is “Low Price”)

Q63: Which of the following is not a precondition for price discrimination

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Answer: The commodity involved must be a durable good.

Q64: Which of the following is not a source of market imperfection

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Answer: Forces of supply and demand (Note: Forces of supply and demand are not sources of market imperfection)

Q65: which of the following is true

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Answer: If the marginal cost is greater than the average cost the average cost

Q66: Which of the following statements concerning indifference curves is true

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Answer: An indifference curve is the locus of points representing various combinations of two goods about which the consumer is indifferent

Q67: Which of the following statements is true with regard to price elasticity of demand

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Answer: Elasticity increases as the price decreases

Q68: Which one of the following is not the characteristic of demand

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Answer: Real market place is required

Q69: Which one of the following is not the characteristic of Perfect

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Answer: Buyers do not know the nature of the product being sold and the prices

Q70: The statement is correct – All costs are variable costs in the long run except LMC

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Answer: NOT Correct

Q71: Based on Figure, how many apartment owners would be willing to sell their apartments for $91,000. online mcq homework

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Answer: One

Q72: In the scenario depicted in Figure, up to ten apartments may be available for sale. Suppose that ten more apartment owners enter the market, for a total of twenty available apartments. These new entrants into the market would be willing to sell their apartments for any price above $90,000. Which of the following statements accurately describes the resulting change in the supply curve. online mcq homework
Question 2: from above question, how many apartment owners would be willing to sell their apartments for $91,000?

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Answer: The supply curve shifts to the right. Ans-2- Eleven

Q73: The graph shown depicts two possible supply curves for production of handmade rugs. S1 is the initial supply curve, and S2 is the new supply curve after a change has occurred in the market. Which of the following events could have caused this shift. online mcq homework

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Answer: Several rug makers have left the market, making handmade rugs more scarce.

Q74: Assume that sofas and arm chairs are substitute goods. The graph shown illustrates the demand curve for sofas. Which of the following events could have triggered the shift in demand from D1 to D2, as shown online mcq homework

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Answer: The price of armchairs decreased

Q75: When the price of cars is $5000, which of the following terms is not an accurate description of the situation online mcq homework

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Answer: The market is in equilibrium

Q76: Beginning from the price of $5000, which of the following events would be predicted by the theory of market adjustment online mcq homework

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Answer: Some buyers who are willing to pay more will bid the price of cars up

Q77: Now suppose that the local government invests in a new, very efficient fleet of buses. Now, it is easy and affordable to get from one place to another without having your own car. What change in the graph shown above is most likely to result from the new bus service online mcq homework

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Answer: The demand curve shifts to the left

Q78: The statement is correct – TFC is inverse “S” Shaped reflecting Laws of Returns

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Answer: NOT Correct

Q79: The statement is correct – Over a very long range of Operation, AFC is Zero

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Answer: NOT Correct

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