Basics of General Economics - Market Forms and Price Output Determination Theory
Exam Duration: 45 Mins Total Questions : 30
Which of the following is an element of Market Structure?
- (a)
Buyers & Sellers
- (b)
A product or service
- (c)
Bargaining for a Price
- (d)
All of the above
Electricity Supply Service is an example of
- (a)
Perfect Competition
- (b)
Monopoly
- (c)
Monopolistic Competition
- (d)
Oligopoly.
Toothpaste Manufacturing Industry is an example of
- (a)
Perfect Competition
- (b)
Monopoly
- (c)
Monopolistic Competition
- (d)
Oligopoly.
Automobile (Cars) Manufacturing Industry is an example of
- (a)
Perfect Competition
- (b)
Monopoly
- (c)
Monopolistic Competition
- (d)
Oligopoly.
The relationship Industry = Large Number of Firms, is applicable for
- (a)
Perfect Competition
- (b)
Monopolistic Competition
- (c)
Monopoly
- (d)
Both (a) and (b)
In which form of the market structure is the degree of control over the price of its product by a Firm very large
- (a)
Monopoly
- (b)
Imperfect Competition
- (c)
Oligopoly
- (d)
Perfect Competition
P = MR = MC = AC = is the condition of
- (a)
Long run equilibrium for a Firm under Perfect Competition
- (b)
Long run disequilibrium for a Firm
- (c)
Long run equilibrium for a Firm under Monopoly
- (d)
Long run equilibrium for a Firm under Monopolistic competition
Which of the following is not true about perfect competition?
- (a)
Purchase and sale of homogeneous goods
- (b)
Mobility of factors of production
- (c)
Free entry and exit
- (d)
Presence of advertisement
Under Perfect Competition price of the Product
- (a)
can be controlled by individual Firm
- (b)
cannot be controlled by individual Firm
- (c)
can be controlled within certain limit by individual Firm
- (d)
none of the above
Which of the following is not a characteristic of a "Price Taker'?
- (a)
TR = P x Q
- (b)
AR = Price
- (c)
Negatively - sloped Demand Curve
- (d)
Marginal Revenue = Price
If a Competitive Firm doubles its output, its Total Revenue
- (a)
doubles
- (b)
more than doubles
- (c)
less than doubles
- (d)
cannot be determined because the price of the good may rise or fall
Which is the first order condition for the profit of a firm to be maximum?
- (a)
AC = MR
- (b)
MC = MR
- (c)
MR = AR
- (d)
AC = AR
In Perfect Competition, a Firm increases profit when________ exceeds ________.
- (a)
Total Cost, Total Revenue
- (b)
Marginal Cost, Marginal Revenue
- (c)
Total Revenue, Total Fixed Cost
- (d)
Average Revenue, Average Cost
Under Perfect Competition, the Firm's AR and MR Curve will be the same as
- (a)
Supply Curve
- (b)
Demand Curve
- (c)
Production Possibility Curve
- (d)
Indifference Curve
A Competitive Firm sells its product at Market Price of Rs 51 per unit. The Fixed Cost is 300 and Variable Cost for different level of production are shown in the following table.
| Quantity | Variable Cost | Fixed Cost | Total Cost | AVC | ATC | MC |
|---|---|---|---|---|---|---|
| 0 | 0 | |||||
| 10 | 470 | |||||
| 20 | 980 | |||||
| 30 | 1850 | |||||
| 40 | 3400 | |||||
| 50 | 5950 |
If the Market Price drops from Rs 51 to Rs 47, the Firm should
- (a)
Close down
- (b)
Produce 10 units
- (c)
Produce 30 units
- (d)
Produce 20 units
In case of a profit maximizing Monopolist, what point determines the Selling Price?
- (a)
Point wner'e marginal cost equals average revenue
- (b)
Point where average cost equals marginal revenue
- (c)
Point where average cost equals average revenue
- (d)
Point where marginal cost equals marginal revenue
The Demand Curve facing an industrial Firm under Monopoly is a/an-
- (a)
Horizontal Straight Line
- (b)
Indeterminate
- (c)
Downward Sloping
- (d)
Upward Sloping
A Monopolist who faces a negatively sloped demand curve operates in the region where the elasticity of demand is-
- (a)
Less than one
- (b)
Equal to one
- (c)
Greater than one
- (d)
Between zero and one
Which of these is not a feature of Monopoly?
- (a)
Single Seller
- (b)
Firm = Industry
- (c)
No substitutes
- (d)
Elasticity of Demand = 0
Under Monopoly, the Firm can earn ________ in the short run.
- (a)
Normal Profits only
- (b)
Super Normal Profits
- (c)
Losses
- (d)
All of the above
Under Monopoly, in the short-run, if AR > AC at the point when MC = MR, it means that the Firm-
- (a)
Normal Profits only
- (b)
Super Normal Profits
- (c)
Losses
- (d)
All of the above
The price discrimination under monopoly will be possible under which of the following conditions?
- (a)
The seller has no control over the supply of his product
- (b)
The market has the same conditions all over
- (c)
The price elasticity of demand is different in different markets
- (d)
The price elasticity of demand is uniform
Under Price Discrimination, the Producer Firm may charge lower prices from a market, if Price Elasticity (e)-
- (a)
e = 1
- (b)
e < 1
- (c)
e > 1
- (d)
e = 0
Under Monopolistic Competition, there are ________ Sellers.
- (a)
Many
- (b)
Only one
- (c)
A Few
- (d)
No
Selling outlay is an essential part of which of the following market situation
- (a)
Monopolistic Competition
- (b)
Perfect Competition
- (c)
Monopoly
- (d)
Pure Competition
Through more advertising, a monopolistically competitive Firm has successfully created more demand for its product. It would have resulted in shifting of-
- (a)
AC Curve upward
- (b)
MR Curve to the left
- (c)
AC Curve upward and MR curve to the right
- (d)
AC Curve upward and MR curve to the right
Under Monopolistic Competition, in the long-run, Output is produced at-
- (a)
minimum feasible cost
- (b)
maximum cost
- (c)
optimal, and not necessarily minimum cost
- (d)
zero cost
Which of the following most closely approximates the definition of an Oligopoly?
- (a)
Tobacco Industry
- (b)
Vehicle manufacturers in India
- (c)
Rice Producers
- (d)
Readymade Garments units in a city
The Kinked Demand Hypothesis is designed to explain in the context of Oligopoly-
- (a)
Price and Output Determination
- (b)
Price Rigidity
- (c)
Price Leadership
- (d)
Collusion among Rivals
In both the Chamberlin and Kinked Demand Curve models, the Oligopolists-
- (a)
recognize their independence
- (b)
do not collude
- (c)
tend to keep prices constant
- (d)
all of the above
