Question 1

A firm is able to sell any quantity of a good at a given price. The firm's marginal revenue will be:

Accepted Answer

A) Greater than Average Revenue 
B) Less than Average Revenue 
C) Equal to Average Revenue 
D) Zero 
A) Greater than Average Revenue 
B) Less than Average Revenue 
C) Equal to Average Revenue 
D) Zero C

Question 2

The best, or optimum, level of output for a perfectly competitive firm is given by the point where

Accepted Answer

A) MR equals AC 
B) MR equals MC 
C) MR exceeds MC by the greatest amount 
D) MR equals MC and MC is rising. 
A) MR equals AC 
B) MR equals MC 
C) MR exceeds MC by the greatest amount 
D) MR equals MC and MC is rising. D

Question 3

If P exceeds AVC but is smaller than AC at the best level of output, the firm is

Accepted Answer

A) making a profit 
B) incurring a loss but should continue to produce in the short run 
C) incurring a loss and should stop producing immediately 
D) breaking even. 
A) making a profit 
B) incurring a loss but should continue to produce in the short run 
C) incurring a loss and should stop producing immediately 
D) breaking even. B

Question 4

When AC is more than AR, what is the firm doing?

Accepted Answer

A) Making supernormal profit 
B) Incurring loss 
C) Having breakeven point 
D) Minimising losses 
A) Making supernormal profit 
B) Incurring loss 
C) Having breakeven point 
D) Minimising losses

Question 5

When AR passes through some point between minimum AVC and AC, it is called:

Accepted Answer

A) Supernormal profit 
B) Loss 
C) Breakeven point 
D) Minimising losses 
A) Supernormal profit 
B) Loss 
C) Breakeven point 
D) Minimising losses

Question 6

Demand curve of a firm is perfectly elastic under:

Accepted Answer

A) Perfect competition 
B) Monopoly 
C) Monopolistic competition 
D) Oligopoly 
A) Perfect competition 
B) Monopoly 
C) Monopolistic competition 
D) Oligopoly

Question 7

Homogenous product means products are:

Accepted Answer

A) Similar 
B) Close substitutes 
C) Quite alike 
D) None of the above 
A) Similar 
B) Close substitutes 
C) Quite alike 
D) None of the above

Question 8

Which of the following industries most closely approximates the perfectly competitive model?

Accepted Answer

A) Automobile 
B) cigarette 
C) newspaper 
D) wheat farming. 
A) Automobile 
B) cigarette 
C) newspaper 
D) wheat farming.

Question 9

Breakeven point means:

Accepted Answer

A) AR = AC 
B) TR = TC 
C) No profit, no loss 
D) All of the above 
A) AR = AC 
B) TR = TC 
C) No profit, no loss 
D) All of the above

Question 10

There is inverse relation between price and demand for the product of a firm under:

Accepted Answer

A) Monopoly only 
B) Monopolistic competition only 
C) Both under monopoly and monopolistic competition 
D) Perfect competition only 
A) Monopoly only 
B) Monopolistic competition only 
C) Both under monopoly and monopolistic competition 
D) Perfect competition only

Question 11

When AR = AC, firm is at:

Accepted Answer

A) Supernormal profit point 
B) Loss making point 
C) Breakeven point 
D) Minimise losses point 
A) Supernormal profit point 
B) Loss making point 
C) Breakeven point 
D) Minimise losses point

Question 12

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

Accepted Answer

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. 
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.

Question 13

Total profits are maximized where

Accepted Answer

A) TR equals TC 
B) the TR curve and the TC curve are parallel 
C) the TR curve and the TC curve are parallel and TC exceeds TR 
D) the TR curve and the TC curve are parallel and TR exceeds TC. 
A) TR equals TC 
B) the TR curve and the TC curve are parallel 
C) the TR curve and the TC curve are parallel and TC exceeds TR 
D) the TR curve and the TC curve are parallel and TR exceeds TC.

Question 14

At the best, or optimum, short-run level of output, the firm will be

Accepted Answer

A) maximizing total profits 
B) minimizing total losses 
C) either maximizing total profits or minimizing total losses 
D) maximizing profits per unit. 
A) maximizing total profits 
B) minimizing total losses 
C) either maximizing total profits or minimizing total losses 
D) maximizing profits per unit.

Question 15

Marginal revenue of a firm is constant throughout under:

Accepted Answer

A) Perfect competition 
B) Monopolistic competition 
C) Oligopoly 
D) All the above 
A) Perfect competition 
B) Monopolistic competition 
C) Oligopoly 
D) All the above

Question 16

A seller cannot influence the market price under

Accepted Answer

A) Perfect Competition 
B) Monopoly 
C) Monopolistic competition 
D) All of the above 
A) Perfect Competition 
B) Monopoly 
C) Monopolistic competition 
D) All of the above

Question 17

When AR passes through minimum point of AVC, it is called:

Accepted Answer

A) Breakeven point 
B) Shutdown point 
C) Normal profit point 
D) Supernormal profit point 
A) Breakeven point 
B) Shutdown point 
C) Normal profit point 
D) Supernormal profit point

Question 18

Under perfect competition, MR curve is:

Accepted Answer

A) Horizontal 
B) Vertical 
C) Falling 
D) Rising 
A) Horizontal 
B) Vertical 
C) Falling 
D) Rising

Question 19

The short-run supply curve of the perfectly competitive firm is given by

Accepted Answer

A) the rising portion of its MC curve over and above the shut-down point 
B) the rising portion of its MC curve over and above the break-even point 
C) the rising portion of its MC curve over and above the AC curve 
D) the rising portion of its MC curve. 
A) the rising portion of its MC curve over and above the shut-down point 
B) the rising portion of its MC curve over and above the break-even point 
C) the rising portion of its MC curve over and above the AC curve 
D) the rising portion of its MC curve.

Question 20

At the shut-down point,

Accepted Answer

A) P =AVC 
B) TR = TVC 
C) the total losses of the firm equal TFC 
D) all of the above. 
A) P =AVC 
B) TR = TVC 
C) the total losses of the firm equal TFC 
D) all of the above.

A firm is able to sell any quantity of a good at a given price. The firm's marginal revenue will be:

The best, or optimum, level of output for a perfectly competitive firm is given by the point where

If P exceeds AVC but is smaller than AC at the best level of output, the firm is

When AC is more than AR, what is the firm doing?

When AR passes through some point between minimum AVC and AC, it is called:

Demand curve of a firm is perfectly elastic under:

Homogenous product means products are:

Which of the following industries most closely approximates the perfectly competitive model?

Breakeven point means:

There is inverse relation between price and demand for the product of a firm under:

When AR = AC, firm is at:

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

Total profits are maximized where

At the best, or optimum, short-run level of output, the firm will be

Marginal revenue of a firm is constant throughout under:

A seller cannot influence the market price under

When AR passes through minimum point of AVC, it is called:

Under perfect competition, MR curve is:

The short-run supply curve of the perfectly competitive firm is given by

At the shut-down point,

Market Models, Structures and Competition

Principles of Market Structures and Microeconomic Theory

Market Power and Pricing Strategies

Monopoly and Perfect Competition

Market Structures and Equilibrium in Economics

Market Structures and Perfect Competition

Understanding Market Structures and Firm Behavior

Money and Market Structures

Economy and Inflation

Macroeconomic Policies and Business Cycles

Economics and Market Structures

Competitive and Monopolistic Markets

The Economics of Monopolistic Competition and Monopoly

Monopoly, Price Discrimination, and Oligopoly: Exploring Market Structures and Strategies

Market Structures and Equilibrium

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Exam 4: Market Structures and Pricing

A firm is able to sell any quantity of a good at a given price. The firm's marginal revenue will be:

The best, or optimum, level of output for a perfectly competitive firm is given by the point where

If P exceeds AVC but is smaller than AC at the best level of output, the firm is

When AC is more than AR, what is the firm doing?

When AR passes through some point between minimum AVC and AC, it is called:

Demand curve of a firm is perfectly elastic under:

Homogenous product means products are:

Which of the following industries most closely approximates the perfectly competitive model?

Breakeven point means:

There is inverse relation between price and demand for the product of a firm under:

When AR = AC, firm is at:

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

Total profits are maximized where

At the best, or optimum, short-run level of output, the firm will be

Marginal revenue of a firm is constant throughout under:

A seller cannot influence the market price under

When AR passes through minimum point of AVC, it is called:

Under perfect competition, MR curve is:

The short-run supply curve of the perfectly competitive firm is given by

At the shut-down point,

Market Models, Structures and Competition

Principles of Market Structures and Microeconomic Theory

Market Power and Pricing Strategies

Monopoly and Perfect Competition

Market Structures and Equilibrium in Economics

Market Structures and Perfect Competition

Understanding Market Structures and Firm Behavior

Money and Market Structures

Economy and Inflation

Macroeconomic Policies and Business Cycles

Economics and Market Structures

Competitive and Monopolistic Markets

The Economics of Monopolistic Competition and Monopoly

Monopoly, Price Discrimination, and Oligopoly: Exploring Market Structures and Strategies

Market Structures and Equilibrium

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