Deck 5: Microeconomics Concepts and Markets

Question 1

Assertion (A) Many oligopolistic industries exhibit an appreciable degree of Price rigidity or stabilityReason (R) Oligopolists face a demand curve that is highly elastic for price increases and less elastic for price reductions

A)(a) is true but (r) is false.
B)both (a) and (r) are false
C)both (a) and (r) are true and (r) is the correct explanation of (a)
D)both (a) and (r) are true but (r) is not the correct explanation of(a)

Answer 1

both (a) and (r) are true and (r) is the correct explanation of (a)

Question 2

Match the followingA B(i). Demand for inputs Hall and Hitch(ii). Oligopoly Single buyer(iii). Kinked demand theory Cartels(iv). Monopsony Derived demand Codes;

A)(i) (ii) (iii) (iv)
B)(i) (iii) (ii) (iv)
C)(iv) (iii) (ii) (i)
D)(iv) (iii) (i) (ii)

Answer 2

(iv) (iii) (i) (ii)

Question 3

If the hourly wage is Rs.10, and the firm produces 5 additional units of the commodity with an additional hour of labour time, then marginal cost is

A)0.5
B)2
C)5
D)10

Answer 3

2

Question 4

The equilibrium level of output for a perfectly competitive marketis

A)mc = ac
B)mc = mr
C)tc = tr
D)none of the above

Question 5

The term 'monopsony' refers to

A)a single seller
B)a single buyer
C)a single buyer and a single seller
D)none of the above

Question 6

The demand curve for labour under perfectly competitive market is

A)downward sloping
B)horizontal straight line
C)upward sloping
D)none of the above

Question 7

The supply curve of the input that a firm faces under a perfectly competitive market is

A)downward sloping
B)horizontal supply curve
C)upward sloping
D)none of the above

Question 8

The supply curve of an input that a firm faces under an imperfectly competitive market is

A)downward sloping
B)horizontal supply curve
C)upward sloping
D)none of the above

Question 9

Let labour is the only variable input, a monopsonist maximizes his or her profit when

A)mpl = mel
B)mpl < mpl
C)mpl > mpl
D)none of the above

Question 10

A profit maximizing firm under a perfectly competitive market employs more and more variable input labour until

A)mrpl < mel = w
B)mrpl > mel = w
C)mrpl = mel = w
D)none of the above

Question 11

To minimize cost of production at any level of output the monopsonist should continue to substitute labour and capital until

A)mel . mpl = mek . mpk
B)mel / mpl = mek / mpk
C)mel . mpl > mek . mpk
D)mel / mpl > mek / mpk

Question 12

In Chamberlin and Kinked demand curve model, the oligoposist

A)recognize their interdependence
B)do not collude
C)tend to keep prices constant
D)all of the above

Question 13

In the case of price leadership by the dominant firm all the firms in the purely oligopolistic industry will produce their best level of output

A)always
B)never
C)some times
D)often

Question 14

If an oligopolist incurs losses in the short run, then in the long run

A)the oligopolist will go out of business
B)the oligopolist will stay in business
C)the oligopolist will break-even
D)any of the above

Question 15

Existence of large number of buyers and sellers and homogenous product is a feature of :

A)monopoly
B)duopoly
C)perfect competition
D)oligopoly

Question 16

Product differentiation is a characteristic of:

A)monopoly
B)perfect competition
C)monopolistic competition
D)oligopoly

Question 17

A firm under Perfect Competition is a:

A)price maker
B)price taker
C)monopolist
D)none of these

Question 18

Selling cost is a feature of :

A)perfect competition
B)monopoly
C)monopolistic competition
D)oligopoly

Question 19

Oligopoly is characterized by:

A)a few sellers
B)one seller
C)large sellers
D)all of these

Question 20

When there are only two sellers, the market is called as:

A)oligopoly
B)monopsony
C)duopoly
D)bilateral monopoly

Question 21

Perfect competition is a market situation under which a commodity is sold at:

A)uniform price
B)different price
C)higher price
D)lower price

Question 22

The demand curve of a firm under perfect competition is :

A)inelastic
B)perfectly inelastic
C)infinitely elastic
D)unitary elastic

Question 23

The price of a commodity under the perfect competition is determined by:

A)buyer
B)seller
C)firm
D)market forces

Question 24

Equilibrium literally means:

A)balance
B)imbalance
C)change
D)none of these

Question 25

The price at which the demand and supply are equal is called:

A)normal price
B)support price
C)equilibrium price
D)fair price

Question 26

Cost of advertisement and salesmanship is called:

A)sales cost
B)selling cost
C)dual price
D)none of these