Deck 4: Market Structures and Pricing

Question 1

Homogenous product means products are:

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

Answer 1

None of the above

Question 2

Monopoly means:

A)Single firm
B)No close substitutes
C)Barriers to entry
D)All of the above

Answer 2

All of the above

Question 3

'Homogenous products' is a characteristic of:

A)Perfect competition only
B)Perfect oligopoly only
C)Both (a) and (b)
D)None of the above

Answer 3

Both (a) and (b)

Question 4

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

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

Question 5

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

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

Question 6

Differentiated products is a characteristic of:

A)Monopolistic competition only
B)Oligopoly only
C)Both monopolistic competition and oligopoly
D)Monopoly

Question 7

Demand curve of a firm is perfectly elastic under:

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

Question 8

Marginal revenue of a firm is constant throughout under:

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

Question 9

A seller cannot influence the market price under

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

Question 10

There are only a few sellers under

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

Question 11

Under perfect competition, MR curve is:

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

Question 12

When AR is above AC, firm earns:

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

Question 13

When AR = AC, firm is at:

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

Question 14

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

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

Question 15

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

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

Question 16

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

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

Question 17

Breakeven point means:

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

Question 18

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

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

Question 19

Given the supply of a commodity in the market period, the price of the 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.

Question 20

Total profits are maximized where

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 21

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

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

Question 22

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

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

Question 23

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

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.

Question 24

At the shut-down point,

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

Question 25

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

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.