Deck 5: Monopoly and Perfect Competition

Question 1

When the perfectly competitive firm and industry are both in long-run equilibrium

A)P = MR = SMC = LMC
B)P = MR = SAC = LAC \\
C)P = MR = lowest point on the LAC curve
D)all of the above.

Answer 1

all of the above.

Question 2

When the perfectly competitive firm but not the industry is in long-run equilibrium,

A)P = MR = SMC = SAC
B)P = MR = LMC = LAC
C)P = MR = SMC = LMC = SAC =LAC
D)P = MR = SMC = LMC = SAC = lowest point on the LAC curve.

Answer 2

P = MR = SMC = LMC = SAC =LAC

Question 3

An increase in output in a perfectly competitive and constant cost industry which is in longrun equilibrium will come

A)entirely from new firms
B)entirely from existing firms
C)either entirely from new firms or entirely from existing firms
D)partly from new firms and partly from existing firms.

Answer 3

entirely from new firms

Question 4

If factor prices and factor quantities move in the same direction, we have

A)a constant cost industry
B)an increasing cost industry
C)a decreasing cost industry
D)any of the above.

Question 5

When the D curve is elastic, MR is

A)1
B)0
C)positive
D)negative.

Question 6

If P = Rs.10 at the point on the D curve where e = 0.5, MR is

A)Rs.5
B)Rs.0
C)2Rs.1
D)2Rs.10.

Question 7

The best, or optimum, level of output for the pure monopolist occurs at the point where

A)STC is minimum
B)TR = STC
C)TR is maximum
D)the TR and STC curves are parallel.

Question 8

At the best, or optimum, level of output for the pure monopolist,

A)MR = SMC
B)P = SMC
C)P = lowest SAC
D)P is highest.

Question 9

If the monopolist incurs losses in the short run, then in the long run

A)the monopolist will go out of business
B)the monopolist will stay in business
C)the monopolist will break even
D)any of the above is possible.

Question 10

The imposition of a maximum price at the point where the monopolist's SMC curve intersects the D curve causes the monopolist to

A)break even
B)incur losses
C)make profits
D)any of the above.

Question 11

Price discrimination is an essential feature of

A)Perfect competition
B)Oligopoly
C)Duopoly
D)monopoly

Question 12

Under monopoly the slope of AR curve is:

A)Upward sloping
B)downward sloping
C)horizontal
D)None of these

Question 13

In a monopsony market there is:

A)Single seller
B)single buyer
C)Two sellers
D)two buyers

Question 14

Third degree price discrimination occurs when the monopolist charges different prices for the same commodity in different

A)Markets
B)places
C)continents
D)countries

Question 15

Price discrimination is possible:

A)Under any market form
B)only under monopoly
C)only under monopolistic completion
D)only in perfect competition

Question 16

Monopolist maximizes profit at the point where

A)MC = AC
B)MC = MR
C)AC = AR
D)MR = AR

Question 17

At the point of equilibrium of a monopolist MC cuts MR curve

A)From below
B)from above
C)at point of equality of AC and AR
D)None

Question 18

A multiplant monopolist maximizes his profit at the point where:

A)MR = MC1
B)MR = MC2
C)MR1 = MR2
D)MR = MC1 = MC2

Question 19

Lerner Index is a measure of:

A)Elasticity of demand
B)Monopoly power
C)Inequality
D)None

Question 20

For a firm with monopoly power

A)Price equals MC
B)Price is less than MC
C)Price exceeds MC
D)None

Question 21

Railways is an example of :

A)Simple monopoly
B)differentiated monopoly
C)Natural monopoly
D)Monopsony

Question 22

A market with only one buyer and one seller is called

A)Oligopsony
B)monopsony
C)Bilateral monopoly
D)None

Question 23

Bilateral monopoly is a market with

A)Single buyer
B)Single seller
C)Single buyer and single seller
D)Few buyers and sellers

Question 24

The dual pricing system of charging high price during peak time and low price during of peak time is called

A)Double pricing
B)Dual pricing
C)kinked pricing
D)peak load pricing

Question 25

Selling more than one product at a single price

A)Dumping
B)Bundling
C)Discounting
D)Off loading