(b) MC = AC
(c) MC = MR
(d) AR = MR
49. When ______________________________ , there will be allocative efficiency meaning
thereby that the cost of the last unit is exactly equal to the price consumers are willing to
pay for it and so that the right goods are being sold to the right people at the right price.
(a) MC = MR
(b) MC = AC
(c) MC = AR
(d) AR = MR
50. Agricultural goods markets depict characteristics close to
(a) perfect competition.
(b) oligopoly.
(c) monopoly.
(d) monopolistic Competition.
51. Which of the following is not a characteristic of a competitive market?
a. There are many buyers and sellers in the market.
b. The goods offered for sales are largely the same.
c. Firms generate small but positive super normal profits in the long run.
d. Firms can freely enter or exit the market.
52. Which of the following markets would most closely satisfy the requirements for a
perfectly competitive market?
a. Electricity
b. Cable television
c. Cola
d. Milk
53. The competitive firm maximizes profit when it produces output up to the point where
a. price equals average variable cost
b. marginal revenue equals average revenue
c. marginal cost equals total revenue
d. marginal cost equals marginal revenue
54. The market for hand tools (such as hammers and screwdrivers) is dominated by
Draper, Stanley, and Craftsman. This market is best described as
a. Monopolistically competitive
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PRICE DETERMINATION IN DIFFERENT MARKETS
b. a monopoly
c. an oligopoly
d. perfectly competitive
55. A market structure in which many firms sell products that are similar but not identical
is known as
a. monopolistic competition
b. monopoly
c. perfect competition
d. oligopoly
56. When an oligopolist individually chooses its level of production to maximize its profits, it
charges a price that is
a. more than the price charged by either monopoly or a competitive market
b. less than the price charged by either monopoly or a competitive market
c. more than the price charged by a monopoly and less than the price charged by a
competitive market
d. less then the price charged by a monopoly and more than the price charged by a
competitive market.
57. In the long-run equilibrium of a competitive market, firms operate at
a. the intersection of the marginal cost and marginal revenue
b. their efficient scale
c. zero economic profit
d. all of these answers are correct
58. Which of the following is not a characteristic of a monopolistically competitive market?
a. Free entry and exit
b. Abnormal profits in the longrun
c. Many sellers
d. Differentiated products
59. In a very short period market :
a. the supply is fixed
b. the demand is fixed
c. demand and supply are fixed
d. none of the above
60. Time element was conceived by
a. Adam Smith
b. Alfred Marshall
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c. Pigou
d. Lionel Robinson
61. Total revenue =
a. price ×quantity
b. price × income
c. income ×quantity
d. none of the above
62. Average revenue is the revenue earned
a. per unit of input
b. per unit of output
c. different units of input
d. different units of output
63. AR can be symbolically written as:
a. MR / Q
b. price × quantity
c. TR / Q
d. none of the above
64. AR is also known as:
a. price
b. income
c. revenue
d. none of the above
65. Marginal revenue can be defined as the change in total revenue resulting from the:
a. purchase of an additional unit of a commodity
b. sales of an additional unit of a commodity
c. sale of subsequent units of a product
d. none of the above
66. When e > 1 then MR is
a. zero
b. negative
c. positive
d. one
67. When e = 1 then MR is
a. positive
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PRICE DETERMINATION IN DIFFERENT MARKETS
b. zero
c. one
d. negative
68. When e < 1 then MR is
a. negative
b. zero
c. positive
d. one
69. The term market refers to a:
a. place where buyer and seller bargain a product or service for a price
b. place where buyer does not bargain
c. place where seller does not bargain
d. none of the above
70. In perfect competition firm is the———————-
a. price maker and not price taker
b. price taker and not price maker
c. neither price maker nor price taker
d. none of the above
71. A Monopolist is the price
a. maker
b. taker
c. adjuster
d. none of the above
72. Price discrimination is one of the features of —-
a. monopolistic competition
b. monopoly
c. perfect competition
d. oligopoly
73. Under monopoly, degree of control over price is:
a. none
b. some
c. very considerable
d. none of the above
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74. Generally, market for perishable like butter, eggs, milk, vegetables etc., will have
a. regional market
b. local market
c. national market
d. none of the above
75. Durable goods and industrial items exist in
a. local market
b. regional market
c. national market
d. secular market
76. Secular period is also known as
a. very short period
b. short period
c. very long period
d. long period
77. Stock exchange market is the example for
a. unregulated market
b. regulated market
c. spot market
d. none of the above
78. The market for the ultimate consumers is known as
a. whole sale market
b. regulated market
c. unregulated market
d. retail market
79. The condition for pure competition is
a. large number of buyer and seller, free entry and exist
b. homogenous product
c. both (a) and (b)
d. large number of buyer and seller, homogenous product, perfect knowledge about the
product
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80. Pure oligopoly is based on the———————— products
a. differentiated
b. homogeneous
c. unrelated
d. none of the above
81. In oligopoly, when the industry is dominated by one large firm which is considered as
leader of the group. This is called:
a. full oligopoly
b. collusive oligopoly
c. partial oligopoly
d. syndicated oligopoly
82. When the product are sold through a centralized body oligopoly is know as
a. organized oligopoly
b. partial oligopoly
c. competitive oligopoly
d. syndicated oligopoly
83. When the monopolist divides the consumers into separate sub markets and charges
different prices in different sub-markets it is known as
a. first degree of price discrimination
b. second degree of price discrimination
c. third degree of price discrimination
d. none of the above.
84. Under ————————— the monopolist will fix a price which will take away the
entire consumers’ surplus.
a. second degree of price discrimination
b. first degree of price discrimination
c. third degree of price discrimination
d. none of the above.
85. Price discrimination is related to
a. time
b. size of the purchase
c. income
d. any of the above
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ANSWERS
1. c 2. c 3. c 4. d 5. c 6. a
7. d 8. a 9. b 10. c 11. .d 12. c
13. b 14. d 15. d 16. c 17. c 18. c
19. c 20. d 21. b 22. a 23. d 24. b
25. a 26. c 27. d 28. a 29. b 30. d
31. d 32. b 33. b 34. b 35. c 36. c
37. a 38. b 39. d 40. d 41. d 42. a
43. c 44. d 45. c 46. b 47. a 48. b
49 c 50. a 51. c. 52. d 53. d 54. c
55. a 56. d 57. d 58. b 59. a 60. b
61. a 62. b 63. c 64. a 65. b 66. c
67. b 68. a 69. a 70. b 71. a 72. b
73. c 74. b 75. c 76. c 77. b 78. d
79. c 80. b 81. c 82. d 83. c 84 b
85. d
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