MCQ Economics Questions Answers, which are covered in this chapter, relate to the topic, Price and Output Determination. MCQ Economics Questions Answers Test contains 20 questions. Answers to Economics MCQs are available after clicking on the answer.
1.A competitive firm in the short run incur losses. The firm continues production, if:
(a) P > AVC
(b) P = AVC
(c) P < AVC
(d) P > AVC
Answer
Answer: (d) P > AVC
2.Under _______ market condition, firms make normal profits in the long run:
(a) Perfect competition
(b) Monopoly
(c) Oligopoly
(d) None
Answer
Answer: (A) Perfect competition
3.A monopolist is able to maximize his profits when:
(a) His output is maximum
(b) He charges a high price
(c) His average cost is minimum
(d) His marginal cost is equal to marginal revenue
Answer
Answer: (d) His marginal cost is equal to marginal revenue
4.Under Monopolistic competition the cross elasticity of demand for the product of a single firm would be:
(a) Infinite
(b) Highly elastic
(c) Highly inelastic
(d) Zero
Answer
Answer: (d) Zero
5.When AR = ` 10 and AC = ` 8 the firm makes ________ :
(a) Normal profit
(b) Net profit
(c) Gross profit
(d) Supernormal profit
Answer
Answer: (d) Supernormal profit
MCQ Economics Questions Answers – Price and Output Determination
6.What are the conditions for the long run equilibrium of the competitive firm?
(a) LMC = LAC = P
(b) SMC = SAC = LMC
(c) P = MR
(d) All of these
Answer
Answer: (a) LMC = LAC = P
7.Kinked demand curve hypothesis is given by:
(a) Alfred marshal
(b) A.C Pigou
(c) Sweezy
(d) Hicks & allen
Answer
Answer: (c) Sweezy
8.Supernormal profits occur, when :
(a) Total revenue is equal to total cost
(b) Total revenue is equal to variable cost
(c) Average revenue is more than average cost
(d) Average revenue is equal to average cost
Answer
Answer: (c) Average revenue is more than average cost
9.If under perfect competition, the price line lies below the average cost curve, the firm would:
(a) Make only Normal profits
(b) Incur losses
(c) Make abnormal profit
(d) Profit cannot be determined
Answer
Answer: (b) Incur losses
10.The MR curve cuts the horizontal line between Y axis and demand curve into:
(a) Two unequal parts
(b) Two equal parts
(c) May be equal or unequal parts
(d) None of these
Answer
Answer: (b) Two equal parts
MCQ Economics Questions Answers – Price and Output Determination
11.Which market has characteristics of product differentiation?
(a) Perfect Competition
(b) Monopoly
(c) Monopolistic Competition
(d) Oligopoly
Answer
Answer: (c) Monopolistic Competition
12.Which of these are characteristics of Perfect Competition.
(a) Many Sellers & Buyers
(b) Homogeneous Product
(c) Free Entry and Exit
(d) All of the above
Answer
Answer: (d) All of the above
13.MR Curve = AR = Demand Curve is a feature of which kind of Market?
(a) Perfect Competition
(b) Monopoly
(c) Monopolistic
(d) Oligopoly
Answer
Answer: (a) Perfect Competition
14.In the long – run monopolist can:
(a) Incur losses
(b) Must earn supernormal profits
(c) Wants to shut – down
(d) Earns only normal profits.
Answer
Answer: (b) Must earn supernormal profits
15.The demand curve of the firm and industry will be same in which form of market:
(a) Monopolistic Competition
(b) Perfect Competition
(c) Monopoly
(d) Oligopoly.
Answer
Answer: (c) Monopoly
MCQ Economics Questions Answers – Price and Output Determination
16.Oligopoly haring identical products is:
(a) Pure oligopoly
(b) Imperfect oligopoly
(c) Price leadership
(d) Collusion.
Answer
Answer:(a) Pure oligopoly
17.The demand curve of oligopoly is :
(a) Horizontal
(b) Vertical
(c) Kinked
(d) Rising left to right
Answer
Answer: (c) Kinked
18.Demand curve is equal to M. R. curve in which market?
(a) Oligopoly
(b) Monopoly
(c) Monopolistic Competition
(d) Perfect Competition
Answer
Answer: (d) Perfect Competition
19.The Kinked demand hypothesis is designed to explain _____ in the context of oligopoly.
(a) Price and Output Determination
(b) Price Rigidity
(c) Perfect competition
(d) All of the above
Answer
Answer: (d) All of the above
20.Price discrimination can take place only in _______.
(a) Monopolistic Competition
(b) Oligopoly
(c) Perfect competition
(d) Monopoly
Answer
Answer: (d) Monopoly