MCQ Economics Questions Answers – Price and Output Determination

MCQ Economics Questions Answers, which are covered in this chapter, relate to the topic, Price and Output Determination. MCQ Economics Questions Answers Test contains 10 questions. Answers to Economics MCQs are available at the end of the last question.




1. A competitive firm in the sort run incure losses. The firm continues production, if:

(a)    P > AVC

(b)    P = AVC

(c)     P < AVC

(d)    P > AVC

2. Under _______ market condition, firms make normal profits in the long run:

(a)    Perfect competition

(b)    Monopoly

(c)     Oligopoly

(d)    None

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

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

5. When AR = ` 10 and AC = ` 8 the firm makes ________ :

(a)    Normal profit

(b)    Net profit

(c)     Gross profit

(d)    Supernormal profit

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




7. Kinked demand curve hypothesis is given by:

(a)    Alfred marshal

(b)    A.C Pigou

(c)     Sweezy

(d)    Hicks & allen

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

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

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

 

ANSWERS

1. (d) P > AVC

2. (a) Perfect competition

3. (d) His marginal cost is equal to marginal revenue

4. (d) Zero

5. (d) Supernormal profit

6. (a) LMC = LAC = P

7. (c) Sweezy

8. (c) Average revenue is more than average cost

9. (b) Incur losses

10 (b) Two equal parts

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