Question 1

Which of the following condition are met in the long run equilibrium of the monopolistic competitor earning only normal profit

Accepted Answer

A)  mc=ac
B)  p=ac
C)  p=mr
D)  p=mc B

Question 2

A firm under monopolistic competition advertise because

Accepted Answer

A)  to compete successfully with rival
B)  to lower cost of production
C)  to increase revenue and sales
D)  since it cannot raise price C

Question 3

Under monopolistic competition, super normal profit arise when

Accepted Answer

A)  ar=ac
B)  mr=mc
C)  ar>ac
D)  ar<ac C

Question 4

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

Accepted Answer

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

Question 5

Economic efficiency is achieved in the long run in the case of

Accepted Answer

A)  perfect competition
B)  monopoly
C)  monopolistic competition
D)  oligopoly

Question 6

Increase or decrease in the level of production by a monopolistically competitive firm have ------- impact on price and output decisions of other firms

Accepted Answer

A)  very significant
B)  significant
C)  small
D)  negligible

Question 7

Monopolistic competition is characterized by

Accepted Answer

A)  few firms' selling differentiated products
B)  many firms selling homogeneous product
C)  few firms selling homogeneous product
D)  many firms selling differentiated products

Question 8

Zero economic profit includes

Accepted Answer

A)  zero normal profit
B)  normal profit
C)  super normal profit
D)  average profit

Question 9

Under monopolistic competition, there can be freedom of entry in the sense that there is freedom to produce

Accepted Answer

A)  close substitutes
B)  perfect substitutes
C)  complements
D)  none of the above

Question 10

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

Accepted Answer

A)  rising portion of the mc curve over and above the shut-down point
B)  rising portion of the mc curve over and above the break-even point
C)  rising portion of the mc curve over and above the ac curve
D)  rising portion of the mc curve

Question 11

The term group equilibrium is referred to

Accepted Answer

A)  duopoly
B)  monopolistic competition
C)  perfect competition
D)  oligopoly

Question 12

Excess capacity is a hallmark of

Accepted Answer

A)  perfect competition
B)  monopoly
C)  oligopoly
D)  monopolistic competition

Question 13

In the market period, price determination in the case of a perishable commodity is influenced by its

Accepted Answer

A)  demand
B)  supply
C)  demand as well as the supply
D)  none of the above

Question 14

In the long-period,

Accepted Answer

A)  all factors are fixed
B)  some factors are fixed and others are variable
C)  all factors are variable
D)  none of the above

Question 15

In the short-period,

Accepted Answer

A)  all factors are fixed
B)  some factors are fixed and others are variable
C)  all factors are variable
D)  none of the above

Question 16

In the case of monopolistic competition,

Accepted Answer

A)  short run supply curve cannot be defined
B)  mr curve cannot be defined
C)  ar curve cannot be defined
D)  none of the above

Question 17

Monopolistic competitive firm fixes the price of its product

Accepted Answer

A)  independent of the price of close substitutes
B)  close to the prices of close substitutes
C)  at a very high level
D)  none of the above

Question 18

A monopolistically competitive market is distinguished from perfect competition by the fact that

Accepted Answer

A)  few sellers
B)  it has few buyers
C)  it deals with differentiated products
D)  none of the above

Question 19

Consumer surplus will be maximum in the case of

Accepted Answer