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MUMBAI UNIVERSITY IDOL MCQ
QUESTION BANK WITH ANSWER
FOR ONLINE EXAM
TYBA
PAPER : IV ADVANCED ECONOMIC THEORY
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:
(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:
(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:
(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:
(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:
(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
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:
(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:
(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:
(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:
(b) Two equal parts
11.
Which market has characteristics
of product differentiation?
(a)
Perfect Competition
(b)
Monopoly
(c)
Monopolistic Competition
(d)
Oligopoly
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:
(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:
(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:
(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:
(c) Monopoly
16.
Oligopoly haring identical
products is:
(a) Pure
oligopoly
(b)
Imperfect oligopoly
(c) Price
leadership
(d)
Collusion.
Answer:(a)
Pure oligopoly
17.
The demand curve of oligopoly is
:
(a)
Horizontal
(b)
Vertical
(c)
Kinked
(d)
Rising left to right
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:
(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:
(d) All of the above
20.
Price discrimination can take
place only in _______.
(a)
Monopolistic Competition
(b)
Oligopoly
(c)
Perfect competition
(d)
Monopoly
Answer: (d) Monopoly
21.Oligopoly’
refers to:
a)
Many sellers, Few buyers
b)
Many sellers, Many buyers
c)
Few sellers, Many buyers
d)
Few sellers, Few buyers
21.‘Oligopoly’
refers to:
(a) Many
sellers, Few buyers
(b) Many
sellers, Many buyers
(c) Few
sellers, Many buyers
(d) Few
sellers, Few buyers
Answer
Few sellers, Many buyers
22.Which
among the following markets has only one buyer for a particular goods or
service?
a) Monopoly
b) Monopolistic
c)
Monopsony
d) Oligopoly
Answer
Monopsony
23.Which
two of the following statements are true?
a) A
simple monopoly firm always earns super normal profit
b)
Sweezy's kinked demand curve model is the best known model explaining
relatively more satisfactory behaviour of oligopoly firm for price rigidity
c) A
perfectly competitive firm is price - taker
d) Firms
under monopolistic competition earn only normal profits
Choose
the correct option from those below
a) and d)
b) and d)
b) and c)
a) and c)
Answer b)
and c)
24.Excess
capacity is NOT noticed in which of the following market conditions?
a) Monopoly
b) Monopolistic
c)
competition
d) Oligopoly
e) Perfect
competition
Answer
Perfect competition
Which one
of the following is / are hold(s) true to successfully practice price
discrimination?
A. The
firm must be a pure monopoly
B. The
firm must possess market power
C. It
must be difficult for consumer in one market to sell to consumers in the other
market
Choose the most appropriate
answer from the options given below:
A and B
only
B and C
only
A and C
only
C only
Answer B and C only
25.Sub -
optimal allocation of resources under monopoly to cause social welfare loss is
often inferred as
a) Deadweight
loss
b) Allocation
drift
c)
Monopoly loss
d) Opportunity
loss
Answer Deadweight loss
26.The
monopolistic firm will be in equilibrium where
a) Price =
Marginal cost
b) Marginal
revenue = Marginal cost
c)
MR = MC = Price
d) Marginal
cost = Total cost
Answer
Marginal revenue = Marginal cost
27.Which
of the following is/are condition(s) for price discrimination of product?
(A) Firm
must have some monopoly power.
(B) Price
elasticities of demand for the product in different market must differ
(C)
Market must be separable or able to be segmented
(D) Free
entry and exit of firms
Choose
the correct answer from the options given below:
(A) and
(D) only
(B), (C)
and (D) only
(A), (C)
and (D) only
(A), (B)
and (C) only
Answer (A), (B) and (C) only
28.The
monopoly involves as social cost mainly due to its emphasis on which one of the
folowing?
a) Earning
net profit in all possible situations.
b) Lower
output at a higher cost in a normal profit situation
c)
Charging different prices from different categories of buyers of
the same product
d) Attempting
to stall entry of other firms in the market.
Answer Lower output at a higher cost in a normal
profit situation
29.Charging
different prices for the same product in different markets until the MR of the
last unit sold equals the MC of the product sold in each market is described by
______.
(A) Price
discrimination of first degree
(B) Price
discrimination of second degree
(C) Price
discrimination of third-degree
(D)
Equilibrium price
(E) Price
discrimination
Choose
the correct answer from the options given below:
(A) and
(B) only
(A) and
(C) only
(C) and
(E) only
(A) and
(D) only
Answer (C) and (E) only
30.In a
monopolistically competitive market, which of the following hold true?
A. firms
are small relative to the total market
B. no
firm has any market power
C. there
is easy entry and exit in the market
D. few
firms have market power
E. there
is no easy entry and exit in the market
Choose
the most appropriate answer from the options given below:
A, C and
E only
B and C
only
A and B
only
A and C
only
Answer 4 : A and C only
31.Every
factor of production gets reward equal to:
a) Value of
average product
b) Value of
marginal product
c)
Value of total product
d) Total
revenue
Answer:
Option A
32.Under
perfect competition, demand for a factor is its:
a) MRP curve
b) ARP curve
c)
TRP curve
d) TR - TC
Answer: Option A
33.We
should employ units of a factor to a point where:
a) MR is
negative
b) MP is
equal to price of the factor
c)
MP is positive
d) D.MP is
rising
Answer:
Option B
34.If
marginal product of labour rises because of new technology:
a) Wages
will rise
b) Wages
will fall
c)
Wages will be unaffected
d) May rise
or fall
Answer:
Option A
35.One of
the following is NOT a assumption of the marginal productivity theory:
a) Units of
factor are homogeneous
b) Mobility
of factor
c)
Low price of factor
d) Perfect
competition
Answer:
Option C
36.Increasing
the minimum wage for workers will:
a) Sole the
unemployment problem
b) Result in
scarcity of workers
c)
Cause a substitution of capital for labour
d) Decrease
the MP of those workers
Answer:
Option C
37. Who is the author of the book
the˜Wealth of nations?
Adam
Smith
38.Whose definition of economics
is general in nature?
Samuelson
39.Give two examples for social science?
Economics
and History
41.What deals with all aspects of
society?
Sociology
42.Who defined economics as, a Economics
is the science of wealth?
Adam
Smith
43.Who advocated inductive method
in scientific enquiry?
Francis
Bacon
44.Whose definition of economics
studies two sides?
Alfred
Marshall
45.What is the other name for
economics?
Political
economy
46.What are the two kinds of
income?
Money and
Real income
47.What are the kinds of utility
in production?
Form, Place and Time utility
48.Who gave the welfare
definition of economics?
Alfred
Marshall
49.What
is the other name of capital goods?
Investment
goods or Producer goods
50.What
is the aim of production?
Creation
of wealth
51.Give two commodities that are
traded in international market?
Steel,
Cotton, Sugar and Tea
52.Which term used by the early
writes management of the state?
Political
Economy
53.Who gave the theory of
evolution?
Darwin
54.Who is the father of
economics?
Adam
Smith
55.Can production is possible
without use of factors of production?
No
56.What are the kinds of
statements on economics?
Positive and Normative
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