Top 350+ Solved Micro economics 2 MCQ Questions Answer
Q. A firm under perfect competition will maximize profits when its
a. total revenue is equal to its total cost
b. marginal revenue is equal to its marginal cost
c. the difference between marginal revenue and marginal cost is the greatest
d. total cost is greater than total revenue
Q. The short-run supply curve of a firm in perfect competition is the segment of its:
a. marginal cost curve that lies above the minimum average total cost
b. marginal revenue curve that lies above the minimum average total cost
c. marginal cost curve that lies above the minimum average variable cost
d. marginal revenue curve that lies above the minimum average variable cost
Q. In perfect competition the shutdown point is defined by
a. where price = avc
b. where price = ac
c. where price = mc
d. when the firm starts to incur loss
Q. The demand curve faced by a monopoly is:
a. vertical
b. horizontal
c. upward sloping
d. downward sloping
Q. A monopoly is a ________, therefore the demand curve it faces is ________
a. price taker, downward-sloping
b. price taker, horizontal
c. price setter, downward-sloping
d. price setter, horizontal
Q. As output increases in a monopoly, the firm's total revenue:
a. first increases and then decreases
b. first decreases and then increases
c. increases continuously
d. decreases continuously
Q. Marginal revenue in a monopoly is:
a. always greater than the price
b. always equal to the price
c. always smaller than the price
d. sometimes greater and sometimes smaller than the price
Q. Which of the following statements is true regarding a profit maximizing monopoly
a. it will cause a deadweight loss
b. it will produce less than perfect competition
c. it will sell at a higher price than perfect competition
d. all of the above
Q. Which of the following is NOT a characteristic of monopolistic competition?
a. there are many sellers
b. there are many buyers
c. everybody is perfectly informed
d. the goods are identical
Q. The diagram depicting monopolistic competition in the short run:
a. is very similar to the short run monopoly diagram
b. is very similar to the short run perfect competition diagram
c. is very similar to the short run oligopoly diagram
d. is completely different to the diagrams of all the other types of markets
Q. If the Average Total Cost curve of a firm in monopolistic competition happens to beabove the demand curve, it means:
a. the firm will have to sell a lot in order to make a profit
b. the firm will have to sell at a very high price in order to make a profit
c. other firms are performing better in the market than the firm depicted in the diagram
d. that firms in that industry will be incurring losses in the short run
Q. If firms in monopolistic competition are enjoying positive economic profits, in the longrun
a. they will continue enjoying such profits, since new firms will be unable to enter the industry
b. consumers will cease wanting to buy such expensive goods and will switch to cheaper alternatives
c. this will attract new firms into the industry, causing prices to drop and profits to disappear
d. the government will have to step in and regulate the price
Q. Firms in monopolistic competition in long run equilibrium ________ than firms in perfectcompetition.
a. produce less
b. charge a lower price
c. have bigger profits
d. have lower costs