Top 350+ Solved Micro economics 2 MCQ Questions Answer
Q. If a firm sells its output on a market that is characterized by many sellers and buyers, adifferentiated product, and unlimited long-run resource mobility, then the firm is
a. a monopolist
b. an oligopolist
c. a perfect competitor
d. a monopolistic competitor
Q. If a firm sells its output on a market that is characterized by few sellers and many buyersand limited long-run resource mobility, then the firm is
a. a monopolist
b. an oligopolist
c. a perfect competitor
d. a monopolistic competitor
Q. If one perfectly competitive firm increases its level of output, market supply
a. will increase and market price will fall
b. will increase and market price will rise
c. and market price will both remain constant
d. will decrease and market price will rise
Q. Which of the following markets comes close to satisfying the assumptions of a perfectlycompetitive market structure?
a. The stock market
b. The market for agricultural commodities such as wheat or corn
c. The market for petroleum and natural gas
d. All of the above come close to satisfying the assumptions of perfect competition
Q. A perfectly competitive firm should reduce output or shut down in the short run if marketprice is equal to marginal cost and price is
a. greater than average total cost
b. less than average total cost
c. greater than average variable cost
d. less than average variable cost
Q. The market demand curve for a perfectly competitive industry is QD = 12 - 2P. Themarket supply curve is QS = 3 + P. The market will be in equilibrium if
a. P = 6 and Q = 9
b. P = 5 and Q = 2
c. P = 4 and Q = 4
d. P = 3 and Q = 6
Q. Which of the following is a barrier to entry that typically results in monopoly?
a. The firm controls the entire supply of a raw material
b. Production of the industry\s product is subject to economies of scale over a broad range of output
c. Production of the industry\s product requires a large initial capital investment
d. The firm holds an exclusive government franchise
Q. In the short run, a monopolist will shut down if it is producing a level of output wheremarginal revenue is equal to short-run marginal cost and price is
a. greater than average total cost
b. less than average total cost
c. greater than average variable cost
d. less than average variable cost
Q. A natural monopoly refers to a monopoly that is defended from direct competition by
a. economies of scale over a broad range of output
b. a government franchise
c. control over a vital input
d. a patent or copyright
Q. When a perfectly competitive industry is in long-run equilibrium, all firms in the industry
a. earn zero economic profits
b. produce a level of output where short-run marginal cost is equal to short-run average total cost
c. produce a level of output where long-run marginal cost is equal to long-run average cost
d. All of the above are correct
Q. The short-run supply curve of a perfectly competitive firm
a. is equal to that portion of the short-run marginal cost curve that is above the average variable cost curve
b. is equal to that portion of the short-run marginal cost curve that is above the average total cost curve
c. is equal to that portion of the short-run average total cost curve that is above the average variable cost curve
d. None of the above is correct
Q. A monopolized market is in long-run equilibrium when
a. zero economic profit is earned by the monopolist
b. production takes place where price is equal to long-run marginal cost and long-run average cost
c. production takes place where long-run marginal cost is equal to marginal revenue and price is not below long-run average cost
d. All of the above are correct
Q. A monopolist produces 14,000 units of output and charges Rs.14 per unit. Its marginalrevenue is Rs.8, its marginal cost is Rs.7 and rising, its average total cost is Rs.10, and its average variable cost is Rs.9. The monopolist should
a. increase curve output, which will result in an increase in the firm\s positive economic profit
b. increase output, which will reduce the firm\s economic losses
c. shut down, which will reduce the firm\s economic losses
d. decrease output, which will result in an increase in the firm\s positive economic
Q. Which of the following types of firms is likely to be a monopolistic competitor?
a. A local telephone company
b. An automobile manufacturer
c. A restaurant
d. All of the above
Q. Which of the following is a differentiated product?
a. A hamburger
b. A shirt
c. An automobile
d. All of the above