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 20 questions. Answers to Economics MCQs are available after clicking on the answer.

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

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

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

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

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

Answer: (d) Supernormal profit


 

MCQ Economics Questions Answers – Price and Output Determination

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

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

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

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

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

Answer: (b) Two equal parts


 

MCQ Economics Questions Answers – Price and Output Determination

11.Which market has characteristics of product differentiation?

(a) Perfect Competition

(b) Monopoly

(c) Monopolistic Competition

(d) Oligopoly

Answer

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

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

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

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

Answer: (c) Monopoly





MCQ Economics Questions Answers – Price and Output Determination

16.Oligopoly haring identical products is:

(a) Pure oligopoly

(b) Imperfect oligopoly

(c) Price leadership

(d) Collusion.

Answer

Answer:(a) Pure oligopoly


 

17.The demand curve of oligopoly is :

(a) Horizontal

(b) Vertical

(c) Kinked

(d) Rising left to right

Answer

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

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

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

Answer: (d) Monopoly


 

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