Practice Test


1) What is the equilibrium market price ? Price (Rs.) : 1 , Demand (tonnes per annum) ; 1,000 , Supply (tonnes per annum) : 400 ; Price (Rs.) : 2 , Demand (tonnes per annum) ; 900 , Supply (tonnes per annum) : 500 ; Price (Rs.) :3 , Demand (tonnes per annum) ; 800 , Supply (tonnes per annum) : 6000 ; Price (Rs.) : 4 , Demand (tonnes per annum) ; 700 , Supply (tonnes per annum) : 700 ; Price (Rs.) : 5 , Demand (tonnes per annum) ; 600 , Supply (tonnes per annum) : 800 ; Price (Rs.) : 6, Demand (tonnes per annum) ; 500 , Supply (tonnes per annum) : 900 ; Price (Rs.) : 7 , Demand (tonnes per annum) ; 400 , Supply (tonnes per annum) : 1,000 ; Price (Rs.) : 8 , Demand (tonnes per annum) ; 900 , Supply (tonnes per annum) : 1,100 ;


2) A market must have commodity buyers & sellers .What else should a market have ?


3) A commodity which is bulky & cheap will have


4) Price is the value of a good in the terms of


5) A large number of buyers & sellers is a feature of


6) The demand curve is undefined under which market structure ?


7) The firm is a price maker in which market structure ?


8) Demand curve is elastic under which market form ?


9) Few sellers is a feature


10) Entry-exit is free under which market structure ?


11) The demand curve is also called


12) When demand is elastic MR is


13) When demand is inelastic MR is


14) A rational producer will always operate on which portion of demand curve ?


15) In economics,a state of balance is called


16) Equilibrium price is also called


17) A firm should produce where MR = MC and


18) In oligopoly ,the demand curve is undefined because of


19) What is that point called when P = AC ?


20) What is that market called when the goods sells at the same price in all parts of the markets


21) Total revenue is a straight positively sloping line from origin under


22) TR minus total explicit cost is called


23) Under perfect competition ,slope of Mr is


24) Under perfect competition ,when price line passes through minimum point of AVC curve ,it is called


25) Under perfect competition ,at the shut down point ,revenue earned by the firm covers which cost ?


26) Under perfect competition losses incurred by the firm at the shut down point are equal to which cost ?


27) Under perfect competition ,at minimizing losses point ,firm incurred losses but it continues to produce because the price covers


28) Under perfect competition the firm will be earning normal profit in the long -run because of which condition ?


29) Under perfect competition long -run equilibrium of the industry occurs at


30) One important condition for successful price discrimination about elasticity of demand is


31) One important condition for successful price discrimination about market structure is


32) Under monopoly , in the long -run what will the firm earn ?


33) Under monopolistic competition , in the long -run compare the profit maximizing output with the least cost output


34) The different between least cost output & profit maximizing output is called


35) What is the formula for calculating loss per unit


36) Behavioural assumption of sweezy's kinked demand curve model is


37) In the kinked -demand curve model the upper portion of the demand curve is


38) In the kinked -demand curve model the lower portion of the demand curve is


39) The kink occur at


40) Under oligopoly the kinked demand curve model explains


41) Firms aim at maximum of which profit ?


42) Under perfect competition ,when price equals AR which is further equal to


43) Under perfect competition ,information is


44) In a monopoly , what happens to entry / exit in long-run ?


45) In the short -run a monopolistic firm can incur losses if


46) Sweezy's model does not explain


47) Which is that market structure in which P = MC in equilibrium ?


48) Assume that when price is Rs.20,quantity demanded is 9 units , & when price is Rs. 19 , quantity demanded is 10 units .Based on this information ,what is the marginal revenue resulting from an increase in output from 9 units to 10 units


49) Assume that when price is Rs.20,quantity demanded is 15 units , & when price is Rs. 18 , quantity demanded is 16 units .Based on this information ,what is the marginal revenue resulting from an increase in output from 15 units to 16 units


50) Suppose a firm is producing a level of output such that MR>MC.What should the firm do to maximize its profits


51) Marginal revenue is equal to :


52) Suppose that a sole proprietorship is earning total revenues of Rs.1,00,000 & is incurring explicit costs of Rs.75,000.If the owner could work for another company for Rs.30,000 a year ,we would conclude that :


53) Which of the following is not an essential condition of pure competition


54) Which is the shape of demand curve faced by a firm under perfect competition


55) Which is the first order condition for the profit of a firm to be maximum ?


56) Which of the following is not a characteristic of a 'price taker' ?


57) Which of the following is false ?


58) With a given supply curve, a decrease in demand causes


59) It is assumed in economic theory that


60) Assume that consumers' incomes & the number of sellers in the market for good A both decrease.Based upon this information we can conclude ,with certainty , that equilibrium


61) Suppose that the supply of camera increases due to an increase in foreign imports.Which of the following will most likely occur ?


62) Assume that in the market for good Z there is a simultaneous increase in demand & the quantity supplied .The result will be


63) Suppose the technology for producing personal computers improves & , at the same time , individual discover new uses for personal computers so that there is greater utilisation of personal computers.Which of the following will happen to equilibrium price & equilibrium quantity ?


64) Which of the following is not a condition of perfect competition


65) Which of the following is not a characteristics of a perfectly competitive market ?


66) Which of the following is not a characteristics of monopolistic competition ?


67) All of the following are characteristic's of a monopoly except


68) Oligopolistic industries are characterized by


69) Price-taking firms,i.e.firms that operate in a perfectly competitive market, are said to be 'small' relative to the market .Which of the following best describes this smallness ?


70) For the price -taking firm :


71) Monopolistic competition differs from perfect competition primarily because


72) The long-run equilibrium outcomes in monopolistic competition & perfect competition are similar , because in both market structures


73) A monopolist is able to maximize his profits when


74) In which form of the market structure is the degree of control over the price of its product by a firm very large ?


75) Which is the other name that is given to the average revenue curve


76) Under which of the following forms of market structure does a firm have no control over the price of its product


77) Discriminating monopoly implies that the monopolist charges different prices for his commodity


78) Price discrimination will be profitable only if the elasticity of demand in different market in which the total market has been divided is


79) The kinked demand hypothesis is designed to explain in the context of oligopoly


80) The firm in a perfectly competitive market is a price taker .This designation as a price taker is based on the assumption that


81) Suppose that the demand curve for the XYZ company slopes downward & to the right .We can conclude that


82) If the firms is in the industry have the following market shares, which market structure would best describe the industry ? Market share : Toothpaste :-18.7% , Dentipaste ;-14.3% , Shinibright;-11.6% , I can't believe its not toothpaste ;-9.4% , Brighter than white ;-8.8% ,Pasty stuff ;-7.4% ,Others ;-29.8% ,


83) The kinked demand curve model of oligopoly assumes that


84) A firm encounters its 'shutdown point' when :


85) Suppose that ,at the profit-maximising level of output, a firm finds that market price is less than average total cost ,but greater than average variable cost.Which of the following statements is correct ?


86) When prices is less than average variable cost at the profit-maximising level of output,a firm should be :


87) A purely competitive firm's supply schedule in the short run is determined by


88) One characteristics not typical of oligopolistic industry is


89) The structure of toothpaste industry in India is best described as


90) The structure of cold drink industry in India is best described as


91) Which of the following is incorrect ?


92) In perfect competition in the long run there will be no


93) When ___,we know that the firms are earning just normal profits


94) When ___,we know that the firms must be producing at a minimum point of the average cost curve & so there will be productive efficiency


95) When_____there will be allocative efficiency meaning thereby that cost of the last unit is exactly equal to the price consumers are willing to pay for it & so that the right goods are being sold to the right people at the right price


96) Agricultural goods markets depict characteristics close to