MCQs of Economics – Profit Maximizing Under Perfect Competition And Monopoly

Profit-maximising firms want to maximize the difference between:

Which statement is False?

Which of the following is most likely to be a variable cost for a firm?

The costs that depend on output in the short run are:

The short run, as economists use the phrase, in characterised by:

Diminishing marginal return implies:

Which of the following is a correct statement about the relationship between average product (AP) and marginal product (MP)?

If the total product of two workers is 80 and the total product of 3 workers is 90 then the average product of the third worker is ____ and the marginal product of the third worker is ______.

Engineers for the All-Terrain Bike Company have determined that a 15% increase in all inputs will cause a 15% increase in output Assuming that input prices remain constant, you correctly deduce that such a change will cause _____ as output increases.

Suppose Handel’s Ice Cream experiences economies of scale up to a certain point and diseconomies of scale beyond that point. Its long-run average cost curve is most likely to be:

Most empirical studies show that firm’s cost curves:

A graph showing all the combinations of capital and labour that can used to produce a given amount of output is:

The rate at which a firm can substitute capital for labour and hold output constant is the:

A graph showing all the combinations capital and labour available for a given total cost is the:

The formula for average fixed costs is:

The formula for average variable cost (AVC) is:

Marginal revenue is:

A firm in perfectly competitive industry is producing 50 units, its profit-maximising quantity. Industry price is £2 and total fixed costs and total variable cost are £25 and £40 respectively. The firm’s economic profit is:

Maximum profit can be shown on a diagram using:

A firm will shut down in the short run if:

If you were running a firm in a perfectly competitive industry, you would be spending your time making decisions on:

Market power is:

When ____ substitutes exist, a monoplist has ____ power to raise price.

If a firm has some degree of market power, then output price.

Relative to a competitively organised industry a monopoly

The cosmetics industry is not considered by economists to be a good example of perfect competition because:

The short run, as economists use the phrase, is characterized by:

If firms can neither enter nor leaves an industry, the relevant time period is the:

In the long run:

A normal rate of profit:

If the ABC Typing Service is earning a rate of return greater than the return necessary for the business to continue operations, then:

Economic profits are:

The normal rate of profit for relatively risk-free firms will be ____ the interest rate on risk-free government bonds.

The slope of marginal revenue curve is:

In a monopoly, marginal revenue is:

Suppose we know that a monopolist is maximising its profits. Which of the following is a correct inference? the monopolist has

An industry that realises such large economies of scale in producing its product that single-firm production of that good or service is most efficient is called:

Form society’s point of view, society would be better off if a monopolist

A market is defined as perfectly contestable if:

In contestable markets, large oligopolistic firms, end up behaving like:

Monopolistic competition differs from perfect competition primarily because:

In monopolistic competition firms achieve some degree of market power.

A monopolistically competitive firm that is incurring a loss will produce as long as the price that the firm charges is sufficient to cover.

A firm in a monopolistically competitive industry:

The long-run equilibrium outcomes in monopolistic competition and perfect competition are similar because in both market structures:

Which of the following statements best describes the outcome under monopolistic competition?

Which of the following statements best describes the outcome under monopolistic competition?

A form of industry structure characterised by a few firms, each large enough to influence market price is:

When one firm in the breakfast cereal market started an advertising campaign that stressed the nutritional value of its cereals, all other cereal manufacturers started similar advertising campaign This suggests that the breakfast cereal market is:

An industry that has a relatively small number of firms that dominate the market is called:

Assume that firms in an oligopoly are currently colluding to set price and output to maximise total industry profit. If the oligopolists are forced to stop colluding, the price charged by the oligopolists will ____ and the total output produced will _____

A price- and quantity-fixing agreement is known as:

A group of firms that gets together to make price and output decisions is called:

In which of the following circumstances would a cartel be most likely to work?

An oligopoly with a dominant price leader will produce a level of output:

The kinked demand curve model of oligopoly assumes the elasticity of demand:

A major weakness of the kinked demand curve model of oligopoly is that:

A market is defined as perfectly contestable if:

Which of the following statements is False?

In contestable markets large oligopolistic firms end up behaving like: