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Q.1
When a competitive firm achieves long run equilibrium, then,
P=MC
MR=MC
P=ATC
All of the above
Q.2
What best explains a shift in market supply curve to the right?
An advertising campaign is successful in promoting the good
A new technique makes it cheaper to produce the good
The government introduces a tax on the good
The price of raw materials increases
Q.3
Total costs in the short-term are classified into fixed costs and variable costs. Which one of the following is a variable cost?
Cost of raw material
Cost of equipment
Interest payment on past borrowing
Payment of rent on buildings
Q.4
Suppose the short run cost function can be written as TC=250 + 10Q. Average fixed cost equals
250/Q
250
10
250/Q + 10
Q.5
Price of a product is determined in a free market by
Demand for the product
Supply of the product
Both demand and supply
The government
Q.6
When cross elasticity of demand is a large positive number, one can conclude that
The good is normal
The good is inferior
The good is a substitute
The good is complement
Q.7
Effective demand depends upon
Desire for the commodity
Means to purchase
Willingness to use those means for that purchase
All of the above
Q.8
Quantity demanded is a
Flow concept
Stock concept
Both 'a' and 'b'
None of the above
Q.9
All but one of the following are assumed to remain the same while drawing an individual's demand curve for a commodity. Which one is it?
The preferences of the individual
His monetary income
The price of the commodity under consideration
The prices of other goods
Q.10
At shut down point
Price is equal to AVC
Total revenue is equal to TVC
Total loss of the firm is equal to TFC
All of the above
Q.11
The LAC curve
Falls when the LMC curve falls
Rises when the LMC curve rises
Goes through the lowest point of the LMC curve
Falls when LMC
LAC
Q.12
Normal goods have
Positive income elasticity
Negative income elasticity
Fluctuating income elasticity
Zero income elasticity
Q.13
If the goods are complementary like car and petrol, their cross elasticity is
Negative
Positive
Zero
Infinite
Q.14
The other name of Budget line is
Demand line
Price line
Supply line
None of the above
Q.15
Identify the factor which generally keeps the price-elasticity of demand for a good high.
Its very high price
Its very low price
Large number of substitutes
None of the above
Q.16
The slope of indifference curve indicates
Price ratio between two commodities
Marginal rate of substitution
Factor substitution
Level of indifference
Q.17
The total area under the demand curve of good measures
Marginal utility
Total utility
Consumers surplus
Producer surplus
Q.18
Which of the following is example of external economies of scale?
Discount on purchases of raw materials
Technical progress leads to development of machine at low price
Hiring of specialized staff due to increase in scale of production
A firm starts producing by-products
Q.19
In the short run, when the output of a firm increases, its average fixed cost
Increases
Decreases
Remains constant
First declines and then rises
Q.20
A frim has variable cost of Rs.1000 at 5 units of output. If fixed costs are Rs.400, what will be the average total cost at 5 units of output?
380
280
60
400
Q.21
If marginal opportunity cost is falling, the PPF would be
Straight line
Concave
Backward leading
Convex
Q.22
Calculate the income elasticity for a household when the income of this household rises by 5% and the demand for buttons does not change at all.
Infinity
1
Zero
5
Q.23
Product differentiation is the most important feature of
Monopolistic competition
Monopoly
Oligopoly
Perfect competition
Q.24
A monopolist is able to maximize his profits when
His output is maximum
He charges high price
His average cost is minimum
His marginal cost is equal to marginal revenue
Q.25
In imperfect competition
Excess capacity always exists
Excess capacity never exists
Excess capacity may or may not exist
None of the above
Q.26
If firm's average cost curve is falling then marginal curve must be
Falling
Rising
Below average cost curve
None of the above
Q.27
MC curve cuts ______ curves at their minimum points
AVC and AC
AFC and AVC
AC and AFC
All of the above
Q.28
In perfect competition, in the long run, there will be
Normal profits
Super normal profits
Less production
Cost will be falling
Q.29
An inferior commodity is one which is consumed in smaller quantities when the income of consumer
Becomes nil
Remains the same
Falls
Rises
Q.30
In long run equilibrium, the pure monopolist can make pure profits because of
Blocked entry
The high price he charges
The low LAC costs
Advertising
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