Economics MCQs

Page No. 299

The use of the word “monopoly” in the name of the market structure called “monopolistic competition” refers to the fact that ?


amonopolistically competitive firms charge prices equal to their marginal costs just like monopolists


ba monopolistically competitive firms faces a downward-sloping demand curve for its differentiated product and so does a monopolist


cmonopolistically competitive markets have free entry and exit just like a monopolistic market


d monopolistically competitive firms produce beyond their efficient scale and so do monopolists



When firms enter a monopolistically competitive market and the business-stealing externality is larger than the product-variety externality then ?


athere are too many firms in the market and market efficiency could be increased if firms exited the market


bthe number of firms in the market is optimal and the market is efficient


c There are too few firms in the market and market efficiency could be be increased with additional entry


dThe only way to improve efficiency in this market is for the government to regulate it like a natural monopoly.



Which of the following is true with regard to monopolistically competitive firms scale of production and pricing decisions Monopolistically competitive firms produce ?


a at the efficient scale and charge a price equal to marginal cost


bat the efficient scale and charge a price above marginal cost


cWith excess capacity and charge a price above marginal cost


dWith excess capacity and charge a price equal to marginal cost



Which of the following is true regarding the production and pricing decisions of monopolistically competitive firms? Monopolistically competitive firms choose the quantity at which marginal cost equals ?


amarginal revenue and then use the demand curve to determine the price consistent with this quantity


b average total cost and then use the supply curve to determine the price consistent with this quantity


c marginal revenue and then use the supply curve to determine the price consistent with this quantity


daverage total cost and then use the demand curve to determine the price consistent with this quantity



Which of the following is true regarding the similarities and differences in monopolistic competition and monopoly ?


athe monopolist faces a downward-sloping demand curve while the monopolistic competitor faces an elastic demand curve


bthe monopolist charges a price above marginal cost while the monopolistic competitor charges a price equal to marginal cost


cThe monopolist makes economic profits in the long run while the monopolistic competitor makes zero economic profits in the long run


dBoth the monopolist and the monopolistic competitor operate at the efficient scale



Which of the following is not a characteristic of a monopolistically competitive market ?


a free entry and exit


blong run economic profits


c many sellers


d differentiated products



UK GDP would exclude which of the following ?


aLawyer services purchased by a home buyer


bThe purchase of a new Nissan produced in Sunderland


cCopper purchased by tap manufacturer Bristan


d A new art gallery purchased by the city of Newcastle



Real GDP is measured in __________ prices while nominal GDP is measured in _________ prices?


aforeign; domestic


bcurrent year; base year


cdomestic; foreign


dbase year; current year



If a cobbler buys leather for Rs100 and thread for Rs50 and uses them to produce and sell Rs500 worth of shoes to consumers the contribution to GDP is ?


a Rs50


b Rs100


c Rs650


dRs500


View Answer Rs500

Gross Domestic Product is the sum of the market value of the ?


aintermediate goods


b final goods and services


cmanufactured goods


d inferior goods and services



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