Economics MCQs

Page No. 323

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


aproduced less and charged a higher price

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b produced more and charged a higher price

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cproduced more and charged a lower price

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d produced less and charged a lower price.

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


a maximized its total revenue

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bset price equal to its average cost

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c. equated marginal revenue and marginal cost

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dmaximized the difference between marginal revenue and marginal cost.

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The slope of marginal revenue curve is ?


aalways equal to one.

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b half as steep as the demand curve

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cthe same as the slope of the demand curve

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dtwice as steep as the demand curve

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Economic profits are ?


athe difference between total revenue and total costs.

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banything greater than the normal opportunity cost of investing

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c the opportunity costs of all inputs

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da rate of profit that is just sufficient to keep owners and investors satisfied

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A normal rate of profit ?


ais the rate of return on investments over the interest rate on risk-free government bonds.

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bis the rate that is just sufficient to keep owners or investors satisfied.

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c is the difference between total revenue and total costs

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d is zero in a perfectly competitive industry.

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


a immediate run

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bintermediate run

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clong run

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dshort run

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View Answer short run

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


athere are many EU and government health controls on cosmetic products

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bthere are a very large number of firms in the industry

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cfirms spend a large amount of money on advertising

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d profit margins are very high for both producers and retailers

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


ano longer influences the amount demand of the firm’s product

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bbecomes a decision variable for the firm

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c is guaranteed to be above a firm’s average cost.

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d is determined by the actions of other firms in the industry

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Market power is ?


aa firm’s ability to monopolies a market completely.

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b a firm’s ability to raise price without losing all demand for its product

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ca firm’s ability to sell any amount of output it desires at the market-determined price.

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da firm’s ability to charge any price it likes

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A firm will shut down in the short run if ?


a fixed costs exceed revenues.

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b it is suffering a loss.

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cvariable costs exceed revenues

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dtotal costs exceed revenues

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