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


b produced more and charged a higher price


cproduced more and charged a lower price


d produced less and charged a lower price.



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


bset price equal to its average cost


c. equated marginal revenue and marginal cost


dmaximized the difference between marginal revenue and marginal cost.



The slope of marginal revenue curve is ?


aalways equal to one.


b half as steep as the demand curve


cthe same as the slope of the demand curve


dtwice as steep as the demand curve



Economic profits are ?


athe difference between total revenue and total costs.


banything greater than the normal opportunity cost of investing


c the opportunity costs of all inputs


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



A normal rate of profit ?


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


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


c is the difference between total revenue and total costs


d is zero in a perfectly competitive industry.



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


a immediate run


bintermediate run


clong run


dshort run


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


bthere are a very large number of firms in the industry


cfirms spend a large amount of money on advertising


d profit margins are very high for both producers and retailers



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


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


bbecomes a decision variable for the firm


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


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



Market power is ?


aa firm’s ability to monopolies a market completely.


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


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


da firm’s ability to charge any price it likes



A firm will shut down in the short run if ?


a fixed costs exceed revenues.


b it is suffering a loss.


cvariable costs exceed revenues


dtotal costs exceed revenues



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