Question:

A major argument in favour of advertising is that:

A.

it provides information to consumers that allows them to make better choices

B.

it helps people reaffirm their tastes and preferences

C.

it reduces competition among firms in the industry, leading to lower prices

D.

it is usually linked to promotions, which help lower the market\s price

Answer» a. it provides information to consumers that allows them to make better choices

Question:

The concept of group equilibrium is related to

A.

Paul M sweezy

B.

Joan robinson

C.

E H Chamberline

D.

E L Edgeworth

Answer» c. E H Chamberline

Question:

Which type of competition leads to maximum exploitation ofconsumer

A.

Perfect competition

B.

Monopoly

C.

Monopolistic competition

D.

Oligopoly

Answer» b. Monopoly

Question:

In the long run, a monopolistically competitive firm earn

A.

Abnormal profit

B.

loss

C.

Normal profit

D.

Differentiated profit

Answer» c. Normal profit

Question:

Average revenue curve under imperfect competition is

A.

Upward sloping

B.

Downward sloping

C.

Horizontal straight line

D.

Vertical straight line

Answer» d. Vertical straight line

Question:

The profit maximizing output level for a monopolist is

A.

the output level where price elasticity of demand is −1 and total revenue is maximized

B.

the output level where price elasticity of demand is +1 and total revenue is maximized

C.

the output level where marginal revenue equals marginal cost

D.

where the difference between price and average total cost is the largest

Answer» c. the output level where marginal revenue equals marginal cost

Question:

Which of the following is not a feature of a perfectly competitive market

A.

Large number of buyers and sellers

B.

Homogeneous product

C.

Group behaviour

D.

Perfect competition

Answer» c. Group behaviour

Question:

For a monopolist, marginal revenue is always less than price because

A.

as output increases, the price of all units must fall to sell the additional unit

B.

because at lower prices, profit margins fall

C.

in order to sell additional quantities, the additional units much be sold at a lower price

D.

because monopolist is a price maker

Answer» a. as output increases, the price of all units must fall to sell the additional unit

Question:

When AC is more than AR, what is the firm doing?

A.

Making supernormal profit

B.

Incurring loss

C.

Having breakeven point

D.

Minimising losses

Answer» b. Incurring loss

Question:

The equilibrium price in the short period is called:

A.

Normal price

B.

Abnormal price

C.

Market price

D.

Bogus price

Answer» c. Market price