Question:

The condition of short run equilibrium under monopolistic competition is

A.

MC=MR

B.

AC=MR

C.

AC=AR

D.

AR=MR

Answer» a. MC=MR

Question:

Marginal revenue for a monopolist is equal to

A.

the increased revenue from the sale of an additional unit less the loss of revenue from selling previous units at a lower price

B.

the change in revenue resulting from a one unit change in output

C.

the change in revenue divided by the change in output

D.

all of the above are applicable

Answer» d. all of the above are applicable

Question:

Monopolist will not produce that portion of demand curve where theelasticity of demand

A.

Equal to unity

B.

Less than unity

C.

Greater than zero

D.

None of the above

Answer» b. Less than unity

Question:

Which of the following is not a function of a commercial bank

A.

Accepting deposits

B.

Issuing currency

C.

Advancing loans

D.

Credit creation

Answer» c. Advancing loans

Question:

The term ‘monopsony’ refers to

A.

a single seller

B.

a single buyer

C.

a single buyer and a single seller

D.

None of the above

Answer» b. a single buyer

Question:

Microeconomic theory assumes that all firms maximize profits because

A.

it has been observed that managers always align their goals with investors and seek to maximize short and long run profits

B.

profit is likely to dominate almost all decisions for smaller firms

C.

if managers deviate from profit maximization decisions for too long shareholders or the board of directors will replace them

D.

both (b) and (c)

Answer» d. both (b) and (c)

Question:

The cross elasticity of demand for the monopolist product is

A.

Very low

B.

Moderate

C.

High

D.

Very high

Answer» a. Very low

Question:

Which of the following is NOT a characteristic of a competitive market

A.

it has many buyers

B.

it has many sellers

C.

the products traded are identical

D.

firms set the price (price makers)

Answer» d. firms set the price (price makers)

Question:

Khan’s multiplier is known as:

A.

investment multiplier

B.

employment multiplier

C.

Foreign trade multiplier

D.

Saving multiplier

Answer» b. employment multiplier

Question:

Individual firm has no control on the price of the commodity in the market is acondition of

A.

Perfect competition

B.

Monopoly

C.

Monopolistic competition

D.

Bilateral monopoly

Answer» a. Perfect competition