Question:

Demand curve is elastic under:

A.

Perfect competition

B.

Monopoly

C.

Monopolistic competition

D.

All of the above

Answer» c. Monopolistic competition

Question:

That the perfectly competitive firm will pick a combination of inputs where the ratio ofeach input’s marginal product to its price is equal follows from

A.

the need to use inputs in fixed proportions

B.

the backward bending supply curve of labour

C.

cost minimization

D.

the attempt to achieve a target rate of return

Answer» c. cost minimization

Question:

Free entry into monopolistically competitive market ensures that all firms will produce at the lowest point of LAC

A.

Always

B.

Sometimes

C.

Never

D.

Cannot say

Answer» c. Never

Question:

Which of the following is a criticism of the theory of monopolistic competition?

A.

It is difficult to define a monopolistically competitive market and to determine the firms and products that comprise it

B.

When product differentiation is slight, each firm\s demand curve is nearly horizontal so the perfectly competitive solution provides an adequate approximation to the monopolistically competitive solution

C.

When there are strong brand preferences and few producers of many differentiated products, or when there are many producers but only a few compete as rivals for any given consumer, then the oligopoly solution provides an adequate approximation to the monopolistically competitive solution

D.

All of the above are correct

Answer» d. All of the above are correct

Question:

A monopolist produces 14,000 units of output and charges Rs.14 per unit. Its marginalrevenue is Rs.8, its marginal cost is Rs.7 and rising, its average total cost is Rs.10, and its average variable cost is Rs.9. The monopolist should

A.

increase curve output, which will result in an increase in the firm\s positive economic profit

B.

increase output, which will reduce the firm\s economic losses

C.

shut down, which will reduce the firm\s economic losses

D.

decrease output, which will result in an increase in the firm\s positive economic

Answer» a. increase curve output, which will result in an increase in the firm\s positive economic profit

Question:

The steepness of the IS curve depends on:

A.

change in interest

B.

Size of the multiplier

C.

both

D.

None

Answer» c. both

Question:

The book “The theory of Monopolistic Competition” is written by

A.

Alfred Marshal

B.

E H Chamberlin

C.

Joan Robinson

D.

J M Keynes

Answer» b. E H Chamberlin

Question:

The price rigidity in an oligopolistic market is explained by _______

A.

price discrimination

B.

product differentiation

C.

bundling

D.

kinked demand curve

Answer» d. kinked demand curve

Question:

Monopoly market is :

A.

Single seller market

B.

single buyer market

C.

single buyer and seller

D.

None

Answer» a. Single seller market

Question:

Discriminating monopoly is possible if two markets have

A.

Differing elasticity of demand

B.

Differing average cost

C.

Same elasticity

D.

Different average cost

Answer» a. Differing elasticity of demand