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Economics CSEET MCQs part 3

1. In long run, a monopolist can make profit because of:

(a) Low cost

(b) Restricted entry

(c) Product differentiation

(d) High scales of Economy

2. The term differentiated product denotes ................. product used by ........... set of


(a) Same, Differentiated

(b) Different, Differentiated

(c) Same, Same

(d) Different, Same

3. In monopolistic competitive market, seller try to compete on the basis of:

(i) Price

(ii) Aggressive Advertising

(iii) Efficient after sale service

(iv) Product development

(a) Only (i)

(b) Only (iii) and (iv)

(c) Only (ii), (iii) and (iv)

(d) (i), (ii), (iii) and (iv)

4. Which of the following is correct regarding perfect competition?

(i) Firm is the price maker

(ii) AR = MR

(iii) MR is linear and parallel to x - axis

(a) Only (i) and (ii)

(b) Only (ii) and (iii)

(c) Only (i) and (iii)

(d) All (i), (ii) and (iii)

5. Discriminating monopolist charges a higher price from the market which has a relatively

................. demand.

(a) Elastic

(b) Inelastic

(c) Perfectly elastic

(d) Greater than 1

6. In imperfect competition, which of the following curves generally lies below the demand

curve and slopes downward?

(a) Marginal cost

(b) Marginal revenue

(c) Average cpst

(d) Average revenue

7. In the long run, a perfectly competitive firm earns only normal profits because of:

(a) Product homogeneity in the industry

(b) Large number of seller and buyers in the industry

(c) Free entry and exit of firms in the industry

(d) Both (a) and (b) above

8. In India monopoly exists in the following industry?

(a) Internet service providing industry

(b) Rail transportation

(c) Small car industry

(d) Electricity generation.

9. Which of the following is false in a monopolistic competition?

(a) Many buyers and sellers

(b) Identical products

(c) Easy entry and exit

(d) Price of the competitor is the bench mark price

10. In general speaking, market refers to a place but in economic terms refers to .................

(a) Product

(b) Internet

(c) Place again

(d) All of the above

11. ................. refers to the amount of money which a firm realizes by selling certain units of

a commodity .

(a) Total revenue

(b) Average revenue

(c) Marginal revenue

(d) Total product

12. Under which of the following conditions, industry is said to have attained long run


(a) All firms are earning normal profit

(b) No further entry and exit from the market

(c) Both (a) and (b)

(d) All firms are earning supernormal profit.

13. In the following figure, the area ABCP shows

(a) Loss

(b) Normal profit

(c) Super normal profit

(d) Shut down point

14. What is the reason for downward slope of monopolist’s demand curve?

(a) Because monopolist can influence the price

(b) Because monopolist can influence the output

(c) Because the industry’s demand curve is the monopolist’s demand curve

(d) All of the above.

15. In which of the following market situation are the firms mutually interdependent in pricing output decisions?

(a) Oligopoly

(b) Perfect competition

(c) Monopoly

(d) Monopolistic competition

16. A monopolist may determine either ................. or ................. , but he cannot determine ................. .

(a) Price, output, revenue

(b) Price, output, sales volume

(c) Price, output, both

(d) None of the above

17. When all the firms are functioning with normal profit, ................. is said to be in equilibrium.

(a) Firm

(b) Market /

(c) Industry

(d) None of the above.

18. Which of the following equation is correct?

(a) MR = ATR/AQ

(b) MRn = TRn -TRn,

(c) Both (a) and (b)

(d) MR = TR/Q

19. If the firm is not producing anything, it will have an operating loss equal to its ...........

(a) Total cost

(b) Average cost

(c) Fixed cost

(d) Variable cost

20. If new firm enters in the industry in long run in perfect competitive market, supply curve

(a) Shifts to the right

(b) Shifts to the left

(c) Moves downwards

(d) Supply curve wijl not be affected

21. Government fixes the price of critical inputs, which of the following are the critical inputs?

(i) Petrol

(ii) Diesel

(iii) Fertilizers

(iv) Coal

(v) Kerosene

* (a) Only (i), (ii) and (iii)

(b) Only (i), (ii) and (v)

(c) Only (i), (ii), (iii) and (v)

(d) (i), (ii), (iii), (iv) and (v)

22. The price of the product depends upon :

(a) Demand

(b) Supply

(c) Both (a) and (b)

(d) Production

23. Under which of the following condition, monopolist can incur loss?

(a) AC > AR

(b) MC > MR

(c) ATC > AR

(d) All of the above.

24. Monopolistic competition does not exist in the following industry:

(a) Salt

(b) Toothpastes

(c) Ice creams

(d) Exists in all the above industries

25. In a perfectly competitive market, the demand curve is ................. .

(a) Relatively elastic

(b) . Infinitely elastic

(c) Relatively inelastic

(d) Unitary elastic'

26. If demand decreases and supply remains constant, equilibrium price will ................. .

(a) Constant

(b) Moves down

(c) Moves up

(d) No affect

27. Which of the following are the barriers to entry?

(a) Government regulation

(b) Product differentiation

(c) High cost of production

(d) All of the above

28. Soaps are example of

(a) Perfect competition

(b) Monopoly

(c) Oligopoly

(d) Imperfect competition

29. The reason for the kinked demand curve is that:

(a) The oligopolist believe that competitors will follow output increase but not output.

(b) The oligopolist believe that competitors will follow price cuts but not price rises.

(c) Both (a) & (b)

(d) None of these.

30. Kinked demand curve under oligopoly is designed to show:

(a) Price and output determination

(b) Price rigidity

(c) Price leadership

(d) Collusion among rivals

31. ................. is that situation in which a firm bases its market policy, in part on the expected behaviour of a few close rivals.

(a) Oligopoly

(b) Monopolistic Competition

(c) Monopoly

(d) Perfect competition

32. Kinked Demand curve hypotheses is given by:

(a) Alfred Marshal

(b) A.C. Pigou

(c) Sweezy

(d) Hicks & alien

33. Kinked demand curve is observed in ................. .

(a) Dipole Market

(b) Monopoly Market

(c) Competitive Market

(d) Oligopoly Market

34. OPEC is an example of:

(a) Monopolistic competition

(b) Monopoly

(c) Oligopoly

(d) Dipole

35. Externalities may be:

(a) Positive

(b) Negative

(c) Mixed

(d) Both (a) and (b).

36. ........... are defined as economic activities that have positive effect on unrelated third party.

(a) Positive Externalities

(b) Negative Externalities

(c) Both (a) and (b)

(d) None of these.

1 (b) 2 (d) 3 (c) 4 (b)

5 (b) 6 (b) 7 (c) 8 (b) 9 (b) 10 (a)

11 (a) 12 '(c) 13 (c) 14 (c) 15 (a) 16 (c)

17 (c) 18 (c) 19 (c) 20 (a) 21 (d) 22 (c)

23 (C) 24 (d) 25 (b) 26 (b) 27 (d) 28 (d)

29 (b) 30 (b) 31 (a) 32 (c) 33 (d). 34 (c)

35 (d) 36 (a)

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