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c Economics MCQs [set-7]
Mathematical
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151. In an input-output matrix, the principal diagonal of this matrix
represents the amount of input each industry takes from ___output.
A. other industry’s
B. government sector’s
C. household sector’s
D. its own output
Answer: D
152. P = a – bQ is the demand cure of a monopolist. Which of the following
statements is true?
A. AR & MR are equal
B. The rate of decline of MR is twice the rate of decline of AR
C. The demand curve has unit elasticity
D. slope of MR is zero.
Answer: B
153. The best or optimum level of output for a perfectly competitive firm is
given by the point:
A. MR = AC
B. MR = MC
C. MR exceeds MC by the greater amount
D. MR = MC and MC is rising
Answer: D
154. In a monopoly, marginal revenue is:
A. equal to AR
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B. less than AR
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C. more than AR c
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D. initially less than AR then more than AR
Answer: B
155. In monopoly, when the demand curve is elastic, MR is:
A. 1
B. 0
C. positive
D. negative
Answer: C
156. In monopoly, if p = Rs. 10 at the point on the demand curve where ? =
0.5, MR is:
A. 5
B. 0
C. ?1
D. ?10
Answer: D
157. If the demand curve for a monopolist is P = 100 -20Q, then the
marginal revenue of that firm is given by the equation:
A. MR = 200 ? 20Q
B. MR = 50 ? 40Q
C. MR = 100 ? 20Q
D. MR = 100 ? 40Q
Answer: D
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158. If the demand facing a monopolist is P = 100 ? 10Q and marginal cost
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is constant at 20, then the profit maximizing price and quantity for this
monopolist are:
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A. P = 60 and Q = 4
B. P = 20 and Q = 8
C. P = 90 and Q = 10
D. P = 4 and Q = 60
Answer: A
159. A profit-maximizing monopoly firm with a demand curve P = 50 ? Q is
a perfect pricediscriminator. If it has marginal costs of Rs. 10/unit and fixed
costs of Rs. 30, it will produce _____ units of output and will make______
profit.
A. 40; Rs. 400
B. 40; Rs. 770
C. 20; Rs. 370
D. 20; Rs. 400
Answer: B
160. A price discriminating Monopolist is considered more efficient than a
single prices monopolist because:
A. a price discriminating Monopolist knows its consumers better
B. a price discriminating Monopolist can set prices more efficiently
C. a price discriminating Monopolist produces a higher level of output
D. a price discriminating Monopolist can produce it’s output at a lower cost
Answer: C
161. One difference between perfect competition and monopolistic
competition is that:
A. In perfect competition, the products are slightly differentiated between firms
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B. There are a larger number of firms in monopolistic competition
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C. There are a smaller number of firms in perfectly competitive industries
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D. Firms in monopolistic competition have some degree of market power
Answer: D
162. A perfectly competitive firm should reduce output or shut down in the
short run if market price is equal to marginal cost and price is:
A. greater than average total cost
B. less than average total cost
C. greater than average variable cost
D. less than average variable cost
Answer: D
163. The market demand curve for a perfectly competitive industry is QD =
12 - 2P. The market supply curve is QS = 3 + P. The market will be in
equilibrium if:
A. P = 6 and Q =
B. P = 3 and Q = 6
C. P = 4 and Q = 4
D. P = 5 and Q = 2
Answer: B
164. In the short run, a monopolist will shut down if it is producing a level
of output where marginal revenue is equal to short-run marginal cost and
price is:
A. less than average variable cost
B. greater than average variable cost.
C. less than average total cost
D. greater than average total cost
Answer: A
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