What kind of curve do firms in perfect competition face?
Correct answer D. A perfectly elastic demand curve
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Costs , Supply And Perfect Competition MCQs
Costs, Supply And Perfect Competition MCQs cover how firms' costs shape their supply decisions and how a perfectly competitive market sets price and output. They suit economics and business students, CSS candidates and lecturer test takers. Every question displays its correct answer instantly, so you can confirm each rule about cost curves and profit maximisation as you practise.
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Where does a profit-maximising firm in perfect competition produce?
Correct answer B. Where marginal revenue equals marginal cost
In the short run, firms in perfect competition will continue to produce as long as which condition is met?
Correct answer C. The price covers average variable cost
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Which of the following is true for a perfectly competitive firm?
Correct answer D. Price equals marginal revenue
Which of these markets comes closest to meeting the requirements of a competitive market?
Correct answer D. Milk
For a competitive firm, what is marginal revenue equal to?
Correct answer C. The price of the good sold
A competitive firm is producing where marginal revenue exceeds marginal cost. How could it increase profit?
Correct answer A. By increasing production
In the long run, what forms a competitive firm’s supply curve?
Correct answer E. The portion of the marginal cost curve that lies above the average total cost curve
How does the long-run market supply curve compare with the short-run one?
Correct answer D. It is always more elastic than the short-run market supply curve
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If all firms in a market have identical costs and the inputs they use are readily available, what will the long-run market supply curve for the good be?
Correct answer B. Perfectly elastic
If the long-run market supply curve for a good is perfectly elastic, what will a rise in demand cause in the long run?
Correct answer B. An increase in the number of firms in the market but no increase in the price of the good
Where do firms in monopolistic competition maximise profit?
Correct answer A. Marginal revenue = marginal cost
What will effective branding tend to do?
Correct answer C. Make demand more price inelastic
Under Porter’s five forces model, conditions are more favourable for firms in an industry when which of the following is true?
Correct answer D. Entry threat is low
In marketing, what does “USP” stand for?
Correct answer C. Unique Selling Proposition
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When is a production technique technically efficient?
Correct answer B. When there is no way to make a given output using less of one input and no more of the other inputs
Decreasing returns to scale means that which variable rises as which other variable rises?
Correct answer B. Long-run average cost rises, output rises
If a firm is not producing the output needed to exploit all economies of scale, what has it failed to reach?
Correct answer B. Minimum efficient scale
Where will a firm make its long-run output decision?
Correct answer C. Where marginal revenue equals long-run marginal cost
At what point does the short-run marginal cost curve cut the short-run average total cost and short-run average variable cost curves?
Correct answer D. At their lowest points
About Costs , Supply And Perfect Competition MCQs
Questions here focus on the price-taking firm. You will see items on why a competitive firm faces a perfectly elastic, horizontal demand curve, why total revenue doubles when output doubles, and why a profit-maximising firm produces where price equals marginal cost. Others deal with the long-run supply curve as the part of marginal cost above minimum average total cost, and which real markets come closest to perfect competition. A few business strategy questions, such as Porter's five forces and USP, also appear. These concepts are core microeconomics for civil service and university papers.
Exams that include Costs , Supply And Perfect Competition MCQs
Pakistan
- CSS
- PMS
- PPSC Lecturer tests
- FPSC
India
- UGC NET
- UPSC CSE
- State PSC exams
Bangladesh
- BCS
- University admission tests (DU, RU, JU)
Frequently asked questions
Why does a perfectly competitive firm face a horizontal demand curve?
A perfectly competitive firm is one of many sellers of an identical product, so it cannot influence the market price. It can sell any quantity at that price but nothing above it. Its demand curve is therefore horizontal, and price equals both average revenue and marginal revenue.
What is the profit-maximising rule in perfect competition?
A perfectly competitive firm maximises profit by producing the quantity where price equals marginal cost, on the rising part of the marginal cost curve. In the short run it keeps producing as long as price covers average variable cost; in the long run price must cover average total cost.
How many Costs, Supply and Perfect Competition MCQs are on MCQs360?
MCQs360 has 44 MCQs on costs, supply and perfect competition, free to practise with no sign-up. Each question shows its answer instantly, so you can quickly check your grasp of marginal cost, firm supply and market structure before an exam.
Last reviewed October 2026