A monopolistically competitive firm is making a loss. It will keep producing as long as its price is high enough to cover which costs?
Correct answer C. Variable costs
Topic / 56 questions
Profit Maximizing Under Perfect Competition And Monopoly MCQs
Page 2 of Profit Maximizing Under Perfect Competition And Monopoly multiple-choice questions with answers. Tap an option to check yourself.
Page 2 of 3
- Miscellaneous Economics 737
- Basic of Economics 430
- Markets, Efficiency And The Public Interest 167
- Agriculture & Irrigation System of Pakistan 126
- Market 87
- Macroeconomic Issues and Analysis 75
- Money, Interest Rates And Output 73
- Introduction To Economics 70
- Population And Development 62
- Profit Maximizing Under Perfect Competition And Monopoly 56
- Income Inequality 52
- Non-Tariff Trade Barriers 48
- Aggregate Supply, Unemployment And Inflation 45
- Natural Resources and the Environment Toward Sustainable Development 44
- Costs , Supply And Perfect Competition 44
- Human Capital 42
- Labour Market 39
- Monopoly 35
- Long Term Economic Growth 30
- Inflation & Productivity 30
- Regional Trading Arrangements 29
- Characteristics and Institutions of Developing Countries 24
- Oligopoly 23
- Consumer Theory vs. Real Consumers 20
- Applied Microeconomics 20
- Alternative Theories Of The Firm 20
- Public Goods 20
- Balance of Payments, Aid and Foreign Investment 19
- Prices, Wages & Taxes 19
- Comparative GDP 19
- Budget Deficits And The Trade Balance 18
- Macroeconomic Policy Tools 18
- Asymmetric Information 17
- Application of Economics 16
- Production Factors 16
- Monopoly & Competition 15
- Capital Formation, Investment Choice, Information Technology, And Technical Progress 15
- Monetary, Fiscal And Incomes Policy, And Inflation 15
- Average And Total Cost 14
- Poverty, Malnutrition, And Income Inequality 12
- Monetary Union 10
Why are the long-run equilibrium outcomes of monopolistic competition and perfect competition similar?
Correct answer D. Firms earn only a normal profit
When one breakfast cereal maker launched an advertising campaign stressing the nutritional value of its cereals, all the other makers launched similar campaigns. What does this suggest about the breakfast cereal market?
Correct answer D. Oligopolistic
Advertisement
Oligopolists are colluding to set price and output so as to maximise total industry profit. If they are forced to stop colluding, what happens to price and total output?
Correct answer C. Decrease; increase
What is a group of firms that jointly decides on prices and output called?
Correct answer C. A cartel
In an oligopoly with a dominant price leader, what level of output is produced?
Correct answer C. Between the competitive level and what a monopolist would choose in the same industry
What is a major weakness of the kinked demand curve model of oligopoly?
Correct answer D. It fails to explain how a firm arrived at its initial price and output decision
Which of the following statements about contestable markets is false?
Correct answer D. For a market to be contestable, the product must be produced with a labour-intensive technology.
In the short run, which costs vary with output?
Correct answer D. Both total variable cost and total cost
Advertisement
What does diminishing marginal returns imply for costs?
Correct answer B. Increasing marginal costs
Two workers produce a total of 80 units and three workers produce 90 units. With three workers, what are the average product and the marginal product of the third worker?
Correct answer D. 30; 10
Handel’s Ice Cream enjoys economies of scale up to a certain size and diseconomies of scale beyond it. What shape is its long-run average cost curve likely to have?
Correct answer A. U-shaped
What is the graph called that shows all combinations of capital and labour that can produce a given level of output?
Correct answer A. An isoquant
What is the graph called that shows every combination of capital and labour that can be bought for a given total cost?
Correct answer C. Isocost line
What is the formula for average variable cost (AVC)?
Correct answer C. TVC/q
Advertisement
A perfectly competitive firm maximises profit by producing 50 units. The market price is £2, total fixed cost is £25 and total variable cost is £40. What is the firm’s economic profit?
Correct answer C. £35
When will a firm shut down in the short run?
Correct answer A. If variable costs exceed revenues
What is market power?
Correct answer D. A firm's ability to raise price without losing all demand for its product
If a firm has some market power, what becomes true of its output price?
Correct answer C. It becomes a decision variable for the firm
Why do economists not regard the cosmetics industry as a good example of perfect competition?
Correct answer C. Firms spend a large amount of money on advertising