Q1.
In the table below what will be equilibrium market price?
In the table below what will be equilibrium market price?
(a) Rs. 20
(b) Rs. 30
(c) Rs. 40
(d) Rs. 50
Q2. Assume
that when price is Rs. 20, the quantity demanded is 9 units, and when price is
Rs. 19, the quantity demanded is 10 units. Based on this information, what is
the marginal revenue resulting from an increase in output from 9 units to 10
units
that when price is Rs. 20, the quantity demanded is 9 units, and when price is
Rs. 19, the quantity demanded is 10 units. Based on this information, what is
the marginal revenue resulting from an increase in output from 9 units to 10
units
(a) Rs. 20
(b) Rs. 19
(c) Rs. 10
(d) Rs. 1
Q3. Assume
that when price is ‘20’ the quantity demanded is 15 units, and price is ‘18’
the quantity demanded is 16 units. Based on this information, what is the
marginal revenue resulting from an increase in output from 15 units to 16
units?
that when price is ‘20’ the quantity demanded is 15 units, and price is ‘18’
the quantity demanded is 16 units. Based on this information, what is the
marginal revenue resulting from an increase in output from 15 units to 16
units?
(a) Rs. 18
(b) Rs. 16
(c) Rs. 12
(d) Rs. 28
Q4. Suppose a firm is producing a level of output such that MR > MC, What
should be firm do to maximize its profits?
(a) The firm
should do nothing.
should do nothing.
(b) The firm
should hire less labour.
should hire less labour.
(c) The firm
should increase price.
should increase price.
(d) The firm
should increase output.
should increase output.
Q5. Marginal
Revenue is equal to:
Revenue is equal to:
(a) the
change in price divided by the change in output.
change in price divided by the change in output.
(b) the
change in quantity divided by the change in price.
change in quantity divided by the change in price.
(c) the
change in product of price and quantity due to a one unit change in output.
change in product of price and quantity due to a one unit change in output.
(d) price,
but only if the firm is a price searcher.
but only if the firm is a price searcher.
Q6. Suppose
that a sole proprietorship is earning total revenues of Rs. 1,00,000 and is
incurring explicit costs of Rs. 75,000. If the owner could work for another
company for Rs. 30,000 a year, we would conclude that:
that a sole proprietorship is earning total revenues of Rs. 1,00,000 and is
incurring explicit costs of Rs. 75,000. If the owner could work for another
company for Rs. 30,000 a year, we would conclude that:
(a) the firm
is incurring an economic loss.
is incurring an economic loss.
(b) implicit
costs are Rs. 25,000.
costs are Rs. 25,000.
(c) the
total economic costs are Rs. 1,00,000.
total economic costs are Rs. 1,00,000.
(d) the
individual is earning an economic profit of Rs. 25,000.
individual is earning an economic profit of Rs. 25,000.
Q7. Which of
the following is not an essential condition of pure competition?
the following is not an essential condition of pure competition?
(a) Large
number of buyers and sellers
number of buyers and sellers
(b)
Homogeneous product
Homogeneous product
(c) Freedom
of entry
of entry
(d) Absence
of transport cost
of transport cost
Q8. In the
long-run, some firms will exit the market if the price of the good offered for
sale is less than
long-run, some firms will exit the market if the price of the good offered for
sale is less than
(a) marginal
revenue
revenue
(b) marginal
cost
cost
(c) average
total cost
total cost
(d) average
revenue
revenue
Q9. The
marginal cost for a firm of producing the 9th unit output is Rs. 20.
Average cost at the same level of output is Rs. 15. Which of the following must
be true?
marginal cost for a firm of producing the 9th unit output is Rs. 20.
Average cost at the same level of output is Rs. 15. Which of the following must
be true?
(a) marginal
cost and average cost are both falling
cost and average cost are both falling
(b) marginal
cost and average cost are both rising
cost and average cost are both rising
(c) marginal
cost is rising and average cost is falling
cost is rising and average cost is falling
(d) it is
impossible to tell if either of the curves are rising or falling
impossible to tell if either of the curves are rising or falling
Q10. Labour
is defined as __________
is defined as __________
(a) Any work
done without remuneration
done without remuneration
(b) Any exertion
of mind or body to get some reward
of mind or body to get some reward
(c) Helping
the mother
the mother
(d) Helping
the friends
the friends
Q11. The
most important function of an entrepreneur is to __________
most important function of an entrepreneur is to __________
(a) Innovate
(b) Bear the
sense of responsibility
sense of responsibility
(c) Finance
(d) Earn
profit
profit
Q12. Which
one of the following is correct?
one of the following is correct?
(a) Land is
produced by man’s efforts.
produced by man’s efforts.
(b) The
supply of land is not constant.
supply of land is not constant.
(c) Capital
is not a result of savings.
is not a result of savings.
(d) Capital
refers to the produced means of production.
refers to the produced means of production.
Q13. Which
one of the following is incorrect?
one of the following is incorrect?
(a) Land has
original and indestructible powers to produce
original and indestructible powers to produce
(b) Labour
has poor bargaining power.
has poor bargaining power.
(c) Risk in
a business concern can be insured.
a business concern can be insured.
(d) The
supply of land is not constant.
supply of land is not constant.
Q14. What is
the shape of the demand curve faced by a firm under perfect competition?
the shape of the demand curve faced by a firm under perfect competition?
(a)
Horizontal
Horizontal
(b) Vertical
(c) Positively
sloped
sloped
(d) Negatively
sloped
sloped
Q15. Which
of the first order condition for the profit of a firm to be maximum?
of the first order condition for the profit of a firm to be maximum?
(a) AC = MR
(b) MC = MR
(c) MR = AR
(d) AC = AR
SOLUTIONS
S1. Ans.(c)
Sol.
S2. Ans.(c)
Sol.
S3. Ans.(c)
Sol.
S4. Ans.(d)
Sol.
S5. Ans.(c)
Sol.
S6. Ans.(a)
Sol.
S7. Ans.(d)
Sol.
S8. Ans.(c)
Sol.
S9. Ans.(b)
Sol.
S10. Ans.(b)
Sol.
S11. Ans.(a)
Sol.
S12. Ans.(d)
Sol.
S13. Ans.(d)
Sol.
S14. Ans.(a)
Sol.
S15. Ans.(b)
Sol.
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