Supply And Perfect Competition(Economics > Costs ) Questions and Answers

Question 1. For a competitive firm, its short run supply curve is ______ and its long run supply curve is _____?
  1.    SMC, LMC
  2.    SMC above SAVC, LMC above LAC
  3.    SMC below SAVC, LMC above LAC
  4.    SMC below SAVC, LMC bellow LAC
Explanation:-
Answer: Option B. -> SMC above SAVC, LMC above LAC
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 2. Short run average total costs are equals to the sum of ____ and _____?
  1.    Short run opportunity costs, profit
  2.    Short run variable costs, profit
  3.    Short run average variable costs, profit
  4.    Short run average variable costs, profit run average fixed costs
Explanation:-
Answer: Option D. -> Short run average variable costs, profit run average fixed costs
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 3. If a long run average cost curve is falling form left to right this is an example of ?
  1.    increasing returns to scale
  2.    decreasing returns to scale
  3.    constant returns to scale
  4.    the minimum efficient scale
Explanation:-
Answer: Option A. -> increasing returns to scale
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 4. In the short run a firm will produce zero output if ?
  1.    price is greater than short run average total cost
  2.    price is between short run average total cost and short run average variable cost
  3.    price is less than short run average variable cost
  4.    profit is zero
Explanation:-
Answer: Option C. -> price is less than short run average variable cost
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 5. When average cost is falling marginal cost is ________ and when average cost is rising marginal cost is?
  1.    greater than average cost, greater than average cost
  2.    less than average cost, greater than average cost
  3.    less than average cost, less than average cost
  4.    greater than average cost, less than average cost
Explanation:-
Answer: Option B. -> less than average cost, greater than average cost
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 6. In monopolistic competition of firms are making abnormal profit other firms will enter and ?
  1.    The marginal cost will shift outwards
  2.    the demand curve will shift inwards
  3.    The average cost will shift downwards
  4.    The average variable cost will increase
Explanation:-
Answer: Option A. -> The marginal cost will shift outwards
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 7. If a firm takes over a competitor then, according to porter’s 5 forces model ?
  1.    Buyer power is higher
  2.    Supplier power is higher
  3.    Substitute threat is higher
  4.    Rivalry is lower
Explanation:-
Answer: Option B. -> Supplier power is higher
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 8. In monopolistic competition ?
  1.    There are few sellers
  2.    There are few buyers
  3.    There is one seller
  4.    There are many sellers
Explanation:-
Answer: Option C. -> There is one seller
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 9. Which of the following is not one of the four Ps in marketing ?
  1.    Product
  2.    Price
  3.    Place
  4.    Presence
Explanation:-
Answer: Option A. -> Product
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
Question 10. In monopolistic competition ?
  1.    Demand is perfectly elastic
  2.    Products are homogeneous
  3.    Marginal revenue = price
  4.    The marginal revenue is below the demand curve and diverges
Explanation:-
Answer: Option D. -> The marginal revenue is below the demand curve and diverges
NO EXPLANATION IS AVAILABLE FOR THIS QUESTION!
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