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Micro Economics Mcq

In:

Submitted By anusingh26
Words 2116
Pages 9
1. Which of the following is true under monopoly?
A. Profits are always positive
B. P > MC
C. P = MR
D. All of the above are true for monopoly Answer: B
2. In a competitive industry with identical firms, long run equilibrium is characterized by
A. P = AC
B. P = MC
C. MR = MC
D. All of the statements associated with this question are correct
Answer: D
3. Which of the following is true?
A. A monopolist produces on the inelastic portion of its demand
B. A monopolist always earns an economic profit
C. The more inelastic the demand, the closer marginal revenue is to price
D. In the short run a monopoly will shutdown if P < AVC Answer: D
4. Which of the following is true under monopoly?
A. Profits are always positive
B. P > minimum of ATC
C. P = MR
D. None of the statements associated with this question are correct Answer: B
5. In the long-run, monopolistically competitive firms:
A. Charge prices equal to marginal cost
B. Have excess capacity
C. Produce at the minimum of average total cost
D. Have excess capacity and produce at the minimum of average total cost Answer: B
6. If a monopolistically competitive firm's marginal cost increases, then in order to maximize profits the firm will
A. Reduce output and increase price
B. Increase output and decrease price
C. Increase both output and price
D. Reduce both output and price Answer:
7. Which of the following market structures would you expect to yield the greatest product variety?
A. Monopoly
B. Monopolistic Competition
C. Bertrand Oligopoly
D. Perfect Competition
Answer:
8. The primary difference between Monopolistic Competition and Perfect Competition is
A. The ease of entry and exit into the industry
B. The number of firms in the market
C. All of the statements associated with this question are correct
D. None of the statements associated with this question are

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