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costs supply and perfect competition MCQs

Practise focused costs supply and perfect competition questions with marked answers for exam preparation and subject revision.

costs supply and perfect competition Mcqs

1. In perfect competition ?
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A. Products are heavily differentiated

B. The products firm offer is very similar

C. Consumer have limited information

D. A few firms dominate the market

2. Which of the following market would most closely satisfy the requirements for a competitive market ?
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A. All of these answers represent competitive markets

B. milk

C. electricity

D. cola

E. cable television

3. For perfect competition to work there must be ?
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A. many buyers and sellers

B. perfect information

C. a standard product

D. free entry and exit

E. all of the above

4. In the long run in perfect competition ?
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A. The price equals total cost

B. Firms are productively efficient

C. Firms are allocatively inefficient

D. The price equals the total revenue

5. Which of the following is not a characteristic of a competitive market ?
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A. The goods offered for sale are largely the same.

B. All of these answers are characteristic of a competitive market

C. The are many buyers and sellers in the market

D. Firms can freely enter or exit the market

E. Firms generate small but positive economic profits in the long run

6. The firms long run output decision will be where ?
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A. marginal cost equals output

B. marginal revenue equals long run marginal cost

C. marginal revenue equals output

D. long run average cost is lowest

7. Decrease returns to scale means that _____ as ______?
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A. Short run marginal cost rises, output rises

B. long run marginal cost rises, output rises

C. long run average cost rises, output rises

D. Short run average cost rises, output rises

8. In monopolistic competition ?
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A. There are barriers to entry to prevent entry

B. Firms make normal profits in the long run

C. All products are homogeneous

D. Firms face a perfectly elastic demand curve

9. Firms in perfect competition face a?
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A. perfectly inelastic supply curve

B. perfectly elastic supply curve

C. perfectly elastic demand curve

D. perfectly inelastic demand curve

10. For a perfectly competitive firm ?
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A. price equals total cost

B. price equals total revenue

C. price is greater than marginal revenue

D. Price equals marginal revenue

11. In perfect competition ?
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A. A few firms dominate the industry

B. Firms are price makers

C. There are many buyers and sellers

D. There are many buyers but few sellers

12. A grocery store should close at night if the ?
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A. total costs of staying open are greater than the total revenue due to staying open

B. total costs of staying open are less than the total revenue due to staying open

C. variable costs of staying open are less than the total revenue due to staying open.

D. variable costs of staying open are greater than the total revenue due to staying open

13. If a competitive firm is producing a level of output where marginal revenue exceeds marginal cost the firm could increase profit if it ?
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A. maintained production at the current level

B. increased production

C. decreased production

D. temporarily shut down.

14. In a competitive industry each buyer and seller ?
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A. Producer different products

B. is a price taker

C. Believes that can influence price

D. Prevents the entry of competitors

15. A production is technique is technically efficient if ?
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A. there is no way to make a given output using less of one input and no more of the other inputs

B. inputs are minimized

C. output is maximized

D. Costs are minimized

16. Holding all factors constant except one and increasing a variable factor is expected to lead to steadily decreased marginal product of that factor, this is an example of ?
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A. decreasing returns to scale

B. The law of diminishing returns

C. an inefficient production technique

D. constant returns to scale

17. The long-run market supply curve ?
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A. is always perfectly elastic

B. is always more elastic than the short-run market supply curve.

C. is always less elastic than the short-run market supply curve

D. has the same elasticity as the short run market supply curve

18. If an input necessary for production is in limited supply so that an expansion of the industry raises costs for all existing firms in the market, then the long-run market supply curve for a good could be ?
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A. downward sloping

B. upward sloping

C. perfectly elastic

D. perfectly inelastic

19. Which of the following is not one of the four Ps in marketing ?
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A. Product

B. Price

C. Place

D. Presence

20. A competitive firm produces a level of output at which ?
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A. None of the above

B. price equals marginal cost

C. Price is greater than marginal cost

D. price is less than marginal cost

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