costs supply and perfect competition MCQs – Page 2

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

costs supply and perfect competition Mcqs
21. In the short run a firm will produce zero output if ?
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A. price is between short run average total cost and short run average variable cost

B. price is less than short run average variable cost

C. profit is zero

D. price is greater than short run average total cost

22. In the long run in perfect competition ?
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A. Total revenue = Total variable cost

B. price = average cost = marginal cost

C. price = average cost = total cost

D. price = marginal cost = total cost

23. When average cost is falling marginal cost is ________ and when average cost is rising marginal cost is?
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A. less than average cost, less than average cost

B. greater than average cost, greater than average cost

C. less than average cost, greater than average cost

D. greater than average cost, less than average cost

24. If a firm takes over a competitor then, according to porters 5 forces model ?
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A. Supplier power is higher

B. Buyer power is higher

C. Rivalry is lower

D. Substitute threat is higher

25. In the short run firms in perfect competition will still produce provided ?
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A. The price covers variable cost

B. The price covers average fixed cost

C. The price covers average variable cost

D. The price covers fixed costs

26. If a competitive firm doubles its output its total revenue ?
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A. more than double

B. cannot be determined because the price of the good may rise or fall

C. doubles.

D. less than doubles.

27. In marketing USP stands for ?
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A. Unique Selling Proposition

B. Under Sales Procedure

C. Unit Sales Point

D. Underlying Sales Proposition

28. A profit maximizing firm is perfect competition produces where ?
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A. Total revenue is maximized

B. Marginal revenue equals zero

C. Marginal revenue equals marginal cost

D. Marginal revenue equals average cost

29. In perfect competition ?
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A. Short run abnormal profits are competed away by the government

B. Short run abnormal profits are competed away by greater advertising

C. Short run abnormal profits are competed away by firms entering the industry

D. Short run abnormal profits are completed away by firms leaving the industry

30. In the long-run some firms will exit the market if the price of the good offered for sale is less than ?
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A. average total cost

B. marginal cost

C. average revenue

D. marginal revenue

31. in long-run equilibrium in a competitive market, firms are operating at ?
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A. zero economic profit

B. their efficient scale

C. intersection of marginal cost and marginal revenue

D. all of these answers are correct

E. the minimum of their average-total-cost curves

32. The competitive firm maximize profit when it produces output up to the point where ?
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A. price equals average variable cost

B. marginal cost equals total revenue

C. marginal cost equals marginal revenue

D. marginal revenue equals average revenue

33. For a competitive firm, marginal revenue is ?
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A. average revenue divided by the quantity sold

B. equal to the quantity of the good sold

C. equal to the price of the good sold

D. total revenue divided by the quantity sold

34. In the long run, the competitive firms supply curve is the ?
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A. portion of the marginal cost curve that lies above the average variable cost curve.

B. upward-sloping portion of the average total cost curve

C. upward-sloping portion of the average variable cost curve

D. entire marginal cost curve

E. portion of the marginal cost curve that lies above the average total cost curve
35. In perfect competition ?
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A. the price equals the average variable cost

B. The price equals the marginal revenue

C. the price equals the total cost

D. the fixed cost equals the variable costs

36. In the short run, the competitive firms supply curve is the portion of the marginal cost curve that lies above the average variable cost curve?
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A. upward-sloping portion of the average variable cost curve

B. Upward-sloping portion of the average total cost curve

C. portion of the marginal-cost curve that lies above the average variable cost curve

D. entire marginal cost curve.

E. portion of the marginal cost curve that lies above the average total cost curve.

37. A competitive firm demand curve is ?
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A. vertical

B. elastic

C. downward sloping

D. Horizontal
38. In monopolistic competition ?
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A. Marginal revenue = price

B. Demand is perfectly elastic

C. The marginal revenue is below the demand curve and diverges

D. Products are homogeneous

39. If a firm is not operating at the output necessary to achieve all scale economies, it has not achieved its ?
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A. Minimum efficient scale

B. Maximum efficient scale

C. Efficient scale

D. Average efficient scale

40. In monopolistic competition firms profit maximize where ?
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A. Marginal revenue = Average cost

B. Marginal revenue = Total cost

C. Marginal revenue = Marginal cost

D. Marginal revenue = Average revenue