Pak
QuizHub
Home
Important MCQs
Past Papers
About
Contact
Privacy
Costs , Supply And Perfect Competition
/
MCQs
Costs , Supply And Perfect Competition – MCQs
50 questions. Click to practice.
Show Answers
Correct options are highlighted when revealed.
1.
In the context of a perfectly competitive firm, what represents its short-run supply curve and its long-run supply curve respectively?
Short-run marginal cost (SMC), long-run marginal cost (LMC)
SMC curve above the short-run average variable cost (SAVC), LMC curve above the long-run average cost (LAC)
SMC curve below the short-run average variable cost (SAVC), LMC curve above the long-run average cost (LAC)
SMC curve below the short-run average variable cost (SAVC), LMC curve below the long-run average cost (LAC)
None of the above
2.
Under what condition will a firm cease production and produce nothing in the short term?
When the price exceeds the short-run average total cost
When the price lies between the short-run average total cost and average variable cost
When the price falls below the short-run average variable cost
When the firm breaks even and earns zero profit
3.
In the short run, the average total cost is composed of which two components?
Short-run opportunity costs and profits
Short-run variable costs plus profits
Short-run average variable costs combined with average fixed costs
Short-run average variable costs and profit run average fixed costs
4.
What is the relationship between marginal cost and average cost when the average cost is decreasing and when it is increasing?
Marginal cost is higher than average cost in both cases
Marginal cost is lower than average cost when average cost is falling, and higher than average cost when average cost is rising
Marginal cost is lower than average cost in both situations
Marginal cost is higher than average cost when average cost is decreasing, and lower than average cost when average cost is increasing
Marginal cost equals average cost regardless of average cost trend
5.
What does it indicate when the long-run average cost curve slopes downward from left to right?
Increasing returns to scale
Decreasing returns to scale
Constant returns to scale
The minimum efficient scale
6.
Which characteristic best describes a monopoly market structure?
The market has a limited number of sellers
There are only a small number of buyers
A single seller dominates the market
Numerous sellers compete in the market
7.
According to Porter's Five Forces framework, what is the likely impact on supplier power when a company acquires one of its competitors?
The influence of buyers increases
The bargaining strength of suppliers rises
The risk of substitutes becomes greater
Competition among existing rivals decreases
None of the above
8.
In a monopolistic competition market, when firms earn abnormal profits, what is the expected effect on marginal cost as new firms enter the industry?
Marginal cost curve will shift outward
Demand curve will move inward
Average cost curve will decline
Average variable cost will rise
9.
Identify the option that is not included in the traditional four Ps of marketing.
Presence
Price
Product
Place
Promotion
10.
Which statement accurately describes the relationship between marginal revenue and the demand curve in monopolistic competition?
The demand curve is completely elastic.
All products offered are identical.
Marginal revenue equals the price of the product.
Marginal revenue lies beneath the demand curve and moves away from it.
11.
In a perfectly competitive market at long-run equilibrium, firms are characterized by which of the following conditions?
Producing at the lowest point on their average total cost curve
All of the listed conditions are true
Operating at their most efficient production scale
Earning zero economic profit
Where marginal cost equals marginal revenue
12.
When a key production input is scarce, causing cost increases for all current firms as the industry grows, what shape does the long-run market supply curve likely take?
completely unresponsive to price changes
entirely responsive to price variations
rising as quantity supplied increases
falling as more quantity is supplied
constant regardless of output level
13.
Over the long term, firms will leave the market if the selling price of their product falls below which of the following?
the additional revenue from selling one more unit
the extra cost incurred by producing one more unit
the total cost per unit on average
the revenue earned per unit sold
14.
Under what condition should a grocery store decide to close during nighttime hours?
If the variable expenses of remaining open are lower than the revenue generated by staying open.
If the overall costs of operating during the night are less than the income earned by staying open.
If the variable expenses of staying open exceed the revenue earned from operating at night.
If the total costs of nighttime operation surpass the revenue obtained from staying open.
15.
Which segment of the marginal cost curve represents the short-run supply curve for a perfectly competitive firm?
The rising segment of the average total cost curve
The increasing portion of the average variable cost curve
The part of the marginal cost curve above the average total cost curve
The full marginal cost curve
The section of the marginal cost curve that lies above the average variable cost curve
16.
At what point does a perfectly competitive firm achieve maximum profit through its production level?
When the price is equal to the average variable cost
When marginal revenue matches average revenue
When marginal cost is the same as total revenue
When marginal cost is equal to marginal revenue
17.
What happens to the total revenue of a perfectly competitive firm if it doubles its production?
It doubles.
It increases by more than double.
It increases by less than double.
It is uncertain since the price might increase or decrease.
18.
Which of the following does not describe a feature of a perfectly competitive market?
Every statement here accurately describes a competitive market
The market consists of numerous buyers and sellers
The products sold are mostly identical
Companies earn small yet positive economic profits over the long term
Businesses have the freedom to enter or leave the market without restrictions
19.
In a perfectly competitive market, what relationship holds true in the long run?
Price equals both average cost and marginal cost
Price is equal to average cost and total cost
Price matches marginal cost and total cost
Total revenue is the same as total variable cost
20.
Which of the following best describes the market structure in perfect competition?
The market is controlled by a small number of companies
Companies have the power to set prices
There are numerous buyers but only a handful of sellers
A large number of buyers and sellers participate
← Previous
Page 1 of 3
Next →