ECO401 MCQs

ECO 401 (16---38)

MCSs

1. The cost which does not vary with the level of production is known as: Fixed cost

Q2. Which of the following is a variable cost in production?

Cost of labor

3. A firm initially faces downward sloping long run average cost curve due to: Economies of scale
4. When a firm increases its level of production in the short run, its average fixed cost will: Decrease
5. Average total cost is defined as: Cost of one unit of output produced
6. When we divide total revenue by total quantity of goods sold, we get: Average revenue
7. Profit of the firm is the difference between: Total revenue and total cost
8. Average revenue curve for a price taking firm is: Horizontal line
9. Average revenue curve for a price making firm is: Downward sloping
10. According to Marginal Revenue-Marginal Cost approach, a firm maximizes its profits by producing output at a point where:
11. The total revenue curve for a price taking firm is: Upward sloping straight line
12. Suppose AR=5-Q is the average revenue function of a firm. The slope of given average revenue function (AR) with respect to output (Q) is: -1
13. All of the following are assumptions of perfect competition EXCEPT: Restrictions on Entry and exit of firms

Q14. Which of the following markets are more likely to operate under perfect competition market structure?

Market for wheat

15. The demand curve faced by an individual perfectly competitive firm is: Horizontal
16. Suppose a firm is getting total revenue of Rs. 15000 by selling 50 units of output. If total cost of producing these 50 units is Rs. 9500, then profit of the firm is: Rs. 5500
17. In the long run, perfectly competitive firms can make: Only normal profits

Q18. Which of the following is a characteristic of monopoly market structure?

Single producer in the market

19. The demand curve faced by a monopolist firm is: Inelastic
20. In the long run, a monopolist can make: Super normal profit
21. A monopoly firm determines its profit maximizing level of output where:
22. All of the following are conditions of price discrimination EXCEPT: Price elasticity of demand for different customers should be same.
23. Price discrimination in which a seller charges different prices from customers according to their ability to pay is known as: First degree price discrimination
24. Price discrimination in which a seller charges different prices from customers who purchase different quantities is known as: Second degree price discrimination
25. Price discrimination in which a seller charges different prices to different customers in different markets is known as: Third degree price discrimination
26. A seller charges different prices of used cars from customers according to their ability to pay. This is an example of: First degree price discrimination
27. A shop keeper gives discount to customers who purchase goods in large quantity. This is an example of: Second degree price discrimination
28. All of the following are characteristics of monopolistic competition EXCEPT: Single producer in the market
29. In the long run, firms operating in monopolistic competition can make: Only normal profit

Q30. In automobiles industry, firms take interdependent decisions. This industry operates in which market structure?

Oligopoly

Q31. Which of the following is a characteristic of oligopoly market structure?

Small number of firms in the market

Q32. In cement industry, decisions of each firm are influenced by the decisions of other firms in this industry. In which market structure, this industry is operating?

Oligopoly

33. Suppose four automobiles firms collude and decide the optimal quantity and price. But later on, one of these automobile firms breaks the agreement and charges lower price to increase its share. This can occur in: Non- collusive oligopoly

Q34. Which of the following markets operates in oligopoly market structure?

Oil Market

35. Suppose the marginal physical product of labor is Rs. 100. If the price of good that workers produce is Rs. 40, then the value of marginal product of labor will be:

4000 The value of marginal product of labour (VMPL) = MPPL x Pi

36. The marginal revenue product of labor is the product of: Marginal physical product of labor and marginal revenue
37. The shape of supply curve for labor is: Backward bending
38. The net present value of an asset can be calculated by a formula: Present value minus purchase cost
39. The labor supply curve explains the relationship between ------------ and hours worked by laborers. Wage rate
40. The total planned or desired spending in the economy during a given period of time is known as:
41. Aggregate price level through the wealth, interest rate and international purchasing power effects are inversely related to:
42. The total value of goods and services that all the firms in the economy would and can willingly produce in a given time period is known as: Aggregate supply
43. Aggregate supply is a function of: Input, technology and price level

Q44. Which one of the following is true according to Say’s law?

Supply creates its own demand

45. Full employment is a state of the economy in which the productive resources of the economy are: Fully employed

Q46. At long run market equilibrium, people are unemployed voluntarily according to which of the following school of thought?

Classical

47. The total final output produced inside a country during a given year is known as: Gross Domestic Product
48. In de-stocking the value of stocks which is held by the businesses is tend to: Fall
49. A variable that is defined for an instant in time is known as: Stock variable
50. A variable that is defined for a period of time is known as: Flow variable

Q51. Which one of the followings is a flow variable?

income

52. The price at which firm sells its final output to the consumers is known as: Factor price
53. Factor price plus indirect taxes imposed by the government is known as: Market price