Costs , Supply And Perfect Competition MCQs

Option A: SMC, LMC

Option B: SMC above SAVC, LMC above LAC

Option C: SMC below SAVC, LMC above LAC

Option D: SMC below SAVC, LMC bellow LAC

Correct Answer: SMC above SAVC, LMC above LAC ✔

Option A: price is greater than short run average total cost

Option B: price is between short run average total cost and short run average variable cost

Option C: price is less than short run average variable cost

Option D: profit is zero

Correct Answer: price is less than short run average variable cost ✔

Option A: Short run opportunity costs, profit

Option B: Short run variable costs, profit

Option C: Short run average variable costs, profit

Option D: Short run average variable costs, profit run average fixed costs

Correct Answer: Short run average variable costs, profit ✔

Option A: greater than average cost, greater than average cost

Option B: less than average cost, greater than average cost

Option C: less than average cost, less than average cost

Option D: greater than average cost, less than average cost

Correct Answer: less than average cost, greater than average cost ✔

Option A: increasing returns to scale

Option B: decreasing returns to scale

Option C: constant returns to scale

Option D: the minimum efficient scale

Correct Answer: increasing returns to scale ✔

Option A: There are few sellers

Option B: There are few buyers

Option C: There is one seller

Option D: There are many sellers

Correct Answer: There is one seller ✔

Option A: Buyer power is higher

Option B: Supplier power is higher

Option C: Substitute threat is higher

Option D: Rivalry is lower

Correct Answer: Supplier power is higher ✔

Option A: The marginal cost will shift outwards

Option B: the demand curve will shift inwards

Option C: The average cost will shift downwards

Option D: The average variable cost will increase

Correct Answer: The marginal cost will shift outwards ✔

Option A: Product

Option B: Price

Option C: Place

Option D: Presence

Correct Answer: Product ✔

Option A: Demand is perfectly elastic

Option B: Products are homogeneous

Option C: Marginal revenue = price

Option D: The marginal revenue is below the demand curve and diverges

Correct Answer: The marginal revenue is below the demand curve and diverges ✔

Option A: the minimum of their average-total-cost curves

Option B: all of these answers are correct

Option C: their efficient scale

Option D: zero economic profit

Correct Answer: all of these answers are correct ✔

Option A: perfectly inelastic

Option B: perfectly elastic

Option C: upward sloping

Option D: downward sloping

Correct Answer: upward sloping ✔

Option A: marginal revenue

Option B: marginal cost

Option C: average total cost

Option D: average revenue

Correct Answer: average total cost ✔

Option A: variable costs of staying open are less than the total revenue due to staying open.

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

Option C: variable costs of staying open are greater than the total revenue due to staying open

Option D: total costs of staying open are greater than the total revenue due to staying open

Correct Answer: variable costs of staying open are greater than the total revenue due to staying open ✔

Option A: Upward-sloping portion of the average total cost curve

Option B: upward-sloping portion of the average variable cost curve

Option C: portion of the marginal cost curve that lies above the average total cost curve.

Option D: entire marginal cost curve.

Correct Answer: portion of the marginal-cost curve that lies above the average variable cost curve ✔

Option A: price equals average variable cost

Option B: marginal revenue equals average revenue

Option C: marginal cost equals total revenue

Option D: marginal cost equals marginal revenue

Correct Answer: marginal cost equals marginal revenue ✔

Option A: doubles.

Option B: more than double

Option C: less than doubles.

Option D: cannot be determined because the price of the good may rise or fall

Correct Answer: doubles. ✔

Option A: All of these answers are characteristic of a competitive market

Option B: The are many buyers and sellers in the market

Option C: The goods offered for sale are largely the same.

Option D: Firms generate small but positive economic profits in the long run

Correct Answer: Firms generate small but positive economic profits in the long run ✔

Option A: price = average cost = marginal cost

Option B: price = average cost = total cost

Option C: price = marginal cost = total cost

Option D: Total revenue = Total variable cost

Correct Answer: price = average cost = marginal cost ✔

Option A: A few firms dominate the industry

Option B: Firms are price makers

Option C: There are many buyers but few sellers

Option D: There are many buyers and sellers

Correct Answer: There are many buyers and sellers ✔

Option A: Short run abnormal profits are completed away by firms leaving the industry

Option B: Short run abnormal profits are competed away by firms entering the industry

Option C: Short run abnormal profits are competed away by the government

Option D: Short run abnormal profits are competed away by greater advertising

Correct Answer: Short run abnormal profits are competed away by firms entering the industry ✔

Option A: The products firm offer is very similar

Option B: Products are heavily differentiated

Option C: A few firms dominate the market

Option D: Consumer have limited information

Correct Answer: The products firm offer is very similar ✔

Option A: The price equals the marginal revenue

Option B: the price equals the average variable cost

Option C: the fixed cost equals the variable costs

Option D: the price equals the total cost

Correct Answer: The price equals the marginal revenue ✔

Option A: Price is greater than marginal cost

Option B: price equals marginal cost

Option C: price is less than marginal cost

Option D: None of the above

Correct Answer: price equals marginal cost ✔

Option A: Horizontal

Option B: vertical

Option C: downward sloping

Option D: elastic

Correct Answer: Horizontal ✔

Option A: many buyers and sellers

Option B: a standard product

Option C: free entry and exit

Option D: perfect information

Correct Answer: all of the above ✔

Option A: is a price taker

Option B: Producer different products

Option C: Believes that can influence price

Option D: Prevents the entry of competitors

Correct Answer: is a price taker ✔

Option A: decreasing returns to scale

Option B: The law of diminishing returns

Option C: constant returns to scale

Option D: an inefficient production technique

Correct Answer: The law of diminishing returns ✔

Option A: At their lowest points

Option B: When they are declining

Option C: When they are increasing

Option D: When marginal revenue is zero

Correct Answer: At their lowest points ✔

Option A: long run average cost is lowest

Option B: marginal revenue equals output

Option C: marginal revenue equals long run marginal cost

Option D: marginal cost equals output

Correct Answer: marginal revenue equals long run marginal cost ✔

Option A: Efficient scale

Option B: Average efficient scale

Option C: Maximum efficient scale

Option D: Minimum efficient scale

Correct Answer: Minimum efficient scale ✔

Option A: Short run marginal cost rises, output rises

Option B: long run marginal cost rises, output rises

Option C: Short run average cost rises, output rises

Option D: long run average cost rises, output rises

Correct Answer: long run average cost rises, output rises ✔

Option A: output is maximized

Option B: inputs are minimized

Option C: there is no way to make a given output using less of one input and no more of the other inputs

Option D: Costs are minimized

Correct Answer: there is no way to make a given output using less of one input and no more of the other inputs ✔

Option A: Unique Selling Proposition

Option B: Underlying Sales Proposition

Option C: Unit Sales Point

Option D: Under Sales Procedure

Correct Answer: Unique Selling Proposition ✔

Option A: Buyer power is high

Option B: Supplier power is high

Option C: Entry threat is low

Option D: Substitute threat is high

Correct Answer: Substitute threat is high ✔

Option A: Demand more price inelastic

Option B: Supply more price inelastic

Option C: Demand more income elastic

Option D: Supply more income elastic

Correct Answer: Supply more income elastic ✔

Option A: Marginal revenue = Average revenue

Option B: Marginal revenue = Marginal cost

Option C: Marginal revenue = Average cost

Option D: Marginal revenue = Total cost

Correct Answer: Marginal revenue = Average cost ✔

Option A: Firms face a perfectly elastic demand curve

Option B: All products are homogeneous

Option C: Firms make normal profits in the long run

Option D: There are barriers to entry to prevent entry

Correct Answer: There are barriers to entry to prevent entry ✔

Option A: an increase in the number of firms in the market but no increase in the price of the good

Option B: an increase the price of the good and an increase in the number of firms in the market

Option C: an increase the price of the good but no increase in the number of firms in the market

Option D: no impact on either the price of the good or the number of firms in the market

Correct Answer: an increase in the number of firms in the market but no increase in the price of the good ✔

Option A: downward sloping

Option B: perfectly inelastic

Option C: upward sloping

Option D: perfectly elastic

Correct Answer: perfectly elastic ✔

Option A: is always more elastic than the short-run market supply curve.

Option B: is always perfectly elastic

Option C: has the same elasticity as the short run market supply curve

Option D: is always less elastic than the short-run market supply curve

Correct Answer: is always more elastic than the short-run market supply curve. ✔

Option A: entire marginal cost curve

Option B: upward-sloping portion of the average total cost curve

Option C: portion of the marginal cost curve that lies above the average total cost curve

Option D: upward-sloping portion of the average variable cost curve

Correct Answer: portion of the marginal cost curve that lies above the average total cost curve ✔

Option A: decreased production

Option B: maintained production at the current level

Option C: temporarily shut down.

Option D: increased production

Correct Answer: increased production ✔

Option A: total revenue divided by the quantity sold

Option B: equal to the quantity of the good sold

Option C: average revenue divided by the quantity sold

Option D: equal to the price of the good sold

Correct Answer: equal to the price of the good sold ✔

Option A: electricity

Option B: cable television

Option C: cola

Option D: milk

Correct Answer: milk ✔

Option A: Price equals marginal revenue

Option B: price is greater than marginal revenue

Option C: price equals total revenue

Option D: price equals total cost

Correct Answer: Price equals marginal revenue ✔

Option A: The price covers average variable cost

Option B: The price covers variable cost

Option C: The price covers average fixed cost

Option D: The price covers fixed costs

Correct Answer: The price covers average variable cost ✔

Option A: The price equals the total revenue

Option B: Firms are allocatively inefficient

Option C: Firms are productively efficient

Option D: The price equals total cost

Correct Answer: Firms are productively efficient ✔

Option A: Total revenue is maximized

Option B: Marginal revenue equals zero

Option C: Marginal revenue equals marginal cost

Option D: Marginal revenue equals average cost

Correct Answer: Marginal revenue equals marginal cost ✔

Option A: perfectly elastic demand curve

Option B: perfectly inelastic demand curve

Option C: perfectly elastic supply curve

Option D: perfectly inelastic supply curve

Correct Answer: perfectly elastic demand curve ✔