KARPAGAM ACADEMY OF HIGHER EDUCATION

III BCOM - FIFTH SEMESTER

BUSINESS ECONOMICS - 18CMU504A
UNIT - III
Multiple Choice Questions ( Each Questions carries ONE Mark)
S.No QUESTIONS OPTION 1 OPTION 2 OPTION 3 OPTION 4 OPTION 5
Commodities
Buyers’ market The supply The demand The demand
are available at
denotes the exceeds the exceeds the and supply are
competitive
1 place where demand supply well balanced
rates
Determinant of
the maximum
profit for a firm Both average The output
2 is Price Average cost cost and price level
Commodities Supply and
Sellers’ market are available at demand are
denotes a competitive Demand Supply exceeds evenly
3 situation where rates exceeds supply demand balanced.
Equates
Equilibrium consumers and Maximizes
price is that Maximizes producers consumer’s Equates supply
4 price which producers profit surplus satisfaction and demand
For price
discrimination
to be
successful, the
elasticity of
demand for the
product in the
two markets
5 should be Same Different Constant Zero
Price leadership Monopolistic Non-collusive Collusive
6 is a form of competition oligopoly Monopoly oligopoly

Maximum
exploitation of
consumer takes
place when Perfect Simple Price
7 there is competition Oligopoly monopoly discrimination
A firm profit is
____________
8 __ P = TOTAL P=Total sales P= TR-TC P= TC-MC
The distinction Monopolistic Perfectly Condition of Oligopolistic
of pricing by a competition competitive pure oligopoly market
firm and by an market structure
industry is not
possible under
9
 First degree Entire Entire A part of A part of
price consumer consumer consumer consumer
10 discrimination surplus goes to surplus goes to surplus goes to surplus goes to
means consumer producer producer consumer
Duopoly is a There is only There are few More than two Two producers
marketing one producer of producers producers of a given
11 situation when a given product product
The term 'group Monopolistic Oligopoly Duopoly Perfect
equilibrium' is competition competition
12 related to
A firm's Is always Can be positive Always Positive at point
marginal positive negative at which the
revenue total revenue is
maximum
13

Monopolistic
competition in
comparison to
perfect Lower price Output at the Higher price
competition and higher Price equal to minimum and lower
14 ensures— output marginal cost average cost output
Second MC curve must MC must cut TR = TC MR=MC
condition for cut the MR the MR from
the equilibrium curve from above
of the firm below
under perfect
15 competition is
More of the
In an oligopoly, oligopoly’s
gains from the firms cannot
if firms do not each firm can trade is similar
trade go to earn a profit
aggressively earn a positive to the
foreign buyers and will
compete with economic monopolisticall
of the products eventually lose
each other on profit. y competitive
produced by the market share.
price, then: market.
16 firms.
_______sugges
t that a number
of small firms
Perfect Scale
produce Oligopoly Monopoly
competition economies
identical
commodity
17 products
 Type of market
structure
represented by
the constant
returns to scale
(CRS)
technology, Monopolistic Perfect
18 includes competition Oligopoly Duopoly competition
Which of the
following is not
a financial
objective of Corporate Return on Profit Cost
19 pricing? growth. investment. maximization. minimization
Setting a price
below that of
the competition Penetration Competitive
20 is called: Skimming pricing pricing sales pricing
Which of the
following is not
a valid option
for a perfectly
competitive Increasing its Decreasing its Increasing its Increasing its
21 firm? output output price resources

A firm that is
producing at the
lowest possible Dominating the
average cost is Earning an Productively other firms in Not producing
22 always economic profit efficient the market. enough output

Price for a firm

under
monopolistic Equal to Greater than Less than
competition is marginal marginal marginal Greater than
23 ______. revenue revenue revenue total revenue

In the long run,

monopolisticall
y competitive
firms tend to Negative Substantial
experience High economic Zero economic economic economic
24 ______. profits profits profits losses
Marginal
revenue for a Equal to
monopolist is Greater than average
25 ______ Equal to price price Less than price revenue
 A price- and
quantity-fixing
agreement is Price Price
26 known as: Game theory leadership Collusion concentration
A group of
firms that gets
together to
make price and
output
decisions is Price A concentrated
27 called: A cartel leadership An oligopoly industry

An profit
maximizing,
oligopolistic
firms produces
at an output
28 level where: P = ATC MR = MC MR = ATC AVC > MR
The petroleum
industry is an Monopolistic Differentiated
29 example of competition Pure oligopoly Duopoly oligopoly
Selling cost is
the feature of Monopolistic Perfect
30 the market form competition competition Oligopoly Monopoly
When abnormal Potential Normal profit Heavy loss Low profit
profit is earned competition
by a particular
firm, there arise
31
A firm that is
the sole seller
of a product
without close
substitutes
32 called: Monopoly Oligopoly Competition Bureaucracy

Profit
Maximisation
goal is suitable Monopoly and
for ---- and ----- Monopolistic Monopolistic Perfect Monopsony and
33 markets and oligopoly and Duopoly competition Duopsony

In case of
oligopoly,
number of
firms is
34 ------------------- Larger Infinite One Few
 What are
homogenous Undifferentiate Differentiated Unrelated Common
35 products? d products products products products
A
distinguishing
characteristic of
monopolistic
competition is Large number Low entry Product Product
36 ------------------ of firms baarriers standardisation differentiation
If firms can
neither enter
nor leave an
industry, the
relevant time
period is the Intermediate
37 ---------- Short run run Long run Immediate run

  In perfect
competition
equilibrium is
attained when
38 ------------------ AR = AC TR=TC MR=MC Q=P
Kinked demand
curve is
associated with
39 ----------------- Cournot Chamberlin Edgeworth Sweezy
The upper
portion of the
kinked demand
curve is
relatively
Cartel is a part More inelastic More elastic
40 -------------- Less elastic Less inealastic
of Perfect
41 ------------------ Monopoly Oligopoly Duopoly competion

While
determining
equilibrium of
firm in short
run for perfect
competion, the
X-axis in the
diagram
42 represents Revenue Output Cost Price
 The monopolist
can fix any
price for his
product, but
cannot
determine
---------- for his
43 product. Revenue Cost Supply Demand

The primary
objective for
discriminating
monopolist is Loss Profit To cover To increase
44 ----------------- minimization maximisation production cost sales
A firm shut- Average Average Average Average
down point is revenue fails to revenue fails to revenue fails to revenue fails to
reached when cover average cover average cover average cover marginal
45 ----------- total cost variable cost. fixed cost cost.

  In a perfectly Producing a
competitive product which
market, the firm Attempting to will be different
will be maximise from its
46 --------------- A price maker profits competitiors Price taker
Equilibrium
implies a state
of
------------------- Absence of
47 - Rest Inactivity motion Movement
Under perfect Very personal
competition, and direct, Nonexistent
rivalry is advertising since the firms
48 -------------- Impersonal being important cooperate Control output
A monopolistic
firm will Marginal Marginal cost
expand its revenue exceeds Marginal cost Marginal
output when exceeds marginal equals marginal revenue is
49 ------------- marginal cost revenue revenue negative.
A monopolist
will never
produce at a
point where Average cost is Average is Marginal cost is Marginal cost is
50 ------------ constant rising positive increasing
Selling a certain
product of
given quality
Charging Charging and cost per
Which of the Charging different prices different prices unit at different
following best different prices for goods with based on cost of prices to
defines price on the basis of different cost of service different
51 discrimination? race. production difference buyers.
 Which one is
not collusive
oligopoly Market sharing Price Price fixing
52 ---------------- Price leadership cartel discrimination cartel
In an
oligopolistic Large number Few sellers and
market, there of sellers and Few sellers and large number of
53 are --------------- few buyers few buyers buyers
When one Only one seller
The kinked sellers
demand curve decreases his
in Sweezy price others
oligopoly When one seller follow but When one seller
model emerges decreases or When one seller when he increases his
due to increases his decreases his increases his price others
assumption that price, others price others price others do decrease their
54 ------------- follow. follow him. not follow prices.
The essential Mutual
aspects of recognition of
oligopoly is Non-price A large number interdependenc
55 ------------- Excess capacity competition of firms e.
The equilibrium
of a firm occurs
56 when -------- P=MC MC=MR P=MR AC=MC
The condition
for the long run
equilibrium of a
perfectly
competitive
57 firm Price=MC=AC Price=TC MC=AVC MC=MR

The implication
of the kinked
demand curve
is reflected in a
discontinuity in Marginal Marginal cost Total revenue
58 the: revenue curve curve curve Total cost curve
The concept of
monopsony was   Mrs. J.
59 invented by: Marshall AP. Learner Chamberlin Robinson
Monopolistic
competition and
oligopoly are
alike under Strong mutual
interms of Non-price interdependenc Kinked demand The number of
60 _____ competition e among firms analysis firms
ION

E Mark)
OPTION 6 ANSWERS
The supply
exceeds the
demand

Both average
cost and price

Demand
exceeds supply

Equates supply
and demand

Different
Collusive
oligopoly

Price
discrimination

P =TR-TC
Condition of
pure oligopoly
Entire
consumer
surplus goes to
consumer
Two producers
of a given
product
Monopolistic
competition

Positive at point
at which the
total revenue is
maximum

Higher price
and lower
output
MC curve must
cut the MR
curve from
below

each firm can

earn a positive
economic
profit.

Perfect
competition
Perfect
competition

Corporate
growth.

Competitive
pricing

Decreasing its
output

Productively
efficient

Equal to
marginal
revenue

Zero economic
profits

Equal to price
collusion

A cartel

P = ATC

Pure oligopoly

Monopolistic
competition
Potential
competition

Monopoly

Monopoly and
Perfect
competition

Few
Undifferentiate
d products

Product
differentiation

Short run

MR=MC

Sweezy

More elastic

Oligopoly

Output
Demand

Profit
maximisation
Average
revenue fails to
cover average
variable cost.

Price taker

Rest
Very personal
and direct,
advertising
being important
Marginal
revenue
exceeds
marginal cost

Marginal cost is
increasing
Selling a certain
product of
given quality
and cost per
unit at different
prices to
different
buyers.
Market sharing
cartel
Few sellers and
large number of
buyers
When one
sellers
decreases his
price others
follow but
when he
increases his
price others do
not follow
Mutual
recognition of
interdependenc
e.

MC=MR

Price=MC=AC

Marginal
revenue curve

  Mrs. J.
Robinson

Strong mutual
interdependenc
e among firms