SAMPLE QUESTIONS

The total cost for producing 4 units is 15 TL, and the total cost for
producing 5 units is 19 TL. What is the marginal cost of fifth unit?

A) 5 TL
B) 3 TL
C) 2 TL
D) 1 TL
E) 4 TL
The total cost for producing 4 units is 15 TL, and the total cost for
producing 5 units is 19 TL. What is the marginal cost of fifth unit?

A) 5 TL
B) 3 TL
C) 2 TL
D) 1 TL
E) 4 TL
If the average total cost for 10 products is 5 TL and the average variable
cost is 2 TL, which of the following is not true?

A) Average fixed cost is 3 TL.

B) Total cost is 50 TL.
C) The variable cost is 20 TL.
D) Fixed cost is 30 TL
E) The average fixed cost is independent of quantity.
If the average total cost for 10 products is 5 TL and the average variable
cost is 2 TL, which of the following is not true?

A) Average fixed cost is 3 TL.

B) Total cost is 50 TL.
C) The variable cost is 20 TL.
D) Fixed cost is 30 TL
E) The average fixed cost is independent of quantity.
Which of the following is not a characteristic of perfectly competitive
markets?

A) Restrictions on entry to the market

B) Having many sellers
C) Having many buyers
D) Buyers and sellers have full information
E) Homogeneity of goods
Which of the following is not a characteristic of perfectly competitive
markets?

A) Restrictions on entry to the market

B) Having many sellers
C) Having many buyers
D) Buyers and sellers have full information
E) Homogeneity of goods
What can be said about the long-term economic profit of a firm operating
in a perfectly competitive market?

A) Negative
B) Increases
C) Positive
D) Uncertain
E) Zero
What can be said about the long-term economic profit of a firm operating
in a perfectly competitive market?

A) Negative
B) Increases
C) Positive
D) Uncertain
E) Zero
“………….. occurs when no one's condition can be improved without
worsening the condition of another.” Which of the following should come
in the blank?

A) Producer surplus
B) Loss
C) Budget
D) Pareto efficiency
E) Social cost
“………….. occurs when no one's condition can be improved without
worsening the condition of another.” Which of the following should come
in the blank?

A) Producer surplus
B) Loss
C) Budget
D) Pareto efficiency
E) Social cost
What is it called when an economic activity causes an indirect benefit or
cost to those that are not directly related to that activity?

A) Public goods
B) Marginal cost
C) Alternative cost
D) Marginal utility
E) Externality
What is it called when an economic activity causes an indirect benefit or
cost to those that are not directly related to that activity?

A) Public goods
B) Marginal cost
C) Alternative cost
D) Marginal utility
E) Externality
For a firm that employs 200 workers under conditions of perfect
competition, the worker's wage is 240 TL and the marginal product of labor
is 220 TL. Which of the following should the firm do to maximize profits?

A) It should continue to employ 200 workers.

B) It should employ more workers.
C) It should increase the wage he pays per worker.
D) It should employ fewer workers.
E) None.
For a firm that employs 200 workers under conditions of perfect
competition, the worker's wage is 240 TL and the marginal product of labor
is 220 TL. Which of the following should the firm do to maximize profits?

A) It should continue to employ 200 workers.

B) It should employ more workers.
C) It should increase the wage he pays per worker.
D) It should employ fewer workers.
E) None.
Which of the following is not a characteristic of a monopoly market?

A) There is only one seller.

B) There are barriers to entry into the market.
C) There are many firms that supply the product.
D) The seller is a price maker.
E) The seller faces a downward sloping demand curve.
Which of the following is not a characteristic of a monopoly market?

A) There is only one seller.

B) There are barriers to entry into the market.
C) There are many firms that supply the product.
D) The seller is a price maker.
E) The seller faces a downward sloping demand curve.
Which of the following is not an entry barrier to a monopoly market?

A) patent
B) copyright
C) have an importatnt source of production
D) low demand
E) economics of scale
Which of the following is not an entry barrier to a monopoly market?

A) patent
B) copyright
C) have an importatnt source of production
D) low demand
E) economics of scale
Which of the following is not a correct statement for an oligopoly market?

A) A market in which only a few firms compete.

B) Products can be both homogeneous and differentiated products.
C) The decision of each firm depends on the action of the other firm.
D) There are partial barriers to entry and exit from the market.
E) The consumer and producer surplus is maximized.
Which of the following is not a correct statement for an oligopoly market?

A) A market in which only a few firms compete.

B) Products can be both homogeneous and differentiated products.
C) The decision of each firm depends on the action of the other firm.
D) There are partial barriers to entry and exit from the market.
E) The consumer and producer surplus is maximized.
Which of the following is not a correct for a monopolistic competition
market?

A) The seller can not affect the price.

B) There are many suppliers.
C) Products are differentiated.
D) There are no barriers in entering and exiting the market.
E) Advertising is important.
Which of the following is not a correct for a monopolistic competition
market?

A) The seller can not affect the price.

B) There are many suppliers.
C) Products are differentiated.
D) There are no barriers in entering and exiting the market.
E) Advertising is important.
What is the official structure formed by manufacturers who have agreed to
engage in anti-competitive activities?

A) Collusion
B) Monopoly
C) Cartel
D) Oligopoly
E) Monopolistic competition
What is the official structure formed by manufacturers who have agreed to
engage in anti-competitive activities?

A) Collusion
B) Monopoly
C) Cartel
D) Oligopoly
E) Monopolistic competition
When a firm operating in the monopoly market produces 400 units, it
earns 120 TL of economic profit, and the firm's marginal revenue and
marginal cost are equal. Which of the following is true about this
company?

A) Price equals marginal revenue.

b) Profit is equal to zero in the long run.
C) The firm should exit the market in the long run.
D) In the long run, new firms enter the market.
E) The firm should continue to operate.
When a firm operating in the monopoly market produces 400 units, it
earns 120 TL of economic profit, and the firm's marginal revenue and
marginal cost are equal. Which of the following is true about this
company?

A) Price equals marginal revenue.

b) Profit is equal to zero in the long run.
C) The firm should exit the market in the long run.
D) In the long run, new firms enter the market.
E) The firm should continue to operate.
 Refer the figure below. How much profit does a profit-maximizing monopoly
earn?

a. $1000
b. $1500
c. $3000
d. $4000
e. $5000

$27
$22

$15

1000

© 2014 Pearson Education, Inc. 28 of 20

 Refer the figure below. How much profit does a profit-maximizing monopoly
earn?

a. $1000
b. $1500
c. $3000
d. $4000
e. $5000

$27
$22

$15

1000

© 2014 Pearson Education, Inc. 29 of 20

 Refer the figure below. What is the difference in total revenue (TR) between
perfect competition and profit-maximizing monopoly?

a. $4000
b. $9500
c. $6250
d. $7000
e. $8000

MCc

$25
$3,5
$20
$18
$10

© 2014 Pearson Education, Inc. 30 of 25

 Refer the figure below. What is the difference in total revenue (TR) between
perfect competition and profit-maximizing monopoly?

a. $4000
b. $9500
c. $6250
d. $7000
e. $8000

MCc

$25
$3,5
$20
$18
$10

© 2014 Pearson Education, Inc. 31 of 25

 Refer the figure below. What is the profit difference between profit-
maximizing monopoly and perfect competition?

a. $15000
b. $16000
c. $12500
d. $25000
e. $30000

MCc

$3,5

© 2014 Pearson Education, Inc. 32 of 25

 Refer the figure below. What is the profit difference between profit-
maximizing monopoly and perfect competition?

a. $1500
b. $1600
c. $1250
d. $2500
e. $3000

MCc

$3,5

© 2014 Pearson Education, Inc. 33 of 25

 See the figure below. What is the social cost of a profit-maximizing
monopoly?

a. $8000
b. $7200
c. $6450 $22
d. $5900
e. $4000 $18

$10

© 2014 Pearson Education, Inc. 34 of 25

 See the figure below. What is the social cost of a profit-maximizing
monopoly?

a. $8000
b. $7200
c. $6450 $22
d. $5900
e. $4000 $18

$10

© 2014 Pearson Education, Inc. 35 of 25

 Refer the figure below. What will be the profit of the monopoly if the
monopoly applies perfect price discrimination?

a. $80000
b. $72000
c. $60000
d. $28000
e. $24000

© 2014 Pearson Education, Inc. 36 of 25

 Refer the figure below. What will be the profit of the monopoly if the
monopoly applies perfect price discrimination?

a. $80000
b. $72000
c. $60000
d. $28000
e. $24000

© 2014 Pearson Education, Inc. 37 of 25

 Which one is false according to the figure below?

A) Profit equals R if the monopoly maximizes its profits

B) There is no profit in a perfectly competitive market.
C) When monopoly maximizes profit, consumer surplus equals C.
D) The social cost equals D when the monopoly maximizes its profits.
to.
E) If the monopoly makes full price discrimination, its profit is C + D.

© 2014 Pearson Education, Inc. 38 of 20

 Which one is false according to the figure below?

A) Profit equals R if the monopoly maximizes its profits

B) There is no profit in a perfectly competitive market.
C) When monopoly maximizes profit, consumer surplus equals C.
D) The social cost equals D when the monopoly maximizes its profits.
to.
E) If the monopoly makes full price discrimination, its profit is C + D.

© 2014 Pearson Education, Inc. 39 of 20

 Given the demand curve of a monopoly firm as P= 300–5Q, the
marginal revenue curve MR= 200–8Q, and the marginal cost
curve MC= 12Q, what will be the price at the profit-maximizing
output level?

A)350
B)300
C)250
D)200
E)100

© 2014 Pearson Education, Inc. 40 of 25

 Given the demand curve of a monopoly firm as P= 300–5Q, the
marginal revenue curve MR= 200–8Q, and the marginal cost
curve MC= 12Q, what will be the price at the profit-maximizing
output level?

A)350
B)300
C)250
D)200
E)100

© 2014 Pearson Education, Inc. 41 of 25

 Given the demand curve of a monopoly firm as P= 55–5Q, the
marginal revenue curve MR= 100–4Q, and the marginal cost
curve MC= 6Q, what will be the consumer surplus at the profit-
maximizing output level?

A)120
B)360
C)220
D)240
E)250

© 2014 Pearson Education, Inc. 42 of 25

 Given the demand curve of a monopoly firm as P= 55–5Q, the
marginal revenue curve MR= 100–4Q, and the marginal cost
curve MC= 6Q, what will be the consumer surplus at the profit-
maximizing output level?

A)120
B)360
C)220
D)240
E)250

© 2014 Pearson Education, Inc. 43 of 25

 Which of the following is false regarding monopolies?

A) The monopoly supply curve is equal to the perfectly competitive

supply curve.
B) If the monopoly applies full price discrimination, the consumer
surplus will equal zero.
C) Monopoly output will be lower than perfectly competitive output.
D) Monopoly may result from economies of scale.
E) In monopoly, the firm has market power.

© 2014 Pearson Education, Inc. 44 of 25

 Which of the following is false regarding monopolies?

A) The monopoly supply curve is equal to the perfectly competitive

supply curve.
B) If the monopoly applies full price discrimination, the consumer
surplus will equal zero.
C) Monopoly output will be lower than perfectly competitive output.
D) Monopoly may result from economies of scale.
E) In monopoly, the firm has market power.

© 2014 Pearson Education, Inc. 45 of 25

 Which one is false according to the figure
below?

A) There is a loss in Chart A, but the firm

should continue its activities in the short term.
B) There is positive profit on Chart B.
C) The firm in Chart C should shut-down.
D) The firm in Chart D is at the breakeven
point.
E) The firm in Chart A should continue to
operate in the long run.

© 2014 Pearson Education, Inc.

 Which one is false according to the figure
below?

A) There is a loss in Chart A, but the firm

should continue its activities in the short term.
B) There is positive profit on Chart B.
C) The firm in Chart C should shut-down.
D) The firm in Chart D is at the breakeven
point.
E) The firm in Chart A should continue to
operate in the long run.

© 2014 Pearson Education, Inc.

 A factory produces 100 cars per month. Average variable cost (AVC) is $20 and
average fixed cost (AFC) is $50. What is the total cost (TC) of the factory?

a.$5.000
b.$6.000
c.$7.000
d.$8.000
e.$9.000

© 2014 Pearson Education, Inc.

 A factory produces 100 cars per month. Average variable cost (AVC) is $20 and
average fixed cost (AFC) is $50. What is the total cost (TC) of the factory?

a.$5.000
b.$6.000
c.$7.000
d.$8.000
e.$9.000

© 2014 Pearson Education, Inc.

 What is the total cost (TC) of the producer at the profit-maximizing
output level?

a.$7000
b.$8000
c.$9000
d.$10000
e.$12000

© 2014 Pearson Education, Inc. 50 of 29

 What is the total cost (TC) of the producer at the profit-maximizing
output level?

a.$7000
b.$8000
c.$9000
d.$10000
e.$12000

© 2014 Pearson Education, Inc. 51 of 29

 If the average fixed cost (AFC) of the producer at the profit-maximizing
level of output is 5, what is the total variable cost (TVC)?

a.$3000
b.$4000
c.$5000
d.$6000
e.$7000

© 2014 Pearson Education, Inc. 52 of 29

 If the average fixed cost (AFC) of the producer at the profit-maximizing
level of output is 5, what is the total variable cost (TVC)?

a.$3000
b.$4000
c.$5000
d.$6000
e.$7000

© 2014 Pearson Education, Inc. 53 of 29

 Suppose the consumer's income is equal to $40 according to the following budget line.
Determine the prices of goods Y and X.

a.There is not enough information to answer the question.

b.Py = $2, Px = $4
c.Py = $4, Px = $8
d.Py = $8, Px = $4
e.Py = $4, Px = $4

© 2014 Pearson Education, Inc.

 Suppose the consumer's income is equal to $40 according to the following budget line.
Determine the prices of goods Y and X.

a.There is not enough information to answer the question.

b.Py = $2, Px = $4
c.Py = $4, Px = $8
d.Py = $8, Px = $4
e.Py = $4, Px = $4

© 2014 Pearson Education, Inc.

 What should the consumer do to increase total utility in the following situation?

MUx > MUy

Px Py

a.He should increase the consumption of good X.

b.He should increase the consumption of good Y
c.He should increase the consumption of both goods.
d.He should reduce the consumption of both goods.
e.Consumption should be kept constant.

© 2014 Pearson Education, Inc. 56 of 37

 What should the consumer do to increase total utility in the following situation?

MUx > MUy

Px Py

a.He should increase the consumption of good X.

b.He should increase the consumption of good Y
c.He should increase the consumption of both goods.
d.He should reduce the consumption of both goods.
e.Consumption should be kept constant.

© 2014 Pearson Education, Inc. 57 of 37

 Which of the following statements is correct according to the
figure consisting of iso-cost and iso-quant curves?

A) Total production cost is minimized at points D, C and B.

B) Points D, C, and B show different combinations of inputs that
yield the same production cost.
C) Points D, C and B are on the same iso-cost.
D) The slope of the iso-quant curve at point C is equal to the
slope of the iso-cost line.
E) Production at point D is more than C.

© 2014 Pearson Education, Inc. Publishing as Prentice Hall

 Which of the following statements is correct according to the
figure consisting of iso-cost and iso-quant curves?

A) Total production cost is minimized at points D, C and B.

B) Points D, C, and B show different combinations of inputs that
yield the same production cost.
C) Points D, C and B are on the same iso-cost.
D) The slope of the iso-quant curve at point C is equal to the
slope of the iso-cost line.
E) Production at point D is more than C.

© 2014 Pearson Education, Inc. Publishing as Prentice Hall

Which of the following is not a cause of market failure?

A) Monopoly markets
B) Imperfect information
C) Public goods
D) Externalities
E) Producing homogeneous goods
Which of the following is not a cause of market failure?

A) Monopoly markets
B) Imperfect information
C) Public goods
D) Externalities
E) Producing homogeneous goods
Which of the following is false regarding price discrimination?

A) In perfect price discrimination, the consumer surplus is zero.

B) The purpose of price discrimination is to divide the market into different
segments according to the price elasticity of consumers and increase
revenue.
C) It is rational to charge high prices to groups with high price elasticity.
D) It is rational to charge high prices to groups with low price elasticity.
E) None
Which of the following is false regarding price discrimination?

A) In perfect price discrimination, the consumer surplus is zero.

B) The purpose of price discrimination is to divide the market into different
segments according to the price elasticity of consumers and increase
revenue.
C) It is rational to charge high prices to groups with high price elasticity.
D) It is rational to charge high prices to groups with low price elasticity.
E) None
 Which of the following is false according to the figure
below, which consists of the indifference curve and the
budget line?

A) The highest utility is at point w.

B) Point e is preferred to point b.
C) Points b and z are on the same budget line.
D) The utility at points b and z are equal.
E) At point e, the marginal utility per dollar spent on good X is
equal to the marginal utility per dollar spent on good Y.

© 2014 Pearson Education, Inc. 64 of 37

 Which of the following is false according to the figure
below, which consists of the indifference curve and the
budget line?

A) The highest utility is at point w.

B) Point e is preferred to point b.
C) Points b and z are on the same budget line.
D) The utility at points b and z are equal.
E) At point e, the marginal utility per dollar spent on good X is
equal to the marginal utility per dollar spent on good Y.

© 2014 Pearson Education, Inc. 65 of 37

If a production store has not yet begun to experience diminishing marginal
returns, what can be said about the sixth worker's marginal product when
the fifth worker's marginal product is 20?

A. It is negative.
B. First negative, then zero.
C. It is less than 20.
D. It is greater than 20.
E. None
If a production store has not yet begun to experience diminishing marginal
returns, what can be said about the sixth worker's marginal product when
the fifth worker's marginal product is 20?

A. It is negative.
B. First negative, then zero.
C. It is less than 20.
D. It is greater than 20.
E. None
If the actual production level is lower than the profit maximizing
production level, what will be the effect of producing 1 additional unit?

A) It reduces profit.
B) It increases the total cost more than it increases the total revenue.
C) It increases total revenue more than it increases total cost.
D) Increases total revenue without increasing total cost.
E) It may reduce or increase profits.
If the actual production level is lower than the profit maximizing
production level, what will be the effect of producing 1 additional unit?

A) It reduces profit.
B) It increases the total cost more than it increases the total revenue.
C) It increases total revenue more than it increases total cost.
D) Increases total revenue without increasing total cost.
E) It may reduce or increase profits.
Which of the following indicates that perfect competition implies Pareto
efficient point?

A) Having equal producer and consumer surpluses.

B) Producer surplus is always maximum and consumer surplus is zero.
C) Consumer surplus is always maximum and producer surplus is zero.
D) Price is equal to marginal cost in all markets at the equilibrium.
E) The ability to improve one person's welfare can be achieved by improving
another person's welfare.
Which of the following indicates that perfect competition implies Pareto
efficient point?

A) Having equal producer and consumer surpluses.

B) Producer surplus is always maximum and consumer surplus is zero.
C) Consumer surplus is always maximum and producer surplus is zero.
D) Price is equal to marginal cost in all markets at the equilibrium.
E) The ability to improve one person's welfare can be achieved by improving
another person's welfare.
Which of the following is not a property of isoquant curves?

A) They do not intersect each other.

B) They have a negative slope.
C) The further away from the origin, the higher the production level.
D) They are convex with respect to the origin.
E) The slope is the same for each point on the curve.
Which of the following is not a property of isoquant curves?

A) They do not intersect each other.

B) They have a negative slope.
C) The further away from the origin, the higher the production level.
D) They are convex with respect to the origin.
E) The slope is the same for each point on the curve.
 Which of the following is false?

a. Price is equal to marginal cost in perfect competition

b. There is a market power in oligopoly.
c. Firms produce differentiated products in monopolistic competition.
d. Supply curve is equal to marjinal cost curve in monopoly.
e. A firm considers behaviour of other firms in oligopoly.

© 2014 Pearson Education, Inc. 74 of 20

 Which of the following is false?

a. Price is equal to marginal cost in perfect competition

b. There is a market power in oligopoly.
c. Firms produce differentiated products in monopolistic competition.
d. Supply curve is equal to marjinal cost curve in monopoly.
e. A firm considers behaviour of other firms in oligopoly.

© 2014 Pearson Education, Inc. 75 of 20

 Which of the following industry implies the lowest
competition?

Number Shares
a. 5 firms 20 20 20 20 20
b. 5 firms 50 20 10 10 10
c. 5 firms 30 30 20 10 10
d. 5 firms 40 30 10 10 10

© 2014 Pearson Education, Inc. 76 of 20

 Which of the following industry implies the lowest
competition?

Number Shares
a. 5 firms 20 20 20 20 20
b. 5 firms 50 20 10 10 10
c. 5 firms 30 30 20 10 10
d. 5 firms 40 30 10 10 10

© 2014 Pearson Education, Inc. 77 of 20

 Which of the following is false?

a. Agriculture can be an example for perfect competition

b. Steel producers can be an example for oligopoly.
c. Hotels can be an example for monopolistic competition.
d. Airlines in Türkiye can be an example for monopoly.
e. Health insurance in Türkiye can be an example for oligopoly.

© 2014 Pearson Education, Inc. 78 of 20

 Which of the following is false?

a. Agriculture can be an example for perfect competition

b. Steel producers can be an example for oligopoly.
c. Hotels can be an example for monopolistic competition.
d. Airlines in Türkiye can be an example for monopoly.
e. Health insurance in Türkiye can be an example for oligopoly.

© 2014 Pearson Education, Inc. 79 of 20

If AFC=30, AVC=50 and P=60 in a perfect competition which of the following is
false?

A)The accounting profit is higher than economic profit

B)The economic profit is lower than zero
C)In the short-run the firm must shut-down
D)In the long-run the firm must exit the industry
E)If the price declines below 50, the firm should shut-down in the short-run
If AFC=30, AVC=50 and P=60 in a perfect competition which of the following is
false?

A)The accounting profit is higher than economic profit

B)The economic profit is lower than zero
C)In the short-run the firm must shut-down
D)In the long-run the firm must exit the industry
E)If the price declines below 50, the firm should shut-down in the short-run