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UNIVERSITY OF CALICUT
BA ECONOMICS
III SEMESTER
CORE COURSE
MICRO ECONOMICS - II
QUESTION BANK
30. Zero economic profit arises in the long run in the case of
A. Perfect competition C. Monopolistic competition
B. Monopoly D. Oligopoly
48. Which of the following condition are met in the long run equilibrium
of the monopolistic competitor earning only normal profit
A. MC=AC
B. P=AC
C. P=MR
D. P=MC
49. The term group equilibrium is referred to
A. Duopoly
B. Monopolistic competition
C. Perfect competition
D. Oligopoly
50. Increase or decrease in the level of production by a monopolistically
competitive firm have ------- impact on price and output decisions
of other firms
A. Very significant
B. Significant
C. Small
D. Negligible
51. Monopolistic competitive firm fixes the price of its product
A. Independent of the price of close substitutes
B. Close to the prices of close substitutes
C. At a very high level
D. None of the above
52. Under monopolistic competition, an increase in the number of
firms producing close substitutes will make the demand curve of
each firm
A. Inelastic
B. Elastic
C. Downward sloping
D. Perfectly inelastic
A. Always
B. Sometimes
C. Never
D. Cannot say
59. Under monopolistic competition, the long run equilibrium of the
firm is established at the
A. Minimum point of LAC
B. Point where LAC is still falling
C. Point where LAC is rising
D. Minimum point of LMC
60. In short run a firms in monopolistic competition
A. Always earns profit
B. Incurs loss
C. Earns normal profit only
D. May earn normal profit, abnormal profit or incur losses
61. In long run all the firms in the monopolistic competition
A. Always earns profit
B. Incurs loss
C. Earns normal profit only
D. May earn normal profit, abnormal profit or incur losses
62. The short run equilibrium level of output of the monopolistic
competitor is given by
A. Price = MC
B. Price= AC
C. MC=MR
D. P=MR
63. When a group of monopolistic competition attains the equilibrium,
the firms in the group
A. Charge different prices, but produce identical outputs
B. Produce different output, but charge the same price
C. Charge different price and produce different output
D. None of the above
108. The supply curve of the input that a firm faces under a perfectly
competitive market is
A. Downward sloping C. Upward sloping
B. Horizontal supply curve D. None of the above
109. The supply curve of an input that a firm faces under an
imperfectly competitive market is
A. Downward sloping C. Upward sloping
B. Horizontal supply curve D. None of the above
110. Let labour is the only variable input, a monopsonist maximizes
his or her profit when
A. MPL = MEL C. MPL > MPL
B. MPL < MPL D. None of the above
111. A profit maximizing firm under a perfectly competitive market
employs more and more variable input labour until
A. MRPL < MEL = w C. MRPL = MEL = w
B. MRPL > MEL = w D. None of the above
112. To minimize cost of production at any level of output the
monopsonist should continue to substitute labour and capital until
A. MEL . MPL = MEK . MPK C. MEL . MPL > MEK . MPK
B. MEL / MPL = MEK / MPK D. MEL / MPL > MEK / MPK
113. In Chamberlin and Kinked demand curve model, the oligoposist
A. Recognize their interdependence
B. Do not collude
C. Tend to keep prices constant
D. All of the above
114. In the case of price leadership by the dominant firm all the firms
in the purely oligopolistic industry will produce their best level of
output
ANSWER KEY
1 D 41 D 81 D 121 C
2 A 42 D 82 C 122 A
3 A 43 C 83 C 123 C
4 C 44 A 84 A 124 D
5 B 45 C 85 B 125 A
6 C 46 A 86 C 126 C
7 C 47 C 87 A 127 B
8 C 48 B 88 A 128 B
9 D 49 B 89 A 129 A
10 D 50 D 90 B 130 B
11 D 51 B 91 C 131 A
12 C 52 B 92 D 132 B
13 B 53 B 93 D 133 A.
14 A 54 A 94 B 134 B
15 C 55 B 95 D 135 A
16 D 56 C 96 C 136 B
17 C 57 D 97 B 137 A
18 D 58 C 98 D 138 A
19 D 59 B 99 B 139 C
20 A 60 D 100 D 140 B
21 B 61 C 101 A 141 C
22 C 62 C 102 C 142 C
23 A 63 B 103 D 143 C
24 B 64 D 104 B 144 D
25 A 65 A 105 B 145 C
26 B 66 C 106 B 146 B
27 A 67 A 107 A 147 D
28 B 68 B 108 B 148 A
29 C 69 D 109 C 149 B
30 A 70 B 110 A 150 D
31 B 71 D 111 C
32 A 72 A 112 B
33 A 73 B 113 D
34 D 74 A 114 A
35 C 75 C 115 D
36 A 76 C 116 C
37 D 77 C 117 C
38 D 78 A 118 B
39 C 79 C 119 C
40 C 80 A 120 A
Reserved