Economics M.C.Q (1 Marks)

A seller cannot influence the market price under.

1. Perfect competition.
2. Monopoly.
3. Monopolistic competition.
4. All of the above.

Demand curve of a firm is perfectly elastic under: (Choose the correct alternative)

1. Perfect competition.
2. Monopoly.
3. monopolistic competition.
4. Oligopoly.

A firm is not a price maker under.​​​​​​

1. Oligopoly.
2. Monopolistic competition.
3. Monopoly.
4. Perfect competition.

A firm is a price taker under.

1. Perfect competition.
2. Oligopoly.
3. Monopolistic competition.
4. Monopoly.

Marginal revenue of a firm is constant throughout under:

1. Perfect competition.
2. Monopolistic competition.
3. Oligopoly.
4. All the above.

Which of the following does not cause shift of supply curve of a good?

1. Price of input.
2. Price of the good.
3. Goods and services tax.
4. Subsidy.

Which one of the following options is not a condition of perfect competition?

1. A large number of firms.
2. Perfect mobility of factors.
3. Informative advertising to ensure that consumers have good information.
4. Freedom of entry and exit into and out of the market.

Which one of the following options is not a characteristic of a perfectly competitive market?

1. Large number of firms in the industry.
2. Outputs of the firms are perfect substitutes for one another.
3. Firms face downward-sloping demand curves.
4. Resources are very mobile.

Which one of the following equations is not a characteristic of a “price taker"?

1. TR = P × Q.
2. AR = Price.
3. Negatively-sloped demand curve.
4. Marginal Revenue = Price.

Which of the following shows relationship between the price of a commodity and quantity supplied graphically?

1. Supply statement.
2. Supply schedule.
3. Supply curve.
4. All of the above.

Which of the following measures of price elasticity shows elastic supply?

1. 0
2. 0.5
3. 1.0
4. 1.5

Which of the following is not a cause of decrease in supply?

1. Rise in price of substitute goods.
2. Increase in price of complementary goods.
3. Increase in taxes.
4. Rise in price of labour (i.e. wages).

Hint: Supply of a commodity is directly related with price of its complementary goods. Increase in price of complementary goods cause increase in supply of the commodity.

When the price of a commodity does not change but the quantity supplied changes. It is called:

1. Unit elastic supply.
2. Perfectly elastic supply.
3. Perfectly inelastic supply.
4. Elastic supply.

When supply of a commodity does not change, irrespective of any change in its price, it refers to:

1. Unit elastic supply.
2. Perfectly elastic supply.
3. Perfectly inelastic supply.
4. Less than unit elastic supply.

When supply is perfectly inelastic, Elasticity of Supply is equal to:

1. -1
2. Zero.
3. 1
4. Infinity.

When supply curve shifts to the right, there is ____________ in supply.

1. An increase.
2. Expansion.
3. Contraction.
4. Decrease.

When supply curve is upward sloping, its slope is __________.

1. Positive.
2. Negative.
3. First positive then negative.
4. Zero.

When same quantity is supplied at a higher price, it shows:

1. Contraction in supply.
2. Decrease in supply.
3. Expansion in supply.
4. Increase in supply.

When same quantity is supplied at a higher price, it shows:

1. Contraction in supply.
2. Decrease in supply.
3. Expansion in supply.
4. Increase in supply.

When price remains constant at all level of output, total revenue

1. Increases at increasing rate.
2. Increases at diminishing rate.
3. Increases at constant rate.
4. None of these.

When MR is zero, TR is _________:

1. Maximum.
2. Minimum.
3. Zero.
4. Rising.

When MR is zero, TR is _________:

1. Maximum.
2. Minimum.
3. Zero.
4. Rising.

When MR is positive, TR ________.

1. Rises.
2. Falls.
3. Remains constant.
4. None of the above.

When MC is equal to MR, while maximizing profit, then

1. MC must be rising.
2. MC must be falling.
3. MC must be constant.
4. None of these.

When less quantity is supplied at a lower price, it shows:

1. Contraction in supply.
2. Decrease in supply.
3. Expansion in supply.
4. Increase in supply.

When less quantity is supplied at a lower price, it shows:

1. Contraction in supply.
2. Decrease in supply.
3. Expansion in supply.
4. Increase in supply.

Whenever marginal revenue becomes negative, total revenue:

1. Becomes maximum.
2. Starts Increasing.
3. Starts Decreasing.
4. Remains constant.

When AR passes through minimum point of AVC, it is called:

1. Breakeven point.
2. Shutdown point.
3. Normal profit point.
4. Supernormal profit point.

When AR is constant AR is equal to _________:

1. MR.
2. TR.
3. AC.
4. MC.

When AR is above AC, firm earns:

1. Supernormal profit.
2. Loss.
3. Breakeven point.
4. Minimise losses.

When AR falls, MR ________:

1. Falls at faster rate.
2. Rises at constant rate.
3. Is falling at the same rate as AR curve.
4. Is constant.

When AR = AC, firm is at:

1. Supernormal profit point.
2. Loss making point.
3. Breakeven point.
4. Minimise losses point.

When AC is more than AR, what is the firm doing?

1. Making supernormal profit.
2. Incurring loss.
3. Having breakeven point.
4. Minimising losses.

What is the shape of TR curve under perfectly competitive market?

1. Straight line parallel to X-axis.
2. Straight line parallel to Y-axis.
3. Upward sloping straight line passing through origin.
4. Downward sloping straight line.

What is the shape of the demand curve faced by a firm under perfect competition?

1. Horizontal.
2. Vertical.
3. Positively sloped.
4. Negatively sloped.

What is the relation between price and marginal cost at equilibrium, when price remains constant with the rise in output.

1. Price = Marginal Cost.
2. Price > Marginal Cost.
3. Price < Marginal cost.
4. None of these.

What is the relation between price and marginal cost at equilibrium, when price falls with the rise in output.

1. Price = Marginal Cost.
2. Price > Marginal Cost.
3. Price < Marginal cost.
4. None of these.

What is constant in the law of supply?

1. Price of related goods.
2. State of technology.
3. Cost of production.
4. All of the above.

vertical supply curve parallel to Y-axis implies that the elasticity of supply is:

1. Zero.
2. Infinity.
3. Equal to one.
4. Greater than zero but less than infinity.

Under perfect competition, MR curve is:

1. Horizontal.
2. Vertical.
3. Falling.
4. Rising.

Under perfect competition a firm is ______________.

1. Price maker and not price taker.
2. Price taker and not price maker.
3. Neither price maker nor price taker.
4. None of these.

Total revenue =

1. Price × quantity
2. Price × income
3. Income × quantity
4. None of these.

Total revenue is defined as:

1. Revenue per unit of commodity.
2. Addition to revenue when one more unit of the commodity is sold.
3. Proceeds from the sale of the commodity.
4. All of the above.

Total revenue is defined as:

1. Revenue per unit of commodity.
2. Addition to revenue when one more unit of the commodity is sold.
3. Proceeds from the sale of the commodity.
4. All of the above.

The value of elasticity of supply ranges from:

1. Zero to infinity.
2. Minus infinity to plus infinity.
3. One to infinity.
4. Zero to minus infinity..

The term 'market' refers to a ______________.

1. Place where buyer and seller bargain a product or service for a price.
2. Place where buyer does not bargain.
3. Place where seller does not bargain.
4. None of these.

The supply of a good refers to:

1. Actual production of the good.
2. Total existing stock of the good.
3. Stock available for sale.
4. Amount of the good offered for sale at a particular price per unit of time.

The supply of a commodity implies:

1. Actual product of a good.
2. Stock available for sale.
3. Total existing stock of the good.
4. The amount of goods offered for sale at a different prices, per unit of time.

The supply curve shifts to the right because of

1. Improved technology.
2. Increased price of factors of production.
3. Increased excise duty.
4. All of them.

The supply curve is usually:

1. Upward rising.
2. Downward sloping.
3. Nothing definite can be said.
4. None of the above.

The shape of supply curve is _____________ in case of normal goods.

1. Positively sloped.
2. Negatively sloped.
3. Parallel to Y-axis.
4. Parallel to X-axis.

There are many wheat farms, each of whom produces the same product. The wheat market can best be classified as:

1. Monopolistic competition.
2. Perfect competition.
3. Oligopoly.
4. Monopoly.

The quantity supplied of a piece of goods or service is the amount that

1. Is actually bought during a given time period at a given price.
2. Producers wish that they could sell that at a higher price.
3. Producers plan to sell during a given time period at a given price.
4. People are willing to buy during a given time period at a given price.

The number of buyers and sellers in the industry are large, this implies that:

1. Firm is a price taker.
2. Firm is a price maker.
3. Firms earn normal profits.
4. Both (a) and (b)

The functional relationship between supply of a commodity and its various determinants is known as:

1. Supply function.
2. Change in supply.
3. Change in quantity supplied.
4. None of the above.

The firm in a perfectly competitive market is a price taker. This designation as a price taker is based on the assumption that __________________.

1. The firm has some, but not complete, control over its product price.
2. There are so many buyers and sellers in the market that any individual firm cannot affect the market.
3. Each firm produces a homogeneous product.
4. There is easy entry into or exit from the market place.

The claim that other things being equal, the quantity supplied of a good rises when the price of good rises and vice-versa is known as:

1. Law of Economics.
2. Law of Supply.
3. Law of Demand.
4. All of these.

Suppose total revenue is rising at a constant rate as more and more units of a commodity are sold, marginal revenue would be:

1. Greater than average revenue.
2. Equal to average revenue.
3. Less than average revenue.
4. Rising.

Suppose that a sole proprietorship is earning total revenues of ₹ 1,00,000 and is incurring explicit costs of ₹ 75,000. If the owner could work for another company for ₹ 30,000 a year, we would conclude that ______________.

1. The firm is incurring an economic loss.
2. Implicit costs are ₹ 25,000.
3. The total economic costs are ₹ 1,00,000.
4. The individual is earning an economic profit of ₹ 25,000.

Supply schedule shows _____________ relationship between price and quantity supplied of a commodity.

1. Positive.
2. Inverse.
3. Negative.
4. Opposite.

Hint: Supply schedule depicts direct (i.e. positive) relationship between price and quantity supplied of a commodity, i.e. if price increases, supply of a commodity also increases.

Supply of a commodity is ______________ concept.

1. Stock.
2. Flow.
3. Both (a) and (b).
4. Wholesale.

Supply is the:

1. Limited resources that are available with the seller.
2. Cost of producing a good.
3. Entire relationship between the quantity supplied and the price of good.
4. Willingness to produce a good if the technology to produce it becomes available.

Supply is a ______ concept.

1. Stock.
2. Flow and stock.
3. Flow.
4. None of them.

Slope of the supply curve measures the rate at which:

1. Quantity demanded changes with respect to its price.
2. Quantity supplied changes with respect to its price.
3. Quantity produced changes with respect to its price.
4. None of the above.

____________ show(s) direct relationship between price of a commodity and its quantity supplied.

1. Supply schedule.
2. Supply curve.
3. Law of supply.
4. All of these.

Price-taking firms, i.e., firms that operate in a perfectly competitive market are said to be "small" relative to the market. Which one of the following options best describes this smallness?

1. The individual firm must have fewer than 10 employees.
2. The individual firm faces a downward-sloping demand curve.
3. The individual firm has assets of less than ₹ 20 lakh.
4. The individual firm is unable to affect market price through its output decisions.

Perfect competition is characterised by all the following except:

1. Well informed buyers and sellers with respect to price.
2. Large number of buyers and sellers.
3. No restriction on entry and exit of firms.
4. Considerable advertising by individual firms.

Perfect competition is a form of market in which there are:

1. A few firms producing identical goods.
2. Many firms producing differentiated goods.
3. A few firms producing goods that differ somewhat in quality.
4. Many firms producing identical good.

Other things being constant, there exists relationship between price and quantity supplied.

1. Direct.
2. Negative.
3. Proportionate.
4. Cannot be explained.

One of the condition of producer equilibrium for a firm under perfectly competitive market is:

1. MR = MC
2. MR = AR
3. MC = ARE
4. None of the above.

Movement along the supply curve is also called:

1. Change in supply.
2. Change in quantity supplied.
3. Contraction in supply.
4. Increase in supply.

Market supply curve is ________ summation of individual supply curves.

1. Horizontal.
2. Vertical.
3. Can be both horizontal or vertical.
4. None of the above.

Market supply curve is ________ summation of individual supply curves.

1. Horizontal.
2. Vertical.
3. Can be both horizontal or vertical.
4. None of the above.

Marginal Revenue is equal to:

1. The change in price divided by the change in output.
2. The change in quantity divided by the change in price.
3. The change in P Q due to a one unit change in output.
4. Price, but only if the firm is a price searcher.

Marginal revenue is defined as:

1. Revenue per unit of commodity.
2. Addition to revenue when one more unit of the commodity is sold.
3. Proceeds from the sale of the commodity.
4. All of the above.

Marginal revenue is defined as:

1. Revenue per unit of commodity.
2. Addition to revenue when one more unit of the commodity is sold.
3. Proceeds from the sale of the commodity.
4. All of the above.

Marginal revenue can be defined as the change in total revenue resulting from

1. Purchase of an additional unit of a commodity.
2. Sale of an additional unit of a commodity.
3. Sale of subsequent units of a product.
4. None of these.

In perfect competition:

1. There are barriers on the entry of new firms.
2. Each firm can influence the price of the good.
3. There are few buyers.
4. All the firms in the market sell their product at the same price.

Increase or decrease in supply means:

1. Change in supply due to change in its own price.
2. Change in supply due to change in factors other than its own price.
3. Both (a) and (b).
4. None of the above.

In a very short period market:

1. The supply is fixed.
2. The demand is fixed.
3. Demand and supply are fixed.
4. None of them.

If the quantity supplied is exactly equal to the relative change in price then the elasticity of supply is

1. Less than one.
2. Greater than one.
3. One.
4. None of them.

If the price of petrol increases in the market, then the supply curve of car will:

1. Shift rightward.
2. Shift leftward.
3. Move upward along the supply curve.
4. Move downward along the supply curve.

If the percentage change in supply is less than the percentage change in price, it is called _______.

1. Unit elasticity of supply.
2. Less elastic supply.
3. More elastic supply.
4. Inelastic supply.

If supply curve shifts towards right, it means that there is:

1. A decrease in supply.
2. An increase in quantity supplied.
3. Increase in supply.
4. Decrease in quantity supplied.

If MC is more than MR at a particular level of output, how will the producer react to maximize the profits:

1. Decrease Production.
2. Increase Production on.
3. Increase Revenue.
4. None of these.

If a firm's supply increases due to application of improved technology, this is known as:

1. Expansion in supply.
2. Contraction in supply.
3. Increase in supply.
4. Increase in quantity supplied.

Hint: If the supply of a commodity increases due to other factors than its price, it is called 'increase in supply'. Causes of increase in supply are improvement in technology, increase in price of its complementary goods, decrease in taxation, decrease in price of its substitute goods, etc.

If a farmer grows rice and wheat, how will an increase in price of wheat affect the supply curve of rice?

1. Supply curve of rice will shift towards left.
2. Supply curve of rice will shift towards right.
3. Supply curve of rice will remain the same.
4. There will be downward movement along the supply curve of rice.

How does TR change with output when MR is negative?

1. TR falls with the increase in output.
2. TR rise with the increase in output.
3. TR falls with the decrease in output.
4. None of these.

How does total revenue behave when marginal revenue falls but remains positive?

1. Total revenue increases.
2. Total revenue decreases.
3. Total revenue becomes maximum.
4. Total revenue is constant.

How does AR curve under perfectly competitive market looks like?

1. Downward sloping.
2. Straight line parallel to X-axis.
3. Upward sloping.
4. Straight line parallel to Y-axis.

Government decided to increase excise duty on the production of a given good. What will be its impact on the supply of the given good?

1. Supply of good will increase.
2. Supply of good will decrease.
3. There will be no impact on the supply of good.
4. None of the above.

For a price-taking firm.

1. Marginal revenue is less than price.
2. Marginal revenue is equal to price.
3. Marginal revenue is greater than price.
4. The relationship between marginal revenue and price is indeterminate.

For a perfectly competitive market, price would be equivalent to:

1. Average revenue.
2. Marginal revenue.
3. Total revenue.
4. Both (a) and (b)

Expansion in supply refers to a situation when the producers are willing to supply a:

1. Larger quantity of the commodity at an increased price.
2. Larger quantity of the commodity due to increased taxation on that commodity.
3. Larger quantity of the commodity at the same price.
4. Larger quantity of the commodity at the decreased price.

Elasticity of supply refers to the degree of responsiveness of supply of a good to changes in its:

1. Demand.
2. Price.
3. Cost of production.
4. State of technology.

Elasticity of supply is zero means:

1. Perfectly inelastic supply.
2. Perfectly elastic supply.
3. Imperfectly elastic supply.
4. None of them.

Elasticity of supply is measured by dividing the percentage change in quantity supplied of a good by

1. Percentage change in income.
2. Percentage change in quantity demanded of good.
3. Percentage change in price.
4. Percentage change in taste and preference.

Elasticity of supply is greater than one when:

1. Proportionate change in quantity supplied is more than the proportionate change in price.
2. Proportionate change in price is greater than the proportionate change in quantity supplied.
3. Change in price and quantity supplied are equal.
4. None of them.

Elasticity of Supply is defined as a measure of the responsiveness of quantity supplied of a good to change in

1. Price of concerned good.
2. Price of substitute good.
3. Demand.
4. None of the above.

Due to change in price, if there is more than proportionate change in quantity supplied of a good, the supply is considered to be:

1. Perfectly elastic.
2. Relatively inelastic.
3. Relatively elastic.
4. Perfectly inelastic.

Contraction of supply is the result of:

1. Decrease in the number of producers.
2. Decrease in the price of the goods concern.
3. Increase in the prices of other goods.
4. Decrease in the outlay of sellers.

Contraction of supply curve means:

1. Upward movement along the supply curve.
2. Downward movement along the supply curve.
3. Rightward shift in supply curve.
4. Leftward shift in supply curve.

Consider the following supply schedule.

S. No.	Price (₹ per unit)	Quantity Supplied (in units)
i.	10	200
ii.	10	100

It is called:

1. Decrease in supply.
2. Decrease in quantity supplied.
3. Decrease in demand.
4. All of the above.

Consider the following supply schedule.

S. No.	Price (₹ per unit)	Quantity Supplied (in units)
i.	25	50
ii.	35	70

This refers to:

1. Expansion in supply.
2. Contraction in supply.
3. Increase in supply.
4. Both (b) and (c).

Hint: Supply of a commodity expand only due to increase in price of the commodity and other factors remain constant. Quantity supplied increases from 50 units to 70 units of the commodity as a result of increase in its price from ₹ 25 to ₹ 35.

Change in supply refers to:

1. An upward or downward shift in supply curve.
2. An upward shift in supply curve.
3. An upward or downward movement along the supply curve.
4. A downward movement along the supply curve.

Breakeven point means:

1. AR = AC.
2. TR = TC.
3. No profit, no loss.
4. All of the above.

Average revenue is the revenue earned

1. Per unit of input.
2. Per unit of output.
3. Different units of input.
4. Different units of output.

Average revenue is defined as:

1. Revenue per unit of commodity.
2. Addition to revenue when one more unit of the commodity is sold.
3. Proceeds from the sale of the commodity.
4. All of the above.

Average revenue is defined as:

1. Revenue per unit of commodity.
2. Addition to revenue when one more unit of the commodity is sold.
3. Proceeds from the sale of the commodity.
4. All of the above.

Average revenue curve is also known as:

1. Profit Curve.
2. Demand Curve.
3. Average Cost Curve.
4. Indifference Curve.

Average revenue and price are always equal under:

1. Perfect Competition only.
2. Monopolistic Competition only.
3. Monopoly only.
4. All market forms.

Average revenue and price are always equal under:

1. Perfect Competition only.
2. Monopolistic Competition only.
3. Monopoly only.
4. All market forms.

At a particular level of output, a producer finds that MC < MR. What will a producer do to maximise his profits?

1. Producer will increase the production.
2. Producer will reduce his production.
3. Producer will make no change in production as he is already getting maximum profit.
4. None of the above.

A supply curve will shift leftward due to:

1. Increase in supply.
2. Increase in quantity supplied.
3. Decrease in supply.
4. Decrease in quantity supplied.

Hint: When supply of a commodity decreases due to unfavourable changes in factors other than price, it is called 'decrease in supply'. In this situation, supply curve shifts leftward.

Assume that when price is 20, the quantity demanded is 15 units and when price is 18, the quantity demanded is 16 units. Based on this information what is the marginal revenue resulting from an increase in output from 15 units to 16 units?

1. ₹ 18
2. ₹ 16
3. ₹ 12
4. ₹ 328

Assume that when price is ₹ 20, the quantity demanded is ₹ 9 units, and when price is 19 the quantity demanded is 10 units. Based on this information what is the marginal revenue resulting from an increase in output from 9 units to 10 units.

1. ₹ 320
2. ₹ 19
3. ₹ 10
4. ₹ 1

AR is always equal to ___________?

1. Revenue.
2. Price.
3. Cost.
4. Profit.

AR is always equal to ________?

1. Revenue.
2. Price.
3. Cost.
4. Profit.

AR is also known as:

1. Price.
2. Income.
3. Revenue.
4. None of these.

A rightward shift in supply curve shows:

1. Contraction in supply.
2. Decrease in supply.
3. Expansion in supply.
4. Increase in supply.

A rightward shift in supply curve shows:

1. Contraction in supply.
2. Decrease in supply.
3. Expansion in supply.
4. Increase in supply.

A purely competitive firm's supply schedule in the short run is determined by ____________.

1. Its average revenue.
2. Its marginal revenue.
3. Its marginal utility for money curve.
4. Its marginal cost curve.

A perfectly inelastic supply curve will be:

1. Parallel to X-axis.
2. Parallel to Y-axis.
3. Downward sloping.
4. None of these.

A perfectly competitive firm faces:

1. Constant price.
2. Constant average revenue.
3. Constant marginal revenue.
4. All the above.

An upward movement along a supply curve shows:

1. Contraction in supply.
2. Decrease in supply.
3. Expansion in supply.
4. Increase in supply.

An increase in the supply of a good is caused by:

1. Improvements in its technology.
2. Fall in the prices of other goods.
3. Fall in the prices of factors of production.
4. All of them.

An increase in quantity supplied refers to a situation where the producers are willing to supply:

1. A larger quantity of the commodity at decreased price.
2. A larger quantity of the commodity at increased price of inputs.
3. A larger quantity of the commodity at increased price of related goods.
4. A larger quantity of the commodity at increased price.

A manufacturer supplies good in such a way that if the price rises by 10%, they are prepared to supply 15% more. In this case, elasticity will be best described as:

1. Inelastic.
2. More than unitary elastic.
3. Perfectly elastic.
4. Unitary elastic.

A horizontal supply curve parallel to the quantity axis implies that the Elasticity of Supply is

OR

Which Elasticity of Supply is shown by the supply curve parallel to X-axis?

1. Zero.
2. Infinite.
3. Equal to one.
4. Greater than zero but less than one.

A horizontal supply curve parallel to the quantity axis implies that the elasticity of supply is:

1. Zero.
2. Infinite.
3. Equal to one.
4. Greater than zero but less than one.

A firm will supply more quantity of a commodity at same price or even at a reduced price, if the firm wants to:

1. Maximise profit.
2. Maximise social welfare.
3. Maximise sales.
4. Maximise wealth.

A firm is able to sell more quantity of a good only by lowering the price. The firm’s marginal revenue, as he goes on selling, would be:

1. Greater than average revenue.
2. Less than average revenue.
3. Equal to average revenue.
4. Zero.

A firm is able to sell more quantity of a good only by lowering the price. The firm's marginal revenue, as he goes on selling, would be:

1. Greater than average revenue.
2. Less than average revenue.
3. Equal to average revenue.
4. Zero.