Thapar University, School of Humanities & Business Studies

2nd March 2016, Quiz-I, Micro Economics-II (PME-106)

Time: 10 Mins. Max Marks: 10

1. In perfect competition, a firm maximizing its
profits will set its output at that level where
a. Average variable cost = price
b. Marginal cost = price
c. Fixed cost = price
d. Average fixed cost = price
e. Total cost = price.
2. Which of the following is not a feature of zero-
profit point (break even point)?
a. The output of the firm makes nil profits.
b. Revenues just cover costs.
c. Price equals average cost.
d. Marginal cost equals fixed cost.
e. All are features of zero-profit point.
3. It is advisable for a firm operating under perfect
competition to shut down in the short run When
the price of the product falls below the
a. Total cost
b. Fixed cost
c. Average variable cost
d. Semi-fixed cost
e. Average cost.
4. A shut down point is a point where
a. Marginal cost (MC) curve meets the average
variable cost curve
b. MC curve meets the AC curve
c. MC curve meets the demand curve
d. Fixed cost curve is tangential to MC curve
e. MC curve meets the total cost curve.
8. Which of the following is false in a monopolistic
competition?
a. Many buyers and sellers.
b. Identical products.
c. Easy entry and exit.
d. Price of the competitor is the benchmark price.
e. Each firm could be market leader in its product
segment.
9. . Product differentiation in a monopolistic
competition could lead to
a. Horizontal demand curve
b. Downward sloping demand curve
c. Vertical demand curve
d. Downward sloping supply curve
e. None of the above.
10. Monopolistic competition consists of
a. A few firms selling differentiated products
b. A few firms selling an identical product
c. Many firms selling differentiated products
d. Many firms selling an identical product
e. None of the above.

5. Which of the following is not a feature of imperfect

competition?
a. Individual sellers have some control over the price
of their output.
b. Individual buyers have some control over the price
of the commodity they require.
c. A group of large sellers can influence the demand
and supply.
d. A group of large buyers can influence the demand
and price.
e. The demand and supply curves will be horizontal.

6. Which of the following best describes monopoly?

a. An indisputable market leader in an industry.
b. Only a single buyer in the market.
c. A single seller with large control over the price in the
industry.
d. Only a single seller with complete control over the
industry.
e. A single buyer with complete control over the
industry.
Part I
7. In India monopoly exists in the following industry?
a. Courier services.
b. Internet service providing industry.
c. Rail transportation.
d. Small car industry.
e. Electricity generation.