Competitive Markets in Economics MCQs
Competitive Markets in Economics MCQs
These Competitive Markets in Economics multiple-choice questions and their answers will help you strengthen your grip on the subject of Competitive Markets in Economics. You can prepare for an upcoming exam or job interview with these 20 Competitive Markets in Economics MCQs.
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1: Allocative efficiency is where ____ and production will be allocated to reflect consumer preferences.
A. P=MC
B. MC=MR
C. MC-MR
D. MR-MC
2: Total revenue divided by the number of units sold is _____.
A. Average revenue
B. Marginal revenue
C. Collusion
D. Marginal cost
3: An industry where input prices (and cost curves) _____ as industry output changes is a constant-cost industry.
A. Rise
B. Fall
C. Do not change
D. Change abruptly
4: An industry where input prices fall (and cost curves fall) as industry output rises, decreasing-cost industry.
A. True
B. False
5: An industry where input prices decrease (and cost curves rise) as industry output rises is called increasing-cost industry.
A. True
B. False
6: The increase in total revenue resulting from a one-unit increase in sales is _____.
A. Marginal revenue
B. Marginal cost
C. Demand curve
D. Total revenue
7: When a good is produced at the lowest possible cost ,it is called productive_____.
A. Efficiency
B. Deficiency
C. Equity
D. Probability
8: A firm should always produce at the output where _____ is called the profit-maximizing level of output.
A. MR
B. MR>MC
C. MR=MC
D. MR/MC
9: Short-run market curve is the _____ summation of the individual firms’ supply curves in the market
A. Vertical
B. Horizontal
C. Parallel
D. Perpendicular
10: The portion of the MC curve above the AVC curve is called the short-run supply curve.
A. True
B. False
11: In a perfectly competitive market, there are ______ buyers and ______ sellers.
A. Few; many
B. Many; few
C. Few; few
D. Many; many
12: Which of the following is an accurate statement about a perfectly competitive market?
A. It has few barriers for entry, but many for exit.
B. It has many barriers for entry, but few for exit.
C. It has few barriers to either entry or exit.
D. It has many barriers to both entry and exit.
13: In a perfectly competitive market, a supplier will have the most difficulty selling his product when his price is ______ the market price.
A. Slightly lower than
B. Much lower than
C. Equal to
D. Higher than
14: A firm maximizes profits by maximizing the difference between ______.
A. Total revenue and total costs
B. Total supply and total price
C. Marginal revenue and marginal costs
D. Marginal supply and marginal price
15: What is the term used for the additional income derived from the production of one unit of the good?
A. Total revenue
B. Marginal revenue
C. Average revenue
D. Allocative revenue
16: Which of the following is an accurate statement about a firm with zero economic profits?
A. It will exit the market.
B. It can cover both its implicit and explicit costs
C. It will shut down for at least several months.
D. It can dictate the market price.
17: Which of the following shows the equilibrium output that a firm will provide at various prices in the short run?
A. A short-run marginal cost
B. A short-run average total cost curve
C. A short-run supply curve
D. A short-run demand curve
18: A firm will always shut down when it cannot cover its average ______ costs.
A. Labor
B. Marginal
C. Fixed
D. Variable
19: A graph shows the portion of the marginal costs above the average variable costs for all the firms in the corn market for a period of six months. This graph is a ______.
A. Short-run market supply curve
B. Short-run supply curve
C. Long-run market supply curve
D. Long-run supply curve
20: Which of the following will most likely happen if P < ATC?
A. A firm will shut down in the short run.
B. A firm will operate in the short run but take a loss.
C. A firm will exit in the long run.
D. A firm will operate in the long run and take a profit.
21: In an expanding market, the market supply curve will ______.
A. Shift to the right
B. Shift to the left
C. Move upward
D. Move downward
22: A firm will get a normal return on the use of its resources at ______ economic profits in the ______ run.
A. High; short
B. High; long
C. Zero; short
D. Zero; long
23: In a(n) ______ industry, cost curves do not change as output changes.
A. Increasing-cost
B. Decreasing-cost
C. Constant-cost
D. Variable-cost
24: ______ are factors outside the firm’s control that raise the firm’s costs as industry output expands.
A. Internal diseconomies of scale
B. Internal economies of scale
C. External diseconomies of scale
D. External economies of scale
25: How do shifts in supply affect a constant-cost industry in the long run?
A. Increase losses
B. Eliminate profits
C. Increase profits
D. Minimize losses
26: In the graph above, the point d represents values resulting in ____________.
A. Inflation
B. Efficiency
C. Unemployment
D. Growth
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