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All questions of Price Determination in Different Markets for CA Foundation Exam
Under which Market Situation demand curve is linear and parallel to X-axis:- a)Perfect competition
- b)Monopoly
- c)Monopolistic Competition
- d)Oligopoly
Correct answer is option 'A'. Can you explain this answer?
Under which Market Situation demand curve is linear and parallel to X-axis:
a)
Perfect competition
b)
Monopoly
c)
Monopolistic Competition
d)
Oligopoly
|
Anand Dasgupta answered |
The demand curve under perfect competition is a horizontal linear line parallel to x-axis which means that the price of the commodity remains the same and any amount of quantity can be sold at this prevailing price in the market but a little variation in the price will lead to a fall in demand to zero.
Under Monopolistic competition the cross elasticity of demand for the product of a single firm would be: - a)Infinite
- b)Highly elastic
- c)Highly inelastic
- d)Zero
Correct answer is option 'D'. Can you explain this answer?
Under Monopolistic competition the cross elasticity of demand for the product of a single firm would be:
a)
Infinite
b)
Highly elastic
c)
Highly inelastic
d)
Zero
|
Mahesh Chakraborty answered |
Explanation:
Monopolistic competition is a market structure where there are many firms selling differentiated products that are close substitutes for each other. Under this market structure, each firm has a certain degree of market power, but they face competition from other firms in the market.
Cross elasticity of demand measures the responsiveness of the quantity demanded of a particular product to a change in the price of another product. When the cross elasticity of demand is zero, it means that the products are not related to each other, and a change in the price of one product does not affect the quantity demanded of the other product.
Under monopolistic competition, the products of different firms are differentiated, and consumers perceive them as not perfect substitutes for each other. As a result, the cross elasticity of demand for the product of a single firm is likely to be zero. This means that a change in the price of a product of one firm is unlikely to have a significant effect on the demand for the products of other firms in the market.
In addition, the degree of product differentiation and the market power of each firm affect the cross elasticity of demand. If the products of different firms are highly differentiated, the cross elasticity of demand will be lower, as consumers will perceive them as distinct products with different qualities and features. Moreover, if each firm has a significant market power, the cross elasticity of demand will be lower, as consumers will have fewer alternative options to switch to if the price of one product increases.
In conclusion, under monopolistic competition, the cross elasticity of demand for the product of a single firm is likely to be zero, as the products of different firms are perceived as not perfect substitutes for each other.
Monopolistic competition is a market structure where there are many firms selling differentiated products that are close substitutes for each other. Under this market structure, each firm has a certain degree of market power, but they face competition from other firms in the market.
Cross elasticity of demand measures the responsiveness of the quantity demanded of a particular product to a change in the price of another product. When the cross elasticity of demand is zero, it means that the products are not related to each other, and a change in the price of one product does not affect the quantity demanded of the other product.
Under monopolistic competition, the products of different firms are differentiated, and consumers perceive them as not perfect substitutes for each other. As a result, the cross elasticity of demand for the product of a single firm is likely to be zero. This means that a change in the price of a product of one firm is unlikely to have a significant effect on the demand for the products of other firms in the market.
In addition, the degree of product differentiation and the market power of each firm affect the cross elasticity of demand. If the products of different firms are highly differentiated, the cross elasticity of demand will be lower, as consumers will perceive them as distinct products with different qualities and features. Moreover, if each firm has a significant market power, the cross elasticity of demand will be lower, as consumers will have fewer alternative options to switch to if the price of one product increases.
In conclusion, under monopolistic competition, the cross elasticity of demand for the product of a single firm is likely to be zero, as the products of different firms are perceived as not perfect substitutes for each other.
In monopolistic competition excess capacity in the firm _______.
a)Never Existsb)Sometimes Existsc)Always Existsd)None of the aboveCorrect answer is option 'C'. Can you explain this answer?
|
Alok Mehta answered |
Excess capacity refers to a situation where a firm is producing at a lower scale of output than it has been designed for. Context: ... It may arise because as demand increases, firms have to invest and expand capacity in lumpy or indivisible portions.
If the price of crackers goes up when the price of cheese goes down, crackers and cheese are
a)complements.b)substitutes.
c)both substitutes and complements.d)inferior goods.Correct answer is option 'D'. Can you explain this answer?
|
Rajat Patel answered |
A complementary good is a good whose use is related to the use of an associated or paired good. Two goods (A and B) are complementary if using more of good A requires the use of more of good B. For example, the demand for one good (printers) generates demand for the other (ink cartridges).
Assume that when price is Rs.20, quantity demanded is 15 units, and when price is Rs.18, 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?- a)Rs. 18
- b)Rs. 16
- c)Rs. 12
- d)Rs. 28
Correct answer is option 'C'. Can you explain this answer?
Assume that when price is Rs.20, quantity demanded is 15 units, and when price is Rs.18, 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?
a)
Rs. 18
b)
Rs. 16
c)
Rs. 12
d)
Rs. 28
|
|
Nitin Kumar answered |
Marginal revenue is the additional revenue earned by producing and selling one more unit of output. It is calculated as the change in total revenue divided by the change in quantity.
Given that when the price is Rs.20, the quantity demanded is 15 units, and when the price is Rs.18, the quantity demanded is 16 units.
To calculate marginal revenue, we need to first calculate the total revenue at each level of output.
At a price of Rs.20, the total revenue is 20 x 15 = Rs.300
At a price of Rs.18, the total revenue is 18 x 16 = Rs.288
The change in total revenue from producing one more unit of output is Rs.288 - Rs.300 = -Rs.12
The change in quantity is 16 - 15 = 1
Therefore, the marginal revenue is -Rs.12/1 = -Rs.12
Hence, the correct answer is option C, which is Rs.12.
Given that when the price is Rs.20, the quantity demanded is 15 units, and when the price is Rs.18, the quantity demanded is 16 units.
To calculate marginal revenue, we need to first calculate the total revenue at each level of output.
At a price of Rs.20, the total revenue is 20 x 15 = Rs.300
At a price of Rs.18, the total revenue is 18 x 16 = Rs.288
The change in total revenue from producing one more unit of output is Rs.288 - Rs.300 = -Rs.12
The change in quantity is 16 - 15 = 1
Therefore, the marginal revenue is -Rs.12/1 = -Rs.12
Hence, the correct answer is option C, which is Rs.12.
Assume that when price is Rs. 20, quantity demanded is 9 units, and when price is Rs. 19, 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.- a)Rs. 20
- b)Rs. 19
- c)Rs. 10
- d)Re. 1
Correct answer is option 'C'. Can you explain this answer?
Assume that when price is Rs. 20, quantity demanded is 9 units, and when price is Rs. 19, 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.
a)
Rs. 20
b)
Rs. 19
c)
Rs. 10
d)
Re. 1
|
Poonam Reddy answered |
Price discrimination is possible only when. - a)Goods are homogeneous
- b)Seller is alone
- c)Market is controlled by the government
- d)None of the above
Correct answer is option 'A'. Can you explain this answer?
Price discrimination is possible only when.
a)
Goods are homogeneous
b)
Seller is alone
c)
Market is controlled by the government
d)
None of the above
|
|
Sparsh Chauhan answered |
The correct option is Option A.
Price discrimination is when the same good is sold at different prices to different consumers.
Price discrimination occur only under imperfect markets such as Monopoly, Oligopoly, Monopolistic competition etc.
It cannot occur under Perfect competition market structure as there are a large number of buyers. So if a firm charges a higher price the consumer will go to the other sellers.
If a seller obtains Rs. 3,000 after selling 50 units and Rs. 3,100 after selling 52 units, then marginal revenue will be- a)Rs. 59.62
- b)Rs. 50.00
- c)Rs. 60.00
- d)Rs. 59.80
Correct answer is option 'B'. Can you explain this answer?
If a seller obtains Rs. 3,000 after selling 50 units and Rs. 3,100 after selling 52 units, then marginal revenue will be
a)
Rs. 59.62
b)
Rs. 50.00
c)
Rs. 60.00
d)
Rs. 59.80
|
Ameya Menon answered |
Marginal revenue is the change in total revenue when an additional unit is sold.
Given data:
Selling price of 50 units = Rs. 3,000
Selling price of 52 units = Rs. 3,100
To find marginal revenue, we need to find the change in total revenue for selling two additional units.
Change in total revenue = Total revenue for 52 units - Total revenue for 50 units
= Rs. 3,100 - Rs. 3,000
= Rs. 100
Marginal revenue = Change in total revenue / Number of additional units sold
= Rs. 100 / 2
= Rs. 50
Therefore, the correct answer is option B, Rs. 50.
Given data:
Selling price of 50 units = Rs. 3,000
Selling price of 52 units = Rs. 3,100
To find marginal revenue, we need to find the change in total revenue for selling two additional units.
Change in total revenue = Total revenue for 52 units - Total revenue for 50 units
= Rs. 3,100 - Rs. 3,000
= Rs. 100
Marginal revenue = Change in total revenue / Number of additional units sold
= Rs. 100 / 2
= Rs. 50
Therefore, the correct answer is option B, Rs. 50.
Which of the following falls under micro economics?- a)National income
- b)General price level
- c)Factor pricing
- d)National saving and investment
Correct answer is option 'C'. Can you explain this answer?
Which of the following falls under micro economics?
a)
National income
b)
General price level
c)
Factor pricing
d)
National saving and investment
|
|
Dhruba Choudhary answered |
Microeconomics vs. Macroeconomics
Before answering the question, it is important to understand the difference between microeconomics and macroeconomics. Microeconomics is the study of individual economic agents such as households, firms, and markets, while macroeconomics is the study of the economy as a whole, including issues such as inflation, unemployment, and economic growth.
Answer
Out of the options given, factor pricing falls under microeconomics.
Explanation
Factor pricing refers to the determination of the prices of factors of production such as labor, capital, and land. It is a study of how markets allocate resources and how the prices of goods and services are determined. This falls under the purview of microeconomics as it deals with the behavior of individual firms and households in the market.
In contrast, national income, general price level, and national saving and investment are macroeconomic concepts as they deal with the overall performance of the economy as a whole. National income refers to the total value of goods and services produced in a country in a given period, while general price level refers to the average level of prices of goods and services in the economy. National saving and investment refer to the total amount of savings and investments made by the entire economy.
Conclusion
In summary, factor pricing falls under microeconomics as it deals with the behavior of individual firms and households in the market. The other options, national income, general price level, and national saving and investment, fall under macroeconomics as they deal with the overall performance of the economy as a whole.
Before answering the question, it is important to understand the difference between microeconomics and macroeconomics. Microeconomics is the study of individual economic agents such as households, firms, and markets, while macroeconomics is the study of the economy as a whole, including issues such as inflation, unemployment, and economic growth.
Answer
Out of the options given, factor pricing falls under microeconomics.
Explanation
Factor pricing refers to the determination of the prices of factors of production such as labor, capital, and land. It is a study of how markets allocate resources and how the prices of goods and services are determined. This falls under the purview of microeconomics as it deals with the behavior of individual firms and households in the market.
In contrast, national income, general price level, and national saving and investment are macroeconomic concepts as they deal with the overall performance of the economy as a whole. National income refers to the total value of goods and services produced in a country in a given period, while general price level refers to the average level of prices of goods and services in the economy. National saving and investment refer to the total amount of savings and investments made by the entire economy.
Conclusion
In summary, factor pricing falls under microeconomics as it deals with the behavior of individual firms and households in the market. The other options, national income, general price level, and national saving and investment, fall under macroeconomics as they deal with the overall performance of the economy as a whole.
In a perfectly competitive market the demand curve of a firm is:-- a)Elastic
- b)Perfectly elastic
- c)Inelastic
- d)Perfectly inelastic
Correct answer is option 'B'. Can you explain this answer?
In a perfectly competitive market the demand curve of a firm is:-
a)
Elastic
b)
Perfectly elastic
c)
Inelastic
d)
Perfectly inelastic
|
|
Ishan Goyal answered |
In a perfectly competitive market individual firms are price takers. The market demand curve slopes downward, while the firm's demand curve is a horizontal line. The firm's horizontal demand curve indicates a price elasticity of demand that is perfectly elastic.
An increase in supply with unchanged demand leads to:- a)Rise in price and fall in quantity
- b)Fall in both price and quantity
- c)Rise in both price and quantity
- d)Fall in price and rise in quantity
Correct answer is 'D'. Can you explain this answer?
An increase in supply with unchanged demand leads to:
a)
Rise in price and fall in quantity
b)
Fall in both price and quantity
c)
Rise in both price and quantity
d)
Fall in price and rise in quantity
|
|
Nilanjan Saha answered |
Explanation:
When there is an increase in supply with unchanged demand, the market equilibrium shifts to the right, which means that the supply curve shifts to the right. This creates a situation where there is more supply than demand in the market. The following are the possible outcomes:
Fall in price: When there is an excess supply of goods, suppliers tend to lower the price of their goods to attract more buyers. This leads to a fall in the price of the goods.
Rise in quantity: When the price of goods falls, buyers tend to buy more of the goods. This leads to a rise in the quantity demanded of the goods.
Rise in quantity supplied: Suppliers tend to increase their supply of goods in response to the fall in price. This leads to a rise in the quantity supplied of the goods.
Fall in price and rise in quantity: The above outcomes lead to a fall in price and a rise in quantity supplied and demanded. This is represented by a movement along the demand and supply curve.
Therefore, the correct answer is 'D' - Fall in price and rise in quantity.
When there is an increase in supply with unchanged demand, the market equilibrium shifts to the right, which means that the supply curve shifts to the right. This creates a situation where there is more supply than demand in the market. The following are the possible outcomes:
Fall in price: When there is an excess supply of goods, suppliers tend to lower the price of their goods to attract more buyers. This leads to a fall in the price of the goods.
Rise in quantity: When the price of goods falls, buyers tend to buy more of the goods. This leads to a rise in the quantity demanded of the goods.
Rise in quantity supplied: Suppliers tend to increase their supply of goods in response to the fall in price. This leads to a rise in the quantity supplied of the goods.
Fall in price and rise in quantity: The above outcomes lead to a fall in price and a rise in quantity supplied and demanded. This is represented by a movement along the demand and supply curve.
Therefore, the correct answer is 'D' - Fall in price and rise in quantity.
The demand curve of oligopoly is: - a)Horizontal
- b)Vertical
- c)Kinked
- d)Rising left to right
Correct answer is option 'C'. Can you explain this answer?
The demand curve of oligopoly is:
a)
Horizontal
b)
Vertical
c)
Kinked
d)
Rising left to right
|
|
Arnab Nambiar answered |
In an oligopolistic market, the kinked demand curve hypothesis states that the firm faces a demand curve with a kink at the prevailing price level. The curve is more elastic above the kink and less elastic below it. This means that the response to a price increase is less than the response to a price decrease.
The kinked demand curve model of oligopoly assumes that- a)response to a price increase is less than the response to a price decrease.
- b)response to a price increase is more than the response to a price decrease.
- c)elasticity of demand is constant regardless of whether price increases or decreases.
- d)elasticity of demand is perfectly elastic if price increases and perfectly inelastic if price decreases.
Correct answer is option 'A'. Can you explain this answer?
The kinked demand curve model of oligopoly assumes that
a)
response to a price increase is less than the response to a price decrease.
b)
response to a price increase is more than the response to a price decrease.
c)
elasticity of demand is constant regardless of whether price increases or decreases.
d)
elasticity of demand is perfectly elastic if price increases and perfectly inelastic if price decreases.
|
Kavita Joshi answered |
The oligopolist faces a kinked‐demand curve because of competition from other oligopolists in the market. If the oligopolist increases its price above the equilibrium price P, it is assumed that the other oligopolists in the market will not follow with price increases of their own.
Market which have two firms are known as: - a)Oligopoly
- b)Duopoly
- c)Monopsony
- d)Oligopsony
Correct answer is option 'B'. Can you explain this answer?
Market which have two firms are known as:
a)
Oligopoly
b)
Duopoly
c)
Monopsony
d)
Oligopsony
|
|
Divya Dasgupta answered |
Duopoly Market
A duopoly market is a market in which two firms dominate the market. In this market, the actions of one firm have a significant impact on the other firm. The main characteristics of a duopoly market are:
1. Interdependence: The two firms in a duopoly market are interdependent. This means that the decisions of one firm affect the decisions of the other firm.
2. Competition: The two firms in a duopoly market compete with each other. They try to gain a larger market share by offering better products or services.
3. Barriers to entry: There are significant barriers to entry in a duopoly market. This makes it difficult for new firms to enter the market and compete with the existing firms.
Examples of Duopoly Markets
Some examples of duopoly markets are:
1. Soft drinks: Coca-Cola and PepsiCo dominate the soft drinks market.
2. Aircraft manufacturing: Boeing and Airbus dominate the aircraft manufacturing market.
3. Operating systems: Microsoft and Apple dominate the operating systems market.
Advantages and Disadvantages of Duopoly Markets
Advantages of duopoly markets are:
1. Innovation: The two firms in a duopoly market are motivated to innovate and improve their products or services to gain a larger market share.
2. Competitive pricing: The two firms in a duopoly market compete with each other, which can lead to competitive pricing.
Disadvantages of duopoly markets are:
1. Limited choices: Consumers have limited choices in a duopoly market, as there are only two firms dominating the market.
2. Collusion: The two firms in a duopoly market may collude to fix prices or limit production, which can harm consumers.
Conclusion
In conclusion, a market which has two firms dominating it is known as a duopoly market. In this market, the two firms are interdependent and compete with each other. There are significant barriers to entry in a duopoly market, which can limit competition. Duopoly markets have advantages and disadvantages, and it is important to weigh them before making any decision.
A duopoly market is a market in which two firms dominate the market. In this market, the actions of one firm have a significant impact on the other firm. The main characteristics of a duopoly market are:
1. Interdependence: The two firms in a duopoly market are interdependent. This means that the decisions of one firm affect the decisions of the other firm.
2. Competition: The two firms in a duopoly market compete with each other. They try to gain a larger market share by offering better products or services.
3. Barriers to entry: There are significant barriers to entry in a duopoly market. This makes it difficult for new firms to enter the market and compete with the existing firms.
Examples of Duopoly Markets
Some examples of duopoly markets are:
1. Soft drinks: Coca-Cola and PepsiCo dominate the soft drinks market.
2. Aircraft manufacturing: Boeing and Airbus dominate the aircraft manufacturing market.
3. Operating systems: Microsoft and Apple dominate the operating systems market.
Advantages and Disadvantages of Duopoly Markets
Advantages of duopoly markets are:
1. Innovation: The two firms in a duopoly market are motivated to innovate and improve their products or services to gain a larger market share.
2. Competitive pricing: The two firms in a duopoly market compete with each other, which can lead to competitive pricing.
Disadvantages of duopoly markets are:
1. Limited choices: Consumers have limited choices in a duopoly market, as there are only two firms dominating the market.
2. Collusion: The two firms in a duopoly market may collude to fix prices or limit production, which can harm consumers.
Conclusion
In conclusion, a market which has two firms dominating it is known as a duopoly market. In this market, the two firms are interdependent and compete with each other. There are significant barriers to entry in a duopoly market, which can limit competition. Duopoly markets have advantages and disadvantages, and it is important to weigh them before making any decision.
In the long run monopolist can - a)Incur losses
- b)Must earn super normal profits
- c)Wants to shut-down
- d)Earns only normal profits
Correct answer is option 'B'. Can you explain this answer?
In the long run monopolist can
a)
Incur losses
b)
Must earn super normal profits
c)
Wants to shut-down
d)
Earns only normal profits
|
|
Priya Patel answered |
While a monopolist can maintain supernormal profits in the long run, it doesn’t necessarily make profits. A monopolist can be a loss making or revenue maximizing too. This is not possible under perfect competition. If abnormal profits are available in the long run, other firms will enter the competition with the result abnormal profits will be eliminated.
Given, AR = 5 and Elasticity of demand = 2 Find MR.- a)+2.5
- b)-2.5
- c)+1.5
- d)+2.0
Correct answer is option 'A'. Can you explain this answer?
Given, AR = 5 and Elasticity of demand = 2 Find MR.
a)
+2.5
b)
-2.5
c)
+1.5
d)
+2.0
|
Ayush Mishra answered |
MR=AR(e -1)/e =5(2-1)/2 =2.5
Under ________ market condition, firms make normal profit in the long run:- a)Perfect competition
- b)Monopoly
- c)Oligopoly
- d)None
Correct answer is option 'A'. Can you explain this answer?
Under ________ market condition, firms make normal profit in the long run:
a)
Perfect competition
b)
Monopoly
c)
Oligopoly
d)
None
|
|
Vaishnavi Joshi answered |
Perfect Competition and Normal Profit:
Perfect competition is a market situation where there are a large number of buyers and sellers, and every seller sells an identical product. In a perfectly competitive market, firms make normal profit in the long run.
Normal profit refers to the minimum amount of profit required to keep the firm in business. It is the opportunity cost of the resources used in the production process. In other words, normal profit is the cost of the entrepreneur's time and effort in managing the business.
Under perfect competition, firms earn normal profit in the long run because of the following reasons:
1. No Entry Barriers: In a perfectly competitive market, there are no entry barriers. Any firm can enter or exit the market without incurring any costs. This means that if a firm is making supernormal profit, new firms will enter the market, and the supply will increase, reducing the price and profit margins of the existing firms.
2. Homogeneous Product: In a perfectly competitive market, all firms sell an identical product. This means that consumers do not have any preferences for a particular brand or product. As a result, firms cannot charge a higher price than their competitors, and the price is determined by the market forces of demand and supply.
3. Perfect Information: In a perfectly competitive market, all firms and consumers have perfect information about the price and quality of the product. This means that firms cannot charge a higher price than their competitors, and consumers can easily switch to another firm if they find a better deal.
4. No Market Power: In a perfectly competitive market, no firm has market power. This means that firms cannot influence the price of the product by their actions. They have to accept the market price, which is determined by the forces of demand and supply.
Conclusion:
In conclusion, under perfect competition, firms make normal profit in the long run because of the absence of entry barriers, the homogeneity of the product, perfect information, and the absence of market power. This means that firms cannot earn supernormal profit, which is the excess of revenue over the opportunity cost of resources used in the production process.
Perfect competition is a market situation where there are a large number of buyers and sellers, and every seller sells an identical product. In a perfectly competitive market, firms make normal profit in the long run.
Normal profit refers to the minimum amount of profit required to keep the firm in business. It is the opportunity cost of the resources used in the production process. In other words, normal profit is the cost of the entrepreneur's time and effort in managing the business.
Under perfect competition, firms earn normal profit in the long run because of the following reasons:
1. No Entry Barriers: In a perfectly competitive market, there are no entry barriers. Any firm can enter or exit the market without incurring any costs. This means that if a firm is making supernormal profit, new firms will enter the market, and the supply will increase, reducing the price and profit margins of the existing firms.
2. Homogeneous Product: In a perfectly competitive market, all firms sell an identical product. This means that consumers do not have any preferences for a particular brand or product. As a result, firms cannot charge a higher price than their competitors, and the price is determined by the market forces of demand and supply.
3. Perfect Information: In a perfectly competitive market, all firms and consumers have perfect information about the price and quality of the product. This means that firms cannot charge a higher price than their competitors, and consumers can easily switch to another firm if they find a better deal.
4. No Market Power: In a perfectly competitive market, no firm has market power. This means that firms cannot influence the price of the product by their actions. They have to accept the market price, which is determined by the forces of demand and supply.
Conclusion:
In conclusion, under perfect competition, firms make normal profit in the long run because of the absence of entry barriers, the homogeneity of the product, perfect information, and the absence of market power. This means that firms cannot earn supernormal profit, which is the excess of revenue over the opportunity cost of resources used in the production process.
Price taker firms _________- a)Do not advertise their product because it misleads the customers
- b)Advertise their products to boost the level of demand
- c)Do not advertise but give gifts along with the sold items to attract customers
- d)Do not advertise because they can sell as much as they wish at the prevailing price
Correct answer is option 'D'. Can you explain this answer?
Price taker firms _________
a)
Do not advertise their product because it misleads the customers
b)
Advertise their products to boost the level of demand
c)
Do not advertise but give gifts along with the sold items to attract customers
d)
Do not advertise because they can sell as much as they wish at the prevailing price
|
|
Alok Mehta answered |
What is a 'Price-Taker' ... All economic participants are considered to be price-takers in a market of perfect competition, or one in which all companies sell an identical product, there are no barriers to entry or exit, every company has a relatively small market share, and all buyers have full information of the market.
Which one of the following statement is Incorrect?- a)Competitive firms are price takers and not price makers
- b)Price discrimination is possible in monopoly only
- c)Duopoly may lead to monopoly
- d)Competitive firm always seeks to discriminate prices
Correct answer is option 'D'. Can you explain this answer?
Which one of the following statement is Incorrect?
a)
Competitive firms are price takers and not price makers
b)
Price discrimination is possible in monopoly only
c)
Duopoly may lead to monopoly
d)
Competitive firm always seeks to discriminate prices
|
Freedom Institute answered |
Explanation:The incorrect statement is:D: Competitive firm always seeks to discriminate pricesHere's why the other statements are correct:A: Competitive firms are price takers and not price makers- In a perfectly competitive market, individual firms have no control over the market price.- They must accept the market price as given and adjust their output levels accordingly.B: Price discrimination is possible in monopoly only- Price discrimination occurs when a firm charges different prices to different consumers for the same good or service.- This is possible in a monopoly because the firm has market power and can control the price of the product.- In competitive markets, firms cannot practice price discrimination as they have no control over the market price.C: Duopoly may lead to monopoly- A duopoly is a market structure where there are only two firms dominating the market.- If one firm acquires the other or if the two firms collude to act as a single entity, the market structure can transition into a monopoly.
A competitive firm in the short run incure losses. The firm continue production, if:- a)P>AVC
- b)P=AVC
- c)P<AVC
- d)P>=AVC
Correct answer is option 'D'. Can you explain this answer?
A competitive firm in the short run incure losses. The firm continue production, if:
a)
P>AVC
b)
P=AVC
c)
P<AVC
d)
P>=AVC
|
|
Gopal Sen answered |
Is greater than AVC
b)P is greater than ATC
c)P is greater than MC
d)All of the above
Answer: d) All of the above
Explanation:
In the short run, a competitive firm will incur losses if its total revenue (TR) is less than its total variable costs (TVC). However, the firm may still continue production if it can cover its variable costs and contribute towards covering its fixed costs.
a) If P is greater than AVC (average variable cost), the firm can cover its variable costs and may continue production to contribute towards covering its fixed costs.
b) If P is greater than ATC (average total cost), the firm can cover both its variable and fixed costs and may continue production.
c) If P is greater than MC (marginal cost), the firm is generating revenue that is greater than the additional cost of producing one more unit and may continue production to maximize its profits.
Therefore, if any of the above conditions are met, the firm may continue production despite incurring losses in the short run.
b)P is greater than ATC
c)P is greater than MC
d)All of the above
Answer: d) All of the above
Explanation:
In the short run, a competitive firm will incur losses if its total revenue (TR) is less than its total variable costs (TVC). However, the firm may still continue production if it can cover its variable costs and contribute towards covering its fixed costs.
a) If P is greater than AVC (average variable cost), the firm can cover its variable costs and may continue production to contribute towards covering its fixed costs.
b) If P is greater than ATC (average total cost), the firm can cover both its variable and fixed costs and may continue production.
c) If P is greater than MC (marginal cost), the firm is generating revenue that is greater than the additional cost of producing one more unit and may continue production to maximize its profits.
Therefore, if any of the above conditions are met, the firm may continue production despite incurring losses in the short run.
Mixed economy means:- a)Coexistence of both private and public sector
- b)Coexistence of poor and rich people
- c)Both (a) and (b)
- d)None.
Correct answer is option 'A'. Can you explain this answer?
Mixed economy means:
a)
Coexistence of both private and public sector
b)
Coexistence of poor and rich people
c)
Both (a) and (b)
d)
None.
|
|
Sparsh Chauhan answered |
Mixed economy means the coexistence of both the private and public sectors in an economy. In other words, it is an economic system where both the market forces and the government play important roles in the allocation and distribution of resources.
Private sector
The private sector refers to the part of the economy that is owned and operated by individuals or companies for profit. This includes businesses such as sole proprietorships, partnerships, and corporations. In a mixed economy, the private sector plays a vital role in creating jobs, producing goods and services, and generating economic growth.
Public sector
The public sector refers to the part of the economy that is owned and operated by the government. This includes government agencies, public utilities, and other government-run organizations. In a mixed economy, the government plays a crucial role in providing essential services such as healthcare, education, and infrastructure development.
Benefits of a mixed economy
1. Economic growth: A mixed economy allows for a significant level of economic growth as it provides a balance between the private sector's profit motive and the government's social welfare objectives.
2. Job creation: As both the private and public sectors are involved in the economy, there are more opportunities for job creation, leading to reduced unemployment rates.
3. Social welfare: The government's involvement in a mixed economy ensures that essential services such as healthcare and education are accessible to all, regardless of their financial status.
4. Innovation: The private sector's profit motive encourages innovation and new product development, leading to increased competition and a better standard of living.
Conclusion
In conclusion, a mixed economy is an economic system that combines elements of both the private and public sectors to provide a balance between economic growth and social welfare. It provides opportunities for job creation, innovation, and essential services, making it a popular economic system worldwide.
Private sector
The private sector refers to the part of the economy that is owned and operated by individuals or companies for profit. This includes businesses such as sole proprietorships, partnerships, and corporations. In a mixed economy, the private sector plays a vital role in creating jobs, producing goods and services, and generating economic growth.
Public sector
The public sector refers to the part of the economy that is owned and operated by the government. This includes government agencies, public utilities, and other government-run organizations. In a mixed economy, the government plays a crucial role in providing essential services such as healthcare, education, and infrastructure development.
Benefits of a mixed economy
1. Economic growth: A mixed economy allows for a significant level of economic growth as it provides a balance between the private sector's profit motive and the government's social welfare objectives.
2. Job creation: As both the private and public sectors are involved in the economy, there are more opportunities for job creation, leading to reduced unemployment rates.
3. Social welfare: The government's involvement in a mixed economy ensures that essential services such as healthcare and education are accessible to all, regardless of their financial status.
4. Innovation: The private sector's profit motive encourages innovation and new product development, leading to increased competition and a better standard of living.
Conclusion
In conclusion, a mixed economy is an economic system that combines elements of both the private and public sectors to provide a balance between economic growth and social welfare. It provides opportunities for job creation, innovation, and essential services, making it a popular economic system worldwide.
__________ is the price at which demand for a commodity is equal to its supply: - a)Normal Price
- b)Equilibrium Price
- c)Short run Price
- d)Secular Price
Correct answer is option 'B'. Can you explain this answer?
__________ is the price at which demand for a commodity is equal to its supply:
a)
Normal Price
b)
Equilibrium Price
c)
Short run Price
d)
Secular Price
|
|
Pallabi Khanna answered |
The price at which quantity demanded of a commodity is equal to its quantity supplied is called the equilibrium price.
Price taker firms _________- a)Do not advertise their product because it misleads the customers
- b)Advertise their products to boost the level of demand
- c)Do not advertise but give gifts along with the sold items to attract customers
- d)Do not advertise because they can sell as much as they wish at the prevailing price
Correct answer is option 'D'. Can you explain this answer?
Price taker firms _________
a)
Do not advertise their product because it misleads the customers
b)
Advertise their products to boost the level of demand
c)
Do not advertise but give gifts along with the sold items to attract customers
d)
Do not advertise because they can sell as much as they wish at the prevailing price
|
|
Rajveer Jain answered |
Price taker firms do not advertise because they can sell as much as they wish at the prevailing price.
Price taker firms are businesses that operate in a perfectly competitive market where they have no control over the price of their product. In other words, they have to accept the market price as given and cannot influence it through their actions. As a result, these firms do not advertise their products.
1. Nature of a price taker firm:
- Price taker firms are small players in the market and have no market power.
- They have a large number of competitors selling similar products.
- They have no control over the price and have to accept the prevailing market price.
- They are price takers, meaning they have to take the price determined by the market.
2. Selling as much as they wish at the prevailing price:
- Price taker firms can sell as much of their product as they wish at the prevailing market price.
- Since they have no control over the price, they do not need to advertise to attract customers.
- The demand for their product is determined by market conditions, and they can sell as much as the market demands at the given price.
3. Advertising is unnecessary for price taker firms:
- Price taker firms do not need to advertise their products because they do not influence the market price.
- Advertising is typically used to create brand awareness, differentiate products, and attract customers.
- Since price taker firms offer homogenous products and have no control over the price, advertising would not significantly impact their sales.
- Instead of investing in advertising, price taker firms focus on minimizing costs and maximizing efficiency to remain competitive in the market.
In conclusion, price taker firms do not advertise their products because they have no control over the price and can sell as much as they wish at the prevailing market price. They focus on optimizing their operations and minimizing costs to remain competitive in the market.
Explanation:
Price taker firms are businesses that operate in a perfectly competitive market where they have no control over the price of their product. In other words, they have to accept the market price as given and cannot influence it through their actions. As a result, these firms do not advertise their products.
1. Nature of a price taker firm:
- Price taker firms are small players in the market and have no market power.
- They have a large number of competitors selling similar products.
- They have no control over the price and have to accept the prevailing market price.
- They are price takers, meaning they have to take the price determined by the market.
2. Selling as much as they wish at the prevailing price:
- Price taker firms can sell as much of their product as they wish at the prevailing market price.
- Since they have no control over the price, they do not need to advertise to attract customers.
- The demand for their product is determined by market conditions, and they can sell as much as the market demands at the given price.
3. Advertising is unnecessary for price taker firms:
- Price taker firms do not need to advertise their products because they do not influence the market price.
- Advertising is typically used to create brand awareness, differentiate products, and attract customers.
- Since price taker firms offer homogenous products and have no control over the price, advertising would not significantly impact their sales.
- Instead of investing in advertising, price taker firms focus on minimizing costs and maximizing efficiency to remain competitive in the market.
In conclusion, price taker firms do not advertise their products because they have no control over the price and can sell as much as they wish at the prevailing market price. They focus on optimizing their operations and minimizing costs to remain competitive in the market.
Which of these are characteristics of Perfect competition. - a)Many Sellers & Buyers
- b)Homogeneous Product
- c)Free Entry and Exit
- d)All of the above
Correct answer is option 'D'. Can you explain this answer?
Which of these are characteristics of Perfect competition.
a)
Many Sellers & Buyers
b)
Homogeneous Product
c)
Free Entry and Exit
d)
All of the above
|
|
Freedom Institute answered |
The answer is D: All of the above. Perfect competition is an idealized market structure that serves as a benchmark for analyzing other market structures. It is characterized by the following features:Many Sellers & Buyers:- A large number of both sellers and buyers participate in the market- No single seller or buyer can influence the market price- Each participant is a price taker, meaning they have no control over the market priceHomogeneous Product:- The products offered by all sellers in the market are identical or very similar- Buyers have no preference between different sellers' products- This ensures that price is the only factor that influences buyers' decisionsFree Entry and Exit:- There are no barriers to entering or exiting the market- Firms can easily enter the market if they believe they can earn a profit- Similarly, firms can exit the market if they are not making a profit- This feature ensures that resources are allocated efficiently and that profits are driven down to a normal level in the long runIn summary, perfect competition is characterized by many sellers and buyers, a homogeneous product, and free entry and exit. These features lead to a highly competitive market environment where firms are forced to operate efficiently and provide goods at a price determined by the market.
Which market have characteristic of product differentiation?- a)Perfect Competition
- b)Monopoly
- c)Monopolistic Competition
- d)Oligopoly
Correct answer is option 'C'. Can you explain this answer?
Which market have characteristic of product differentiation?
a)
Perfect Competition
b)
Monopoly
c)
Monopolistic Competition
d)
Oligopoly
|
|
Nilanjan Saha answered |
Market with Characteristic of Product Differentiation
Explanation:
Product differentiation is a marketing strategy in which a company tries to distinguish its product or service from competitors by adding features or characteristics that make it unique. This strategy is mostly used in monopolistic competition, where there are many firms in the market and each firm is trying to differentiate its product to attract customers.
Monopolistic Competition
Monopolistic competition is a market structure in which there are many firms selling a differentiated product. The firms have some control over the price of the product, but the competition is still high as the products are close substitutes. In monopolistic competition, firms can differentiate their products based on quality, design, features, branding, packaging, and advertising.
For example, in the market for smartphones, there are many firms that sell smartphones with different features, designs, and brands. Each firm tries to differentiate its product to attract customers. Apple, Samsung, and Huawei are some of the popular brands that sell smartphones with different features and designs.
In monopolistic competition, firms can charge a slightly higher price for their differentiated product as customers may be willing to pay extra for the unique features. However, if the price is too high, customers may switch to a substitute product.
Conclusion
Therefore, the correct answer to the question is option 'C', Monopolistic Competition, as it is the market structure that has the characteristic of product differentiation.
Explanation:
Product differentiation is a marketing strategy in which a company tries to distinguish its product or service from competitors by adding features or characteristics that make it unique. This strategy is mostly used in monopolistic competition, where there are many firms in the market and each firm is trying to differentiate its product to attract customers.
Monopolistic Competition
Monopolistic competition is a market structure in which there are many firms selling a differentiated product. The firms have some control over the price of the product, but the competition is still high as the products are close substitutes. In monopolistic competition, firms can differentiate their products based on quality, design, features, branding, packaging, and advertising.
For example, in the market for smartphones, there are many firms that sell smartphones with different features, designs, and brands. Each firm tries to differentiate its product to attract customers. Apple, Samsung, and Huawei are some of the popular brands that sell smartphones with different features and designs.
In monopolistic competition, firms can charge a slightly higher price for their differentiated product as customers may be willing to pay extra for the unique features. However, if the price is too high, customers may switch to a substitute product.
Conclusion
Therefore, the correct answer to the question is option 'C', Monopolistic Competition, as it is the market structure that has the characteristic of product differentiation.
Economic Problem arises when:- a)Wants are unlimited
- b)Resources are limited
- c)Alternative uses of resources
- d)All of the above
Correct answer is option 'D'. Can you explain this answer?
Economic Problem arises when:
a)
Wants are unlimited
b)
Resources are limited
c)
Alternative uses of resources
d)
All of the above
|
|
Aarya Sharma answered |
The Economic Problem arises due to the interplay of two fundamental factors: unlimited wants and limited resources. This problem is faced by individuals, organizations, and countries alike.
Unlimited Wants
Human wants are endless. People always desire more goods and services than they can afford to acquire. Wants are not limited to basic necessities like food, clothing, and shelter. They also extend to luxury goods like expensive cars, houses, and vacations. Moreover, wants keep changing and evolving over time due to factors like changing lifestyles, peer pressure, and advertising.
Limited Resources
Resources are the means to satisfy human wants. They include land, labor, capital, and entrepreneurship. However, these resources are not unlimited. For instance, land is a finite resource, and its supply cannot be increased. Similarly, labor is limited by the size of the population, and capital is constrained by the amount of savings and investment.
Alternative Uses of Resources
Resources can be used in different ways to produce different goods and services. For example, a farmer can use his land to grow wheat, cotton, or sugarcane. Similarly, a factory can use its labor and capital to produce cars, computers, or smartphones. The problem arises when resources have to be allocated among alternative uses. Every choice involves an opportunity cost, which is the value of the next-best alternative forgone.
All of the Above
The Economic Problem arises due to the interaction of unlimited wants, limited resources, and alternative uses of resources. No society can satisfy all the wants of all its members with the limited resources at its disposal. Hence, choices have to be made about what to produce, how to produce, and for whom to produce. These choices are guided by the principles of efficiency, equity, and sustainability.
Unlimited Wants
Human wants are endless. People always desire more goods and services than they can afford to acquire. Wants are not limited to basic necessities like food, clothing, and shelter. They also extend to luxury goods like expensive cars, houses, and vacations. Moreover, wants keep changing and evolving over time due to factors like changing lifestyles, peer pressure, and advertising.
Limited Resources
Resources are the means to satisfy human wants. They include land, labor, capital, and entrepreneurship. However, these resources are not unlimited. For instance, land is a finite resource, and its supply cannot be increased. Similarly, labor is limited by the size of the population, and capital is constrained by the amount of savings and investment.
Alternative Uses of Resources
Resources can be used in different ways to produce different goods and services. For example, a farmer can use his land to grow wheat, cotton, or sugarcane. Similarly, a factory can use its labor and capital to produce cars, computers, or smartphones. The problem arises when resources have to be allocated among alternative uses. Every choice involves an opportunity cost, which is the value of the next-best alternative forgone.
All of the Above
The Economic Problem arises due to the interaction of unlimited wants, limited resources, and alternative uses of resources. No society can satisfy all the wants of all its members with the limited resources at its disposal. Hence, choices have to be made about what to produce, how to produce, and for whom to produce. These choices are guided by the principles of efficiency, equity, and sustainability.
AR is also known as:- a)price
- b)income
- c)revenue
- d)none of the above
Correct answer is option 'A'. Can you explain this answer?
AR is also known as:
a)
price
b)
income
c)
revenue
d)
none of the above
|
|
Mrinalini Iyer answered |
AR or Average Revenue is a term used in economics and business to refer to the amount of revenue generated per unit of output sold. It is calculated by dividing total revenue by the quantity of goods or services sold. AR is also known as price, as it represents the price at which each unit of output is sold.
Explanation:
AR is a crucial metric for businesses as it helps them to determine the price at which they should sell their products or services. It is important for businesses to set their prices at a level that maximizes their revenue and profits. By calculating AR, businesses can determine the optimal price point that will help them achieve this goal.
AR is calculated by dividing total revenue by the quantity of goods or services sold. For example, if a company sells 100 units of a product at a price of $10 per unit, its total revenue would be $1000. Dividing this by the quantity sold (100), we get an AR of $10 per unit.
AR is also important for businesses to monitor over time. If a company notices a decline in its AR, it may indicate that its prices are too high and it needs to lower them to remain competitive. On the other hand, if AR is increasing, it may indicate that the company is successfully increasing its prices or selling higher-priced products, which can lead to higher profits.
In conclusion, AR is a key metric for businesses to monitor and use in their pricing strategy. It is also a useful tool for investors and analysts to evaluate a company's financial performance.
Explanation:
AR is a crucial metric for businesses as it helps them to determine the price at which they should sell their products or services. It is important for businesses to set their prices at a level that maximizes their revenue and profits. By calculating AR, businesses can determine the optimal price point that will help them achieve this goal.
AR is calculated by dividing total revenue by the quantity of goods or services sold. For example, if a company sells 100 units of a product at a price of $10 per unit, its total revenue would be $1000. Dividing this by the quantity sold (100), we get an AR of $10 per unit.
AR is also important for businesses to monitor over time. If a company notices a decline in its AR, it may indicate that its prices are too high and it needs to lower them to remain competitive. On the other hand, if AR is increasing, it may indicate that the company is successfully increasing its prices or selling higher-priced products, which can lead to higher profits.
In conclusion, AR is a key metric for businesses to monitor and use in their pricing strategy. It is also a useful tool for investors and analysts to evaluate a company's financial performance.
Price discrimination can take place only in _______.- a)Monopolistic Competition
- b)Oligopoly
- c)Perfect competition
- d)Monopoly
Correct answer is option 'D'. Can you explain this answer?
Price discrimination can take place only in _______.
a)
Monopolistic Competition
b)
Oligopoly
c)
Perfect competition
d)
Monopoly
|
|
Sahil Malik answered |
Price Discrimination and its applicability
Definition of Price Discrimination
Price discrimination refers to a pricing strategy that involves charging different prices for the same product or service to different customers or groups of customers based on their willingness to pay or other demographic or behavioral characteristics.
Applicability of Price Discrimination
Price discrimination is possible only in a market where there is a monopoly situation. In a perfectly competitive market, there is no scope for price discrimination as firms have to accept the price determined by the market. In monopolistic competition, firms have some degree of market power, but the market is too fragmented and heterogeneous to allow for effective price discrimination. Oligopoly, on the other hand, is characterized by a small number of large firms with significant market power, but collusion or coordination among these firms makes it difficult to practice price discrimination.
Price Discrimination and Monopoly
In a monopoly situation, the firm is the sole supplier of a product or service in the market, and hence, it has complete control over the price. This gives the firm the ability to practice price discrimination as it can charge different prices to different customers based on their willingness to pay. The firm can identify different customer groups and charge each group a price that maximizes its profits.
Examples of Price Discrimination in Monopoly
Examples of price discrimination in monopoly include:
- Charging different prices for the same product or service based on the time of purchase, such as higher prices during peak hours or seasons.
- Offering discounts or special deals to certain customer groups, such as students, senior citizens, or frequent buyers.
- Charging different prices for different versions or packages of the same product or service, such as basic, standard, and premium versions.
Conclusion
In conclusion, price discrimination is a pricing strategy that involves charging different prices for the same product or service to different customers or groups of customers based on their willingness to pay or other demographic or behavioral characteristics. It is possible only in a market where there is a monopoly situation, as the firm has complete control over the price and can identify different customer groups and charge each group a price that maximizes its profits.
Definition of Price Discrimination
Price discrimination refers to a pricing strategy that involves charging different prices for the same product or service to different customers or groups of customers based on their willingness to pay or other demographic or behavioral characteristics.
Applicability of Price Discrimination
Price discrimination is possible only in a market where there is a monopoly situation. In a perfectly competitive market, there is no scope for price discrimination as firms have to accept the price determined by the market. In monopolistic competition, firms have some degree of market power, but the market is too fragmented and heterogeneous to allow for effective price discrimination. Oligopoly, on the other hand, is characterized by a small number of large firms with significant market power, but collusion or coordination among these firms makes it difficult to practice price discrimination.
Price Discrimination and Monopoly
In a monopoly situation, the firm is the sole supplier of a product or service in the market, and hence, it has complete control over the price. This gives the firm the ability to practice price discrimination as it can charge different prices to different customers based on their willingness to pay. The firm can identify different customer groups and charge each group a price that maximizes its profits.
Examples of Price Discrimination in Monopoly
Examples of price discrimination in monopoly include:
- Charging different prices for the same product or service based on the time of purchase, such as higher prices during peak hours or seasons.
- Offering discounts or special deals to certain customer groups, such as students, senior citizens, or frequent buyers.
- Charging different prices for different versions or packages of the same product or service, such as basic, standard, and premium versions.
Conclusion
In conclusion, price discrimination is a pricing strategy that involves charging different prices for the same product or service to different customers or groups of customers based on their willingness to pay or other demographic or behavioral characteristics. It is possible only in a market where there is a monopoly situation, as the firm has complete control over the price and can identify different customer groups and charge each group a price that maximizes its profits.
MR Curve = AR = Demand Curve is a feature of which kind of Market?
- a)Perfect Competition
- b)Monopoly
- c)Monopolistic
- d)Oligopoly
Correct answer is option 'A'. Can you explain this answer?
MR Curve = AR = Demand Curve is a feature of which kind of Market?
a)
Perfect Competition
b)
Monopoly
c)
Monopolistic
d)
Oligopoly
|
Srsps answered |
Answer: B: MonopolyExplanation:In a Monopoly market, the following features are observed:- Single seller: There is only one firm or seller producing the product or offering the service.- No close substitutes: The product or service offered by the monopolist has no close substitutes, making it unique.- Price maker: The monopolist is the price maker and has control over the price of the product or service.- High barriers to entry: There are high barriers to entry for other firms, either in the form of legal restrictions or economies of scale.MR Curve = AR = Demand Curve:In a monopoly market, the Marginal Revenue (MR) curve, the Average Revenue (AR) curve, and the Demand curve are equal. This is because the monopolist is the sole seller and has control over the price. The demand for the product or service is determined by the price set by the monopolist. Since there is only one seller, the average revenue is equal to the price, and the marginal revenue is the additional revenue earned by selling one extra unit. Therefore, MR = AR = Demand Curve in a monopoly market.
Normative aspect of Economics is given by: - a)Marshall
- b)Robbins
- c)Adam Smith
- d)Samuelson
Correct answer is option 'A'. Can you explain this answer?
Normative aspect of Economics is given by:
a)
Marshall
b)
Robbins
c)
Adam Smith
d)
Samuelson
|
|
Priya Patel answered |
Normative science
According to Alfred Marshall, economics is a normative science. Marshall said that wealth should be utilized for human welfare.
Criticisms of Welfare definition
Professor Lionel Robbins has criticized the Marshalls definition of economics and introduced the modern definition economics in 1932 A.D. The major criticisms made by Robbins are as follows:
1. Classificatory in Nature
Alfred Marshall classified human activities into material and non-material welfare, ordinary and other business. However, he could not clarify the differences between these terms. Therefore, in the view of Robbins, this definition is classificatory in nature rather than analytical in nature.
2. Narrow or Limited Scope
Alfred Marshall stressed that economics studies just about material welfare obtained from materials activities carried out by human beings. On the other hand, critics pointed out that there is some other non-material welfare which fulfills human desires and needs that come under the subject matters of economics.
3. Lack of Clear Concept about Welfare
Marshall has highly focused on material welfare rather than human welfare in his definition. Lionel Robbins pointed out that the concept of welfare differs according to time, place and circumstances. A smoker and alcohol lover considers smoking and alcohol and promotes his welfare. On the other hand, same commodities such as harmful drugs, tobacco and alcohol are harmful to other non-smokers because they cannot promote their welfare in any form.
4. Excludes Human Science
According to Alfred Marshall, economics studies about those people who are living in society. But the critics of this definition argued that economics should study total human beings whether they are actively participating in social functions or they are isolated from society.
5. It involves value judgments
The word "welfare" in Marshall Definition involves value judgments and relates "Economics" to the branch of ethics. But economics should be neutral regarding moral judgments and about what is good and what is bad.
Monopolistic Competitive firms ______. - a)Are small in size
- b)Have small share in total market
- c)Are very large in size
- d)Both (A) and (B)
Correct answer is option 'D'. Can you explain this answer?
Monopolistic Competitive firms ______.
a)
Are small in size
b)
Have small share in total market
c)
Are very large in size
d)
Both (A) and (B)
|
|
Madhavan Malik answered |
A monopolistic competitive industry has the following features:
Many firms.
Freedom of entry and exit.
Firms produce differentiated products.
Firms have price inelastic demand; they are price makers because the good is highly differentiated
Firms make normal profits in the long run but could make supernormal profits in the short term
Firms are allocatively and productively inefficient.
The kinked demand cure is observed in :- a)Duopoly market
- b)Monopoly market
- c)Oligopoly market
- d)Competitive market
Correct answer is option 'C'. Can you explain this answer?
The kinked demand cure is observed in :
a)
Duopoly market
b)
Monopoly market
c)
Oligopoly market
d)
Competitive market
|
Sameer Jain answered |
The kinked demand curve is observed in oligopoly markets. Oligopoly refers to a market structure where there are only a few large firms that dominate the market. These firms have a significant influence on the market price and output levels.
Explanation:
1. Oligopoly Market Structure:
- Oligopoly markets are characterized by a small number of large firms that dominate the market.
- These firms have a significant market share and often compete with each other to gain a competitive advantage.
- Due to the interdependence among firms, the actions of one firm can have a direct impact on the others.
2. Kinked Demand Curve:
- The kinked demand curve theory suggests that in an oligopoly market, firms face a demand curve that is kinked or discontinuous at the current market price.
- The kink in the demand curve occurs because firms assume that if they increase their price, other firms will not follow suit, resulting in a significant loss of market share.
- On the other hand, if a firm decreases its price, other firms are likely to match the price decrease, resulting in a smaller increase in market share.
- This creates a situation where the demand curve is relatively elastic above the current price level and relatively inelastic below the current price level.
3. Explanation of the Kinked Demand Curve Theory:
- The kinked demand curve theory is based on the assumption of price rigidity in oligopoly markets.
- Firms in oligopoly markets are often hesitant to change their prices due to the fear of retaliation from competitors.
- This leads to a situation where firms prefer to maintain the status quo and keep their prices stable.
- As a result, the demand curve is relatively elastic above the current price level because firms anticipate losing a significant market share if they increase their price.
- Similarly, the demand curve is relatively inelastic below the current price level because firms assume that competitors will match any price decrease, resulting in a smaller increase in market share.
Conclusion:
The kinked demand curve theory is observed in oligopoly markets where a few large firms dominate the market. The theory suggests that the demand curve is kinked or discontinuous at the current market price due to the interdependence among firms and their reluctance to change prices. This theory helps explain the price rigidity often observed in oligopoly markets.
Explanation:
1. Oligopoly Market Structure:
- Oligopoly markets are characterized by a small number of large firms that dominate the market.
- These firms have a significant market share and often compete with each other to gain a competitive advantage.
- Due to the interdependence among firms, the actions of one firm can have a direct impact on the others.
2. Kinked Demand Curve:
- The kinked demand curve theory suggests that in an oligopoly market, firms face a demand curve that is kinked or discontinuous at the current market price.
- The kink in the demand curve occurs because firms assume that if they increase their price, other firms will not follow suit, resulting in a significant loss of market share.
- On the other hand, if a firm decreases its price, other firms are likely to match the price decrease, resulting in a smaller increase in market share.
- This creates a situation where the demand curve is relatively elastic above the current price level and relatively inelastic below the current price level.
3. Explanation of the Kinked Demand Curve Theory:
- The kinked demand curve theory is based on the assumption of price rigidity in oligopoly markets.
- Firms in oligopoly markets are often hesitant to change their prices due to the fear of retaliation from competitors.
- This leads to a situation where firms prefer to maintain the status quo and keep their prices stable.
- As a result, the demand curve is relatively elastic above the current price level because firms anticipate losing a significant market share if they increase their price.
- Similarly, the demand curve is relatively inelastic below the current price level because firms assume that competitors will match any price decrease, resulting in a smaller increase in market share.
Conclusion:
The kinked demand curve theory is observed in oligopoly markets where a few large firms dominate the market. The theory suggests that the demand curve is kinked or discontinuous at the current market price due to the interdependence among firms and their reluctance to change prices. This theory helps explain the price rigidity often observed in oligopoly markets.
What should firm do when Marginal revenue is greater than marginal cost?- a)Firm should expand output
- b)Effect should be made to make them equal
- c)Prices should be covered down
- d)All of these
Correct answer is option 'A'. Can you explain this answer?
What should firm do when Marginal revenue is greater than marginal cost?
a)
Firm should expand output
b)
Effect should be made to make them equal
c)
Prices should be covered down
d)
All of these
|
|
Shivam Chawla answered |
When marginal revenue (MR) is greater than marginal cost (MC), it means that the firm is generating more revenue from selling an additional unit of output than the cost incurred in producing that unit. In such a scenario, the firm should expand its output to maximize its profits. Here are the reasons why:
1. Profit maximization: The ultimate goal of any firm is to maximize its profits. When MR>MC, producing one more unit of output will add more to the firm's revenue than its cost. Therefore, the firm should continue producing more output until MR=MC, which is the point of profit maximization.
2. Market demand: Marginal revenue is a function of market demand. When MR>MC, it indicates that the market is willing to pay a higher price for the additional output. Therefore, expanding output is a way of meeting the market demand and maximizing revenue.
3. Economies of scale: Expansion of output can lead to economies of scale, which means that the firm can produce more units at a lower cost per unit. This can further increase the firm's profitability.
4. Competitive advantage: Expanding output can also give the firm a competitive advantage by increasing its market share and reducing the cost per unit. This can help the firm to compete effectively with its rivals.
In conclusion, when MR>MC, the firm should expand its output to maximize profits, meet market demand, achieve economies of scale, and gain a competitive advantage.
1. Profit maximization: The ultimate goal of any firm is to maximize its profits. When MR>MC, producing one more unit of output will add more to the firm's revenue than its cost. Therefore, the firm should continue producing more output until MR=MC, which is the point of profit maximization.
2. Market demand: Marginal revenue is a function of market demand. When MR>MC, it indicates that the market is willing to pay a higher price for the additional output. Therefore, expanding output is a way of meeting the market demand and maximizing revenue.
3. Economies of scale: Expansion of output can lead to economies of scale, which means that the firm can produce more units at a lower cost per unit. This can further increase the firm's profitability.
4. Competitive advantage: Expanding output can also give the firm a competitive advantage by increasing its market share and reducing the cost per unit. This can help the firm to compete effectively with its rivals.
In conclusion, when MR>MC, the firm should expand its output to maximize profits, meet market demand, achieve economies of scale, and gain a competitive advantage.
In market, the price and output equilibrium is determined on the basis of:- a)Total revenue and total cost
- b)Total cost and marginal cost
- c)Marginal revenue and marginal cost
- d)Only marginal cost.
Correct answer is option 'C'. Can you explain this answer?
In market, the price and output equilibrium is determined on the basis of:
a)
Total revenue and total cost
b)
Total cost and marginal cost
c)
Marginal revenue and marginal cost
d)
Only marginal cost.
|
|
Arjun Singhania answered |
In a perfectly competitive market, price equals marginal cost and firms earn an economic profit of zero. In a monopoly, the price is set above marginal cost and the firm earns a positive economic profit. Perfect competition produces an equilibrium in which the price and quantity of a good is economically efficient.
Profits of the firm will be more at:
- a)MR=MC
- b)Additional revenue from extra unit equals its additional cost
- c)Both of above
- d)None
Correct answer is option 'C'. Can you explain this answer?
Profits of the firm will be more at:
a)
MR=MC
b)
Additional revenue from extra unit equals its additional cost
c)
Both of above
d)
None
|
|
Ruchi Mishra answered |
Profit Maximization at MR=MC
When a firm is producing a certain level of output, it aims to maximize its profits. The firm can achieve profit maximization at the point where its Marginal Revenue (MR) equals Marginal Cost (MC). This is the point where the firm can earn the maximum amount of profit.
Explanation:
MR is the additional revenue earned by the firm by selling one more unit of output. MC is the additional cost incurred by the firm by producing one more unit of output. A firm can increase its profits by increasing its output until MR equals MC. At this point, the firm is producing the exact amount of output where the additional revenue earned by producing one more unit is equal to the additional cost incurred by producing one more unit.
If the firm produces less than the point where MR equals MC, then producing one more unit will increase its revenue more than its cost, so the firm can increase its profits by producing more. But if the firm produces more than the point where MR equals MC, then producing one more unit will increase its cost more than its revenue, so the firm can increase its profits by producing less.
Therefore, it is important for a firm to produce at the point where MR equals MC to maximize its profits. This is because at this point, the firm is producing the exact amount of output where the additional revenue earned is equal to the additional cost incurred, so the firm can earn the maximum amount of profit.
Conclusion:
Hence, the correct answer is option 'A', i.e., profits of the firm will be more at MR=MC.
When a firm is producing a certain level of output, it aims to maximize its profits. The firm can achieve profit maximization at the point where its Marginal Revenue (MR) equals Marginal Cost (MC). This is the point where the firm can earn the maximum amount of profit.
Explanation:
MR is the additional revenue earned by the firm by selling one more unit of output. MC is the additional cost incurred by the firm by producing one more unit of output. A firm can increase its profits by increasing its output until MR equals MC. At this point, the firm is producing the exact amount of output where the additional revenue earned by producing one more unit is equal to the additional cost incurred by producing one more unit.
If the firm produces less than the point where MR equals MC, then producing one more unit will increase its revenue more than its cost, so the firm can increase its profits by producing more. But if the firm produces more than the point where MR equals MC, then producing one more unit will increase its cost more than its revenue, so the firm can increase its profits by producing less.
Therefore, it is important for a firm to produce at the point where MR equals MC to maximize its profits. This is because at this point, the firm is producing the exact amount of output where the additional revenue earned is equal to the additional cost incurred, so the firm can earn the maximum amount of profit.
Conclusion:
Hence, the correct answer is option 'A', i.e., profits of the firm will be more at MR=MC.
Can you explain the answer of this question below:Average revenue curve is also known as:
- A:
Profit curve
- B:
Demand curve
- C:
Supply curve
- D:
Average cost curve.
The answer is b.
Average revenue curve is also known as:
Profit curve
Demand curve
Supply curve
Average cost curve.
|
Abc answered |
Demand curve depicts the relation between quantity & price.........avg revenue = mrkt price of product....... therefore, avg revenue curve also called as demand curve :)
Supernormal profits occur, when: - a)Total revenue is equal to total cost
- b)Total revenue is equal to variable cost
- c)Average revenue is more than average cost
- d)Average revenue is equal to average cost
Correct answer is option 'C'. Can you explain this answer?
Supernormal profits occur, when:
a)
Total revenue is equal to total cost
b)
Total revenue is equal to variable cost
c)
Average revenue is more than average cost
d)
Average revenue is equal to average cost
|
|
Maheshwar Goyal answered |
Supernormal profit is also called economic profit, and abnormal profit, and is earned when total revenue is greater than the total costs.
The demand curve of the firm and industry will be same in which form of market: - a)Monopolistic Competition
- b)Perfect Competition
- c)Monopoly
- d)Oligopoly
Correct answer is option 'C'. Can you explain this answer?
The demand curve of the firm and industry will be same in which form of market:
a)
Monopolistic Competition
b)
Perfect Competition
c)
Monopoly
d)
Oligopoly
|
Nandini Iyer answered |
Perceived Demand for Firms in Different Competitive Settings. The demand curve faced by a perfectly competitive firm is perfectly elastic, meaning it can sell all the output it wishes at the prevailing market price. The demand curve faced by a monopoly is the market demand.
Competitive firms in the long run earn: - a)Super normal profit
- b)Normal profit
- c)Losses
- d)None
Correct answer is option 'B'. Can you explain this answer?
Competitive firms in the long run earn:
a)
Super normal profit
b)
Normal profit
c)
Losses
d)
None
|
|
Mahesh Chakraborty answered |
In the long run, with the entry of new firms in the industry, the price of the product will go down as a result of the increase in supply of output and also the cost will go up as a result of more intensive competition for factors of production. The firms will continue entering the industry until the price is equal to average cost so that all firms are earning only normal profits.
The study of inflation is part of:- a)Normative economics.
- b)Macroeconomics.
- c)Microeconomics.
- d)Descriptive economics.
Correct answer is option 'B'. Can you explain this answer?
The study of inflation is part of:
a)
Normative economics.
b)
Macroeconomics.
c)
Microeconomics.
d)
Descriptive economics.
|
|
Priya Patel answered |
For example, increased inflation (macro effect) would cause the price of raw materials to increase for companies and in turn affect the end product's price charged to the public. Microeconomics takes what is referred to as a bottoms-up approach to analyzing the economy while macroeconomics takes a top-down approach.
Oligopolistic industries are characterized by :- a)a few dominant firms and substantial barriers to entry.
- b)a few large firms and no entry barriers.
- c)a large number of small firms and no entry barriers.
- d)one dominant firm and low entry barriers.
Correct answer is option 'A'. Can you explain this answer?
Oligopolistic industries are characterized by :
a)
a few dominant firms and substantial barriers to entry.
b)
a few large firms and no entry barriers.
c)
a large number of small firms and no entry barriers.
d)
one dominant firm and low entry barriers.
|
|
Alok Mehta answered |
The term oligopoly indicates: a few firms producing either a differentiated or a homogeneous product. Oligopolistic industries are characterized by: a few dominant firms and substantial entry barriers.
A monopolist is able to maximize his profits when : - a)His output is maximum
- b)He charges a high price
- c)His average cost is minimum
- d)His marginal cost is equal to marginal revenue
Correct answer is option 'D'. Can you explain this answer?
A monopolist is able to maximize his profits when :
a)
His output is maximum
b)
He charges a high price
c)
His average cost is minimum
d)
His marginal cost is equal to marginal revenue
|
|
Poonam Reddy answered |
A monopolist is able to maximize its profits by setting the price at the level that will maximize its per-unit profit.setting output at MR = MC and setting price at the demand curve's highest point. producing maximum output where price is equal to its marginal cost.
MR of n the unit is given by: - a)TRn/ TRn-1
- b)TRn + TRn-1
- c)TRn - TRn-1
- d)All of these
Correct answer is option 'C'. Can you explain this answer?
MR of n the unit is given by:
a)
TRn/ TRn-1
b)
TRn + TRn-1
c)
TRn - TRn-1
d)
All of these
|
|
Alok Mehta answered |
The dalton, symbol Da, is also sometimes used as a unit of molar mass, especially in biochemistry, with the definition 1 Da = 1 g/mol, despite the fact that it is strictly a unit of mass (1 Da = 1 u = 1.660 538 921(73)X10−27 kg).
Given the relation MR=P (1-1/e), if e<1, then
- a)MR < 0
- b)MR > 0
- c)MR = 0
- d)None of these.
Correct answer is option 'A'. Can you explain this answer?
Given the relation MR=P (1-1/e), if e<1, then
a)
MR < 0
b)
MR > 0
c)
MR = 0
d)
None of these.
|
|
Ipsita Rane answered |
We need to find the value of e such that MR = 0.
MR = P(1 - 1/e)
0 = P(1 - 1/e)
1/e = 1
e = 1
Therefore, if e = 1, then MR = 0.
MR = P(1 - 1/e)
0 = P(1 - 1/e)
1/e = 1
e = 1
Therefore, if e = 1, then MR = 0.
If price is forced to stay below equilibrium price: - a)Excess supply exists
- b)Excess demand exists
- c)Either (a) or (b)
- d)Neither (a) nor (b)
Correct answer is option 'B'. Can you explain this answer?
If price is forced to stay below equilibrium price:
a)
Excess supply exists
b)
Excess demand exists
c)
Either (a) or (b)
d)
Neither (a) nor (b)
|
|
Alok Mehta answered |
If the market price is below the equilibrium price, quantity supplied is less than quantity demanded that is excess demand exists, creating a shortage. The market is not clear. It is in shortage. Market price will rise because of this shortage.
If a shortage exists, price must rise in order to entice additional supply and reduce quantity demanded until the shortage is eliminated.
In the long run: - a)Only demand can change
- b)Only supply can change
- c)Both demand and supply can change
- d)None of these
Correct answer is option 'C'. Can you explain this answer?
In the long run:
a)
Only demand can change
b)
Only supply can change
c)
Both demand and supply can change
d)
None of these
|
|
Vaishnavi Gupta answered |
Demand and Supply in the Long Run
In the long run, both demand and supply can change. This is because the long run refers to a period of time where all factors of production are variable, meaning that both demand and supply can adjust to changes in the market.
Factors Influencing Demand
Demand can change due to various factors such as:
1. Changes in consumer preferences and tastes
2. Changes in population and demographics
3. Changes in income levels
4. Changes in prices of related goods
5. Changes in advertising and promotional activities
6. Changes in government policies and regulations
Factors Influencing Supply
Supply can change due to various factors such as:
1. Changes in technology
2. Changes in the cost of production
3. Changes in the availability of resources and raw materials
4. Changes in the number of firms in the industry
5. Changes in government policies and regulations
Impact of Changes in Demand and Supply
When there is a change in either demand or supply, the market equilibrium point shifts. This means that the quantity and price of the good or service will change. If demand increases, the equilibrium price and quantity will increase. If supply increases, the equilibrium price will decrease and quantity will increase.
Conclusion
In conclusion, in the long run, both demand and supply can change due to various factors. When there is a change in either demand or supply, the market equilibrium point shifts, leading to changes in price and quantity.
In the long run, both demand and supply can change. This is because the long run refers to a period of time where all factors of production are variable, meaning that both demand and supply can adjust to changes in the market.
Factors Influencing Demand
Demand can change due to various factors such as:
1. Changes in consumer preferences and tastes
2. Changes in population and demographics
3. Changes in income levels
4. Changes in prices of related goods
5. Changes in advertising and promotional activities
6. Changes in government policies and regulations
Factors Influencing Supply
Supply can change due to various factors such as:
1. Changes in technology
2. Changes in the cost of production
3. Changes in the availability of resources and raw materials
4. Changes in the number of firms in the industry
5. Changes in government policies and regulations
Impact of Changes in Demand and Supply
When there is a change in either demand or supply, the market equilibrium point shifts. This means that the quantity and price of the good or service will change. If demand increases, the equilibrium price and quantity will increase. If supply increases, the equilibrium price will decrease and quantity will increase.
Conclusion
In conclusion, in the long run, both demand and supply can change due to various factors. When there is a change in either demand or supply, the market equilibrium point shifts, leading to changes in price and quantity.
The structure of the cold drink industry in India is best described as- a)perfectly competitive.
- b)monopolistic.
- c)monopolistically competitive.
- d)oligopolistic.
Correct answer is option 'D'. Can you explain this answer?
The structure of the cold drink industry in India is best described as
a)
perfectly competitive.
b)
monopolistic.
c)
monopolistically competitive.
d)
oligopolistic.
|
|
Priya Patel answered |
The soft drink industry is a type of an oligopoly and an example of the firm is Coca cola Company. The industry is an oligopoly because the firms in this industry produce products that are differentiated. The competition depends on the way the brand of the firms market their products. The firms in the soft drink industry are mutually interdependent and each firm is affected by the actions of the competitors. The sales of Coca Cola Company may end up being affected in case Pepsi changes its product specification or even the price of the product. The competitors often act by changing their advertising, specification and price. There are also barriers to entry of new firms in the soft drink industry (Profit maximization under imperfect competition, 2010).
Under monopoly, degree of control over price is :- a)none
- b)some
- c)very considerable
- d)none of the above
Correct answer is option 'C'. Can you explain this answer?
Under monopoly, degree of control over price is :
a)
none
b)
some
c)
very considerable
d)
none of the above
|
|
Sahil Malik answered |
Monopoly and Control over Price
Monopoly is a market structure where a single seller or a group of sellers controls the market for a particular good or service. In this market structure, the degree of control over price is very considerable. Let us understand why.
One Seller
Under a monopoly, there is only one seller in the market, which means that the seller has complete control over the supply of the product. This control over supply gives the seller the power to control the price of the product.
No Close Substitutes
In a monopoly market, there are no close substitutes for the product being sold. This means that the seller has a virtual monopoly on the market, and consumers have no other option but to buy the product at the price set by the seller.
Barriers to Entry
Monopolies are often created due to barriers to entry. These barriers can be in the form of patents, economies of scale, or government regulation. These barriers make it difficult for new firms to enter the market and compete with the existing monopolist. As a result, the monopolist can set the price of the product without the fear of competition.
Conclusion
Thus, under monopoly, the degree of control over price is very considerable. The monopolist has complete control over the supply of the product, and there are no close substitutes or competition. Therefore, the monopolist can set the price of the product at a level that maximizes its profits.
Monopoly is a market structure where a single seller or a group of sellers controls the market for a particular good or service. In this market structure, the degree of control over price is very considerable. Let us understand why.
One Seller
Under a monopoly, there is only one seller in the market, which means that the seller has complete control over the supply of the product. This control over supply gives the seller the power to control the price of the product.
No Close Substitutes
In a monopoly market, there are no close substitutes for the product being sold. This means that the seller has a virtual monopoly on the market, and consumers have no other option but to buy the product at the price set by the seller.
Barriers to Entry
Monopolies are often created due to barriers to entry. These barriers can be in the form of patents, economies of scale, or government regulation. These barriers make it difficult for new firms to enter the market and compete with the existing monopolist. As a result, the monopolist can set the price of the product without the fear of competition.
Conclusion
Thus, under monopoly, the degree of control over price is very considerable. The monopolist has complete control over the supply of the product, and there are no close substitutes or competition. Therefore, the monopolist can set the price of the product at a level that maximizes its profits.
Perfectly competitive firm faces:- a)Perfectly elastic demand curve
- b)Perfectly inelastic demand curve
- c)Zero
- d)Negative.
Correct answer is option 'A'. Can you explain this answer?
Perfectly competitive firm faces:
a)
Perfectly elastic demand curve
b)
Perfectly inelastic demand curve
c)
Zero
d)
Negative.
|
|
Alok Mehta answered |
A perfectly competitive firm faces a demand curve is a horizontal line equal to the equilibrium price of the entire market.
Kinked demand curve hypothesis is given by: - a)Alfred marshal
- b)A.C Pigou
- c)Sweezy
- d)Hicks & allen
Correct answer is option 'C'. Can you explain this answer?
Kinked demand curve hypothesis is given by:
a)
Alfred marshal
b)
A.C Pigou
c)
Sweezy
d)
Hicks & allen
|
|
Arun Khanna answered |
1. Sweezy's Kinked Demand Curve Model: The kinked demand curve of oligopoly was developed by Paul M. Sweezy in 1939. Instead of laying emphasis on price-output determination, the model explains the behavior of oligopolistic organizations.
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