MCQs - Forms of Market Commerce Notes | EduRev

Crash Course of Micro Economics -Class 12

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Q.1 Which of the following is not a characteristic of monopolistic competition ?
(a) Ease of entry into the industry
(b) Product differentiation
(c) A relatively large number of sellers
(d) A homogenous product
Ans: D

Which of the following markets have the unique feature of indeterminate demand curve?
(a) Perfect competition
(b) Oligopoly
(c) Monopoly
(d) Monopolistic

Ans: B

Under which of the market forms, the demand curve is steeper than the market of monopolistic competition ?
(a) Duopoly
(b) Monopoly

(c) Oligopoly
(d) Perfect Competition
Ans: B

Q.4 Tata Power Delhi Distribution Limited is an example of

(a) Perfect Competition
(b) Monopolistic Competition
(c) Monopoly
(d) None
Ans: C

Under monopoly form of market the price elasticity of demand is generally
(a) More than unity
(b) Equal to unity
(c) Less than unity
(d) Infinity
Ans: C

In the monopolistic competition form of market, which one of the following statements is generally correct?
(a) Freedom of entry and exit for the new firms
(b)  Demand curve parallel to vertical axis.
(c) Firm has full control over price.
(d) Selling cost do not exist.
Ans: A

In oligopoly form of market which one of the following does not hold true ?

(a) Non-price competition
(b) Small number of huge firms
(c) Indeterminate firm’s demand curve
(d) Perfect knowledge among the buyers
Ans: D

Demand curve faced by a competitive firm is
(a) Perfectly inelastic
(b) Perfectly elastic
(c) Less elastic
(d) None of these
Ans: B

Implication of very large number of firms in perfectly competitive market is:
(a) No single seller on its own can influence the price
(b) Firm becomes price maker
(c) Entry of a new firm becomes difficult
(d) None of these
Ans: A

Under perfect competition, a firm earns normal profit in the long run due to
(a) Homogeneous product
(b) Free entry and exit of firms

(c) Large number of buyers and sellers
(d) Absence of transport cost
Ans: B

Demand curve under monopolist competition is more elastic than under monopoly because of
(a) Large number of firms
(b) Freedom of entry and exit
(c) Presence of close substitutes
(d) Large selling costs
Ans: C

In Middle East a group of oil companies by forming a cartel jointly decide output and prices of oil.  This is an example of
(a) Collusive oligopoly
(b) Monopolistic company
(c) Duopoly
(d) Imperfect oligopoly
Ans: A

Basic difference between monopolistic competition and oligopoly is
(a) Product differentiation
(b) Barrier to entry
(c) Number of buyers
(d) Price discrimination
Ans: B

In oligopoly market there is price rigidity because

(a) No firm changes it spice for fear of retaliation by other firms
(b) Selling cost
(c) Difficult entry of a new firm
(d) None of these
Ans: A

If number of firms in the market rises then

(a) Equilibrium quantity will rise but equilibrium price will fall
(b) Both equilibrium price & quantity will fall
(c) Equilibrium price will rise and equilibrium quantity will fall
(d) Equilibrium price and quantity will remain the same
Ans: A

Long run profits under monopolistic competition are:

(a) Supper normal
(b) Normal
(c) Sub normal
(d) Depends on barriers to entry
Ans: B

Basic difference between monopolistic competition and oligopoly is

(a) Number of buyers
(b) Product differentiation
(c) Price discrimination
(d) Barriers to entry
Ans: D

If a perfectly competitive firm is in equilibrium in the short run, then it earns super normal profits when
(a) AR <  AC
(b) AR = AC
(c)  AR > AC
(d)  AR = Price
Ans: C

All of the following are examples of barriers to entry except

(a) Reputation of established firms
(b) Special deals with distributors 

(c) Excessive prices
(d) Patents
Ans: C

When oil producing countries of the middle east meet to set prices and output levels, it is an example of
(a) Monopoly
(b) Collusive oligopoly
(c) Competitive oligopoly
(d) Profit sharing
Ans: B

Q.21 Most efficient form of market is

(a) Perfect competition
(b) Monopoly
(c) Oligopoly
(d) Monopolistic competition
Ans: A

Market refers to  :

(a) The geographical area where only sale of goods and services is done.

(b) The geographical area where only purchase of goods and services is done

(c) The mechanism of sale and purchase of goods and services

(d) None of these.
Ans: C

Categorisation of market into different forms depends upon:
(a) Direction of competition
(b) Degree of competition
(c) Number of firms
(d) Both (b) and (c)
Ans: D

Size of the market is large when:
(a) The number of the buyers is large
(b) the sale and purchase of a commodity is large
(c) The number of sellers is large
(d) The degree of competition is large
Ans: B

Zero degree of product differentiation is found under :

(a) Monopoly
(b) Monopolistic competition
(c) Oligopoly
(d) None
Ans: D

In comparison to other market forms ,  perfect completion facilitates:
(a) Lowest output and higher price
(b) Higher output and lower price

(c) Both highest output and highest price
(d) Both lowest output and lowest price
Ans: B

There is cut throat competition & a high degree of interdependence between the firms under
(a) monopolistic competition
(b) collusive oligopoly
(c) non-collusive oligopoly
(d) perfect competition
Ans: C

Members of the cartel under cooperative oligopoly accept the price policy as specified by the:
(a) industry
(b) price leader
(c) cartel
(d) none of these
Ans: B

Competition is preferred to collusion as a means of profit maximization under :

(a) perfect competition
(b) imperfect competition
(c) cooperative oligopoly
(d) non-cooperative oligopoly
Ans: D

Q.30 Firm under oligopoly are able to earn :

(a) normal profits
(b) super normal profits
(c) losses

(d) none of these
Ans: B

Firms in the long run earn normal profits because of :

(a) Free entry
(b) Free exit
(c) Free entry as well as free exit
(d) None
Ans: C

Optimum level of output is that level of output where:

(a) AVC for each firm is the lowest
(b) AC for each firm is the lowest
(c) TVC for each firm is the lowest
(d) TC for each firm is the lowest
Ans: B

A horizontal straight line AR and MR curve is found under:

(a) Monopoly
(b) Oligopoly
(c) Monopolistic competition
(d) Perfect competition
Ans: D

Q.34 Formation of a group by the competing firms in the market is called :

(a) Patent right

(b) Patent life
(c) Cartel
(d) None of these
Ans: C

Q.35 In comparison to monopoly, the demand curve under monopolistic competition is:

(a) Infinitely elastic
(b) Equally elastic
(c) More elastic
(d) Less elastic
Ans: C

Product differentiation under monopolistic competition is often supported with:

(a) Heavy advertisement expenditure
(b) Selling costs
(c) Non-price competition
(d) Both (a) and (b)
Ans: D

Q.37 A market strategy adopted by a firm to increase its market share through advertisement is called:
(a) perfect competition
(b) pure competition

(c) price competition
(d) non-price competition
Ans: D

Q.38 Firm’s demand curve under oligopoly is:

(a) less elastic
(b) more elastic
(c) indeterminate
(d) none of these
Ans: C

Q.39 In oligopoly, the products area:
(a) homogeneous only
(b) differentiated only
(c) Both
(d) none
Ans: C

Q.40'A firm can sell more only at the lower price.’ To which market would you relate this statement?

(a) Perfect competition
(b) Monopoly
(c) Oligopoly
(d) Duopoly
Ans: B

Firm’s demand curve under monopoly shows:
(a) no relationship between price & demand
(b) inverse relationship between price & demand
(c) positive relationship between price & demand

(d) none of these
Ans: B

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

(a) A few firms producing identical goods
(b) Many firms producing differentiated goods
(c) A few firms producing goods that differs
(d) Many firms producing identical good
Ans: D

Patent is:

(a) A guarantee of quality to consumers.
(b) An exclusive right to an inventor of a product.
(c) A control over some unique source.
(d) None of the above
Ans: B

The soft drink market is dominated by coke, pepsi and very few other firms.  The firms often start price wars.  The market can best be classified as:
(a) Perfect competition
(b) Monopolistic competition
(c) Oligopoly
(d) Monopoly
Ans: C

Q.45 How could an oligopolist increase his output without changing price ?

(a) Reduce output
(b) Reduce marketing efforts
(c) Through non price competition
(d) Reduce costs
Ans: C

Toothpaste’ is a product of which type of market form:
(a) Monopolistic Competition
(b) Monopoly
(c) Oligopoly
(d) Perfect Competition
Ans: A

How much selling costs are incurred in case of perfect competition ?
(a) Very High
(b) Very Less
(c) Negligible
(d) Zero
Ans: D

Firms cooperate with each other in determining price or output or both.  It is a feature of :
(a) Pure Oligopoly
(b) Non-Collusive Oligopoly
(c) Imperfect Oligopoly
(d) Collusive Oligopoly
Ans: D

Q.49 Which of the following is not a characteristic of a price taker firm ?

(a)  TR = P × Q
(b) AR = Price
(c) Negatively sloped demand curve
(d) MR = Price
Ans: C

The perfectly competitive firm doubles its output, then its total revenue:
(a) Doubles
(b) More than doubles
(c) Less than doubles
(d) Cannot be determined
Ans: A

In order to maximize profits, a monopoly company will produce that quantity at which:
(a) marginal revenue equals average total cost
(b) price equals marginal revenue
(c) marginal revenue equals marginal cost
(d)  total revenue equals total cost
Ans: C

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