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MEAP Quiz-l
August 2015

Duration : 15 minutes
Name:
Marks : 15 marks
Roll No:

0.5 marks shall be deducted

Note: Each question carries one mark. For each wrong answer
response there will be a
and for each answer with more than one response or mutilated
pencil.
deduction of 1.5 marks. Hence answer carefully in pen not in
I

among yourselves'
It is an open book, open source examination with no discussion

The demand curve facing the individual seller in perfect competition

is:
L.

a) The same as market demand'

b) PerfectlYinelastic.
c) Down-sloPing.
@Horizontal.

2. Maximum Profit is found where

MC=MR
b) MR = ATC
c) Total revenue equals total cost.
d) MR is greater than MC by the largest amount'

3. ln a perfectly competitive market'

a) There are a small number of buyers and selters.

of another'
b) A firm can easily switch from the production of one good to the production
affect the price by their actions'
@ lndividual buyers or sellers cannot
d) Price of Product never changes'

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 4' A perfectly competitive firm can incur losses but
continue to operate in the short run, if it is
least able to cover its
i

a) Total costs.
b) Fixed costs.
"
@ Variable costs.
d) Average total costs.

5. ln perfect competition, profit is equat to

a) Total revenue minus explicit costs. fl,.\,b = e- Ar)xq

b,J Price minus AVC times quantity sold.
@ Price minus ATC times quantity sold.
d) Marginal revenue minus marginat cost.

6' what is the greatest possibte size of the loss that a rationar
competitive firm can suffer in the
short run?

a) tnfinity.
b) Explicit plus implicit costs.
c) Zero. '

(di Totat fixed costs.

\/
7 ' Given the same cost and revenue schedules, a profit
maximizing monopolist will produce:

@ Less output than a competitive industry.

b) More output than a competitive industry.
c) The same amount of output as a competitive industry.
d) None ofthe above.

8' The profit-maximizing output of a monopolist is

established by the intersection of the:

a) Demand and MC curves

b) Supply and MR curves
MR and MC curves
@
d) Demand and ATC curves

9' lf at a monthly output rate of 100 units, AVc is 2.50, price

is 4 and AFC is L, then total profit per
month is:
6L: too; AVc = Z.s ; y=\ ,. AFc - [

a) 2s
Gi;;TR=-(xo'=(ooxf-/Pee
c) 1oo *Tc= hrc fAVC = t+L-s= 3's
d) soo fC: ATC)<Q= 3.sXtoo=29
: 50' PaseZof 4
-.-P*\,L = TR- fC {oo-3to=
L0. Which of the following is/are the characteristics of Monopolistic competition?

a) Many sellers.
b) Product differentiation.
c) Free entry and ext.
of the above.
" @Att
11. Which of the following are valid in a perfectly competitive market, when demand is inelastic and
supplyisincreased? ,4;",
5p,^,F-\n.U c-t"yeti*ot1 , no s;yle
;l li:illllill"",l'.1ffi;chansed. js Jle- 'Jo in$'rc-ncc- 1^o Po * s"I'dj
-
c) The price increases. ar,^d lrro d.tt,orA t-t c-,sns 'f-^b' 3o eve-n
@ ]1. or.rntity increases slightly. i\ .fi.,e s.-7fg is incrreased. 4-,n 1.^o^fi
r
$
e) rhe prices remain unchanged' ' srjr+ly .
,^,-. ti ."15 iL*".

12. Which of the following is not a feature of natural monopoly?

a) A firm can expand to monopolize the industry by cutting costs rapidly to lower levels.
b) lndustries with relatively high fixed costs are perceived to be natural monopolies.
c) The marginal costs for natural monopolies are low. bt
Thu -*W [to-*
d) The large monopotist will be very efficient than smaller firms. *he- |y)onoplisL 'is srv4y
@ lt will be impossible to break natural monopolies.o-"qr4 l"A by 4
*.,-#:*' ^"ri;;g?
13. Price discrimination takes place when
p,"*ffi\ ;x ffjt'""s
\eerr' fovetrorrenA,

@ A given product is sold at more than one price and these price differences are not
justified by cost differences.
b) Different prices, to compensate for differences in characteristics of the product, are
charged.
c) The price is equal to the per unit cost of the product.
d) lncreased price lowers the supply
" ' of the product.
e) Both (a) and (c) above. ) \ c c*vrrs"A,
L^,s;u- * $\k^nb
51 ar hrfnuene*J fla : ^

rica}.}.J]$*^k-h,dT,.,..,a;[\**^j$.}.raticc^s,il;s
Frr l-lon^
.l ft- Jrcn'r-i"
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Page 3 of 4
 \
I

use the following figure to answer the questions below:

price

PT

P?
P3
P*

L4' For the monopolist depicted in the figure above, the profit-maximizing
price and output,
respectively, are:
a) Op4 and Oej.

@
c)
op1 and oe1
Op2 and Oe2 ,

d) Op3 and Oe1

15' lf the revenue and the cost data in the figure above were representative of a perfectly
competitive industry, the equilibrium price and quantity, respectively,
would be:
a) Opl and Oer
op2 and oe2
@
c) Op3 and Oe1
d) Op4 and Oer
X

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