Department of Technical Education & Board of Technical Examinations 2007 P.U.C Economics Model for MANAGEMENT - Question Paper

ques. one (1 point)
If P = $8 and MC = $5 + 0. 2Q, the competitive firm's profit-maximizing level of output is:
1. 5
2. 0.2
3. 8
4. 15
ques. two (1 point)
In the long run, firms will offer supply at the point where P = MR = MC if:
1. MC is rising
2. MC is falling
3. MC is constant
4. P > AC
ques. three (1 point)
Graphically, competitive market supply is measured by the:
1. vertical difference of competitor demand curves
2. vertical sum of competitor demand curves
3. horizontal difference of competitor MC curves
4. horizontal sum of competitor MC curves
ques. four (1 point)
For a firm in perfectly competitive market equilibrium:
1. MR < AR
2. P > AC
3. P > MR
4. P = MC
ques. five (1 point)
Competition tends to be light when:
1. potential entrants are few
2. capital requirements are nominal
3. standards for skilled labor and other inputs are modest
4. regulatory barriers are modest
ques. six (1 point)
In a perfectly competitive market:
1. sellers and buyers have perfect info
2. entry and exit are difficult
3. sellers produce similar, but not identical products
4. each seller can affect the market price by changing output
ques. seven (1 point)
The firm demand curve in a competitive market is:
1. upward sloping
2. downward sloping
3. horizontal
4. vertical
ques. eight (1 point)
A firm will earn normal profits when price:
1. equals avg. total cost
2. equals avg. variable cost
3. equals marginal cost
4. exceeds minimum avg. total cost
ques. nine (1 point)
In the short run, a perfectly competitive firm will shut down and produce nothing if:
1. excess profits equal zero
2. total cost exceeds total revenue
3. total variable cost exceeds total revenue
4. the market price falls beneath the minimum avg. total cost
ques. 10 (1 point)
Perfect competition always prevails in markets with:
1. few buyers and sellers
2. many buyers and sellers
3. an even balance of power ranging from sellers and buyers
4. a single buyer
ques. 11 (1 point)
In perfectly competitive markets, profits are maximized when:
1. MC = AC
2. P > AC
3. MR = MC
4. MR = P
ques. 12 (1 point)
Economic profit:
1. cannot be negative
2. can exceed the risk-adjusted normal rate of return
3. is less than the risk-adjusted normal rate of return
4. does not reflect the cost of owner-supplied inputs
ques. 13 (1 point)
Market structure is not typically characterized on the basis of:
1. the number and size distribution of active buyers and sellers
2. potential entrants
3. exit barriers
4. government regulation
ques. 14 (1 point)
Effects of market structure are not typically measured in terms of:
1. the prices paid by consumers
2. declining consumer popularity
3. employment opportunities
4. pace of product innovation
ques. 15 (1 point)
Price and product quality competition tends to be vigorous when:
1. entry barriers are low
2. potential entrants are few
3. product quality info is scarce
4. the number of active sellers is few
ques. 16 (1 point)
Industry cartels never:
1. give rise to price supports
2. spur entry when barriers to entry are low
3. spur exit when exit barriers are low
4. prompt inefficiency and waste
ques. 17 (1 point)
The rate of return necessary to attract and retain capital investment is called:
1. ROE
2. economic losses
3. normal profit
4. economic profit
ques. 18 (1 point)
In competitive market equilibrium, the firm's:
1. MR = MC and P > AR
2. MR = MC and P > AC
3. AR = AC and MR > MC
4. P = MR = AR = AC = MC
ques. 19 (1 point)
At the point of minimum AVC:
1. MC is falling
2. MC is constant
3. MC is rising
4. MC = AVC
ques. 20 (1 point)
So long as P > AVC, the competitive firm's short-run supply curve is equal to:
1. AVC
2. P
3. MC
4. none of these

Earning:   Approval pending.