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CBSE Questions for Class 11 Commerce Economics Non-Competitive Markets Quiz 4 - MCQExams.com
CBSE
Class 11 Commerce Economics
Non-Competitive Markets
Quiz 4
Competitive behavior and competitive market structure are, in general, _____ related.
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directly
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inversely
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not related at all
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both a and b
Explanation
Competitive behavior and competitive market structure are, in
general, inversely related; the more competitive the market structure, less
competitive is the behavior of the firms. We see that Coke and
Pepsi compete with each other in a variety of ways to achieve a higher level
of sales or a greater share of the market. Conversely, we do not find individual
farmers competing among themselves to sell a larger amount of crop. This
is because both Coke and Pepsi possess the power to influence the market
price of soft drinks, while the individual farmer does not.
For a monopoly firm, __________.
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the price depends on the quantity of the commodity sold
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price is a decreasing function of the quantity sold
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The market demand curve shows the quantities that consumers as a whole are willing to purchase at different prices.
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Both A and B
The ________ curve will lie exactly on the market demand curve.
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TR
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MR
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AR
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none of these
Market demand curve shows the ______.
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quantities that consumers as a whole are willing to purchase at different prices.
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demand for a commodity in an area
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demand of the market in different conditions
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both A and B
Explanation
The market demand curve is the addition of all the individual demand curves in the market. It shows the quantity demanded by the individuals at a given price point. Hence, the market demand curve shows the quantities that consumers as a whole are willing to purchase at different prices.
Change in TR due to the sale of an additional unit is termed _________.
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average revenue
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marginal revenue
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additional demand
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both B and C
Short run supply curve of firm in perfect competitive market is _________.
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portion of the marginal cost curve that lies above the average variable cost curve.
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portion of the marginal cost curve that lies below the average variable cost curve
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same as demand curve
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marginal cost curve itself
A firm's short-run supply curve under perfect competition is ___________.
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the rising part of the SMC curve from and above the minimum AVC
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zero output for all prices strictly less than the minimum AVC
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both A and B
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none of the above
Explanation
A
firm’s short run supply curve is
the rising part of the SMC curve
from and above the minimum AVC
together with zero output for all
prices strictly less than the
minimum AVC. It can be derived by considering 2 cases- price >= minimum AVC and price < minimum AVC.
Duopoly is a market structure which is _________.
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when there are two oligopoly markets functioning simultaneously
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the special case of oligopoly where there are exactly two sellers
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when monopoly and oligopoly functioning simultaneously
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none of these
Explanation
A duopoly is a form of oligopoly, where only two companies dominate the market.
Under the duopoly companies tend to compete against one another, reducing the chance of monopolistic market power.
Hence b is the correct answer.
Oligopoly is one where ______.
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the market of a particular commodity consists of more than one seller
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number of sellers is few
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both A and B
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none of these
Explanation
An oligopoly is an industry which is dominated by a few firms. In this market, there are a few firms which sell homogeneous or differentiated products. Also, as there are few sellers in the market, every seller influences the behavior of the other firms and other firms influence it.
Hence c is the correct option.
Which of the following is not true for monopolistic competition?
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Demand curve faced by the firm is not horizontal (perfectly elastic) as is the case with perfect competition
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Demand curve faced by the firm is the market demand curve, as in the case with monopoly
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The firm expects small increases in demand if it lowers the price
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The marginal revenue is slightly less than the average revenue
Monopolistic Competition is one where _____.
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number of firms is large
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there is free entry and exit of firms
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goods produced by them are not homogeneous
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all of these
Explanation
Monopolistic competition is a competition where there are a large number of sellers who sell related products which are close substitutes for each other. Also, there are no barriers to entry. Hence, there is a free entry and exit of firms. As a result, all these are features of monopolistic competition.
Which of the following is not a feature of monopolistic competition?
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Free entry and free exit
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Non- Homogeneous products
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Large number of firms
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Restrictions on entry
Explanation
Monopolistic competition is a competition where there are a large number of sellers who sell related products which are close substitutes for each other. Also, there are no barriers to entry. Hence, there are no restrictions on entry in the monopolistic competition.
Which of the following is true regarding monopoly in the long run?
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They earn zero profits
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Monopoly firms function the same as in perfect competition
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Profits earned by monopoly firms do not go away
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None of these
Under perfect market conditions the supply curve of a firm is represented by _______.
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marginal cost curve
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marginal revenue curve
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average revenue curve
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average cost curve
___________ of a firm shows the levels of output (plotted on the x-axis) that the firm chooses to produce corresponding to different values of the market price (plotted on the y-axis).
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Demand Curve
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Output Curve
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Supply Curve
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Both B and C
Explanation
The supply curve depicts the quantities that the suppliers are willing and able to sell at various prices during a particular period of time. It graphically shows the relationship between supply price and quantity. At higher prices the suppliers are willing to supply a higher quantity as it will generate a higher profit thus the curve is upwards sloping in nature.
Government intervention to ask a natural monopoly to charge price equal to marginal cost will lead __________.
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to monopolist firm quilting the market
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to market efficiency
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to distributive efficiency
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to the market being flooded with new firms
Which of the following faces a downward sloping demand curve?
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Firm in a competitive market
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Firm in a monopoly market
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Both (A) and (B)
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None of the above
Explanation
A monopoly firm faces a downward-sloping demand curve as more output can be sold only by increasing price. As a result, revenue generated from every additional unit (known as MR) is less than the price (AR) of the product. Due to this reason, MR is less than AR.
When the demand curve of a pure monopoly firm is elastic, marginal revenue will be _________.
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negative
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positive
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zero
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any of the above
_______ leads to monopoly situation.
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Exclusive trademarks, copy rights and patent
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Government restrictions on further entry
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Control over critical raw material and technology
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All of the above
Explanation
A monopoly is a situation where there is only a single seller who has a sole control over the firm. The products are also not close substitutes for each other. Monopoly is caused by the following situation:
Exclusive trademarks, copyrights, and patent.
Government restrictions on further entry.
Control over critical raw material and technology.
Bilateral monopoly arises when a _______ seller faces ________ buyer
.
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single, single
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single, few
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few, few
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few, single
Explanation
Bilateral monopoly is a situation where there are a single seller and a single buyer. Its also referred to as monopoly-monopsony behaviour. Hence, a bilateral monopoly arises when a single seller faces a single buyer.
For a monopoly firm the marginal revenue curve _________.
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overlaps AR curve
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is above the AR curve
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lies half way between AR curve and the Y axis
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is parallel to X axis
A monopoly is able to continue to generate economic profits in the long run because of ________.
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economies of scale
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having full control over price, cost and production
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entry barriers in the market
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political patronage
A monopoly may be self perpetuating when profits are used for _________.
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further expansion
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research and development
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cost saving
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all of the above
In a pure monopoly firm a firm can make abnormal profit at the long run equilibrium level due to ________.
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price discrimination
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cost effectiveness
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banned entry of new firms
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sales promotion
Explanation
A pure monopoly means a single seller with no competitors. Monopoly power is the extent to which a firm can influence and even 'set' the market price or influence the quantity supplied to the market, and also the extent to which conditions of business are influenced by a single firm.
In a pure monopoly firm a firm can make abnormal profit at the long run equilibrium level due to
banned entry of new firms. Hence, correct answer is option C.
Average revenue of a monopolist firm is _________.
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Is equal to demand curve
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always less than the marginal revenue
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equal to marginal revenue
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any of the above
The form of market in which the only seller of a commodity has full control over the price is known as _______.
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monopoly
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oligopoly
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simple monopoly
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perfect competition
Explanation
Monopoly is a market situation where there is only one seller and who has a full control over the prices of the products.
Monopoly is that market in which one company is a single source of product in the market. Hence, the form of market in which the only seller of a commodity has full control over the price is known as monopoly.
A monopoly firm can sell 10 unit of X per month @ Rs. 1000 per unit, however if price is reduced to Rs. 950 it can 11 units per month. The marginal revenue from sale of 11th unit is _________.
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Rs. 50
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Rs. 500
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Rs. 499
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Rs. 700
A monopolist continues production as long as ________.
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marginal revenue is falling
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marginal revenue is increasing
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marginal revenue is more than marginal cost
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he is not threatened by public outcry
Profit maximization level of a Monopoly firm is ________.
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where MC=MR
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MC=Price
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MR=Price
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none
Which of these is termed as an extreme form of imperfect competition.?
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Oligopoly
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Monopolistic competition
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Perfect competition
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Monopoly
Explanation
Imperfect competition is a market situation where there are many sellers who sell heteregeneous products which are dissimilar. Seller has the right to set the prices as per their choice. It is seen mostly in monopoly which involves single seller who can control the market himself and earn supernatural profits. Hence, monopoly is termed as extreme form of imperfect competition.
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