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CBSE Questions for Class 11 Commerce Economics Non-Competitive Markets Quiz 6 - MCQExams.com
CBSE
Class 11 Commerce Economics
Non-Competitive Markets
Quiz 6
Essential condition(s) for price discrimination is/ are:
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Existence of monopoly
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No contact among buyers
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Existence of two or more than two markets
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All of above
Which of the following is not a characteristic of a competitive market?
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There are many buyers and sellers in the market.
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The goods offered for sales are largely the same.
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Firms generate small but positive super normal profits in the long run.
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Firms can freely enter or exit the market.
In the long-run equilibrium of a competitive market, firms operate at:
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The intersection of the marginal cost and marginal revenue
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Their efficient scale
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Zero economic profit
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All of the above
Explanation
In the long run, a competitive firm operates at MC = MR, on the minimum of the LAC and earn zero economic profit, i.e, operate at normal profit levels.
When an oligopolist individually chooses its level of production to maximize its profits, it charges a price that is.
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more than the price charged by either monopoly or a competitive market
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less than the price charged by either monopoly or a competitive market
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more than the price charged by a monopoly and less than the price charged by a competitive market
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less than the price charged by a monopoly and more than the price charged by a competitive market.
Explanation
Oligopoly is an important form of imperfect competition and in the market price will be less than monopoly but more than competitive market.
All of the following are characteristics of a monopoly except:
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There is a single firm.
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The firm is a price taker.
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The firm produces a unique product.
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The existence of some advertising.
Explanation
In case of monopoly the finn and the industry are the same as there is only a single seller. Thus the firm itself is the price maker and not price taker.
The following figure shows ___________.
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a firm is a price maker
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a firm is price taker
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an industry is price taker
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none of the above
Explanation
In prefect competition the firms do not have control over the industry price as each firm has a negligible effect on the total industry supply. Thus, they must accept the price determined in the industry.
Which of the following is NOT the feature of monopoly form of market?
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Not elastic in nature
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Legal barriers
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Size of the market is too small
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All of the above
Explanation
solution:
The relationship among price elasticity, demand, and total revenue has an important implication for the selection of the profit-maximizing price and output: A monopoly firm will never choose a price and output in the inelastic range of the demand curve.
option 2. Key Takeaways. Legal monopolies are companies that operate as a monopoly under a government mandate. Legal monopolies are created for the purposes that offer a specific product or service to consumers, at a regulated price.
hence the correct option: A
In perfect market Competition the price is Not dependent on
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Transportation cost
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Products of individuals firms
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Both a & b
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None of the above
In a perfect competitive firm _______________.
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it can sell as much as it wants at unchanged prices
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it has no market power
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it is a price taker
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All of the above
In a free market economy, the optimal quality of goods and service is determined by ____________.
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customers
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workers
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firms
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government
Explanation
Customer is one who purchase goods and services from the seller. Customer satisfaction is the main aim of the seller to earn goodwill in the market. Free market economy is one where there are no government or less government interventions. Hence, in a free market economy, the optimal quality of goods and service is determined by customers.
In the long run monopolistic competitive firms make the same type of profits as _______________.
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perfect competition
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monopoly
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oligopoly
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none of the above
Explanation
Due to free entry and exit in the industry, the industry supply is altered in the long run and the price is adjusted to the point where P = AC at the point MC = MR and the firms make normal profits in the long run.
Perfect competition market is _________________.
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most prominent market
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hypothetical market
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resourceful market
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all of the above
Explanation
Perfect competition is a market structure in which buyers and sellers are so well informed and numerous that all the elements of monopoly are absent. The market price is also beyond the control of buyer and seller. Hence, perfect competition market is hypothetical market.
Monopolistic competition differs from perfect competition primarily because _________________.
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in monopolistic competition, firms can differentiate their products
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in perfect competition, firms can differentiate their products
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In monopolistic competition, industry produces all of the market supply of goods
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In Perfect competition, the exits are too less
Explanation
Monopolistic competition is a type of imperfect competition where large number of sellers sell differentiated products which are not perfect substitutes whereas perfect competition is one where buyers and sellers are numerous and well informed about the market and they sell homogenous product. Hence, monopolistic competition differs from perfect competition primarily because in monopolistic competition, firms can differentiate their products.
Monopolistic competition is ________________.
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real form of market
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hypothetical market
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neither a nor b
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both a & b
Explanation
Monopolistic competition is a market structure where there are large number of sellers selling differentiated products. There is also no entry barriers on the firm. Hence, monopolistic competition is a real form of market because today this market structure is seen almost everywhere.
In a perfect competition, seller has to incur selling expenses because his product has to be differentiated from the supplied by other sellers.
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True
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False
Explanation
In a perfectly competitive market structure, the buyers have perfect knowledge of the industry and thus the firms do not have to invest in advertising their products.
The long run equilibrium under monopolistic competition has ____________.
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free exit and entry of firms
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competition among firms
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Both a & b
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None of the above
Explanation
Monopolistic competition is a market structure where there are large number of sellers selling differentiated products.There is also no entry barriers on the firm.It has free exit and entry of firms and competition among firms.
In the long run with increasing returns in a firm it still earns normal profit. This feature is present in _____ form of market.
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perfect Competition
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monopoly
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monopolistic competition
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All of the above
In long run monopolistic competitive firm earn profits only when ____________.
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the efficient output level will be produced in the long run
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they earn zero economic profit
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firms will only earn a normal profit
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firms will realize all economies of scale
The situation in which buyers are able to affect the price of a good is referred to as ______ power.
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monopoly
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purchasing
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monophony
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countervailing
Explanation
The situation where is only one seller and who has full control over the product as well as price of that product is called as monopoly. On the other hand, the situation in which a single buyer is able to affect the price of a good is referred to as monophony power.
Price exceeds average variable cost but is smaller than average total cost at the optimum level of output, the firm is ______________.
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making a profit and should continue to produce
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incurring a loss but should continue to produce
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incurring a loss and should stop producing immediatly
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break even and maintain current output
In monopolistic competition there is ________________.
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cut-throat price competition
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product differentiation
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explicit consideration at firm level of the feed back efforts of other firms pricing decisions.
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High profit margins
In a non-competitive market, when the demand of the product increases and the product price increases _______________.
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the marginal revenue curve will shift to the right
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the marginal revenue curve will shift to the left
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the firm will move up the marginal revenue curve and hire fewer units of the input
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the firm will move down the marginal revenuencurve and hire fewer units of the input
Explanation
The marginal revenues curve follows from the demand curve/average revenue curve (it is twice as steep as the demand curve), thus if the demand curve shifts upwards the marginal revenue curve will also shift upwards.
In monopolistic Competition _____________.
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close substitution can be defined
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close substitution can not be defined
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both a & b
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none of the above
The perfectly competitive firm's short run supply curve is same as the ___________________.
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total revenue
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supply of other firms in the industry
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upward sloping portion of its marginal cost curve at or above minimum AVC curve
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upward sloping portion of its MR curve
In perfect competition in the long run there will be no ________.
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supernormal profits
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normal profits
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production
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none of above
Explanation
Supernormal profit is all the excess profit a firm makes above the minimum return necessary to keep a firm in business.
Supernormal profit is calculated by
Total Revenue – Total Costs
(where total cost includes all fixed and variable costs, plus minimum income necessary for the owner to be happy in that business.)
In perfect competition in the long run there will be no supernormal profit.
Hence, correct answer is option A.
In a perfect competition which curve among following will be a straight line?
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Marginal revenue
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Marginal cost
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Average cost
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Total cost
Explanation
In case of perfect competition market. AR =MR.
As AR is a straight line as the price is constant. Thus, MR is also a straight line.
Hence a is the correct option.
Under which market situation demand curve is linear and parallel to X-Axis?
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Perfect competition
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Monopoly
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Monopolistic competition
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Oligopoly
Firm in industry is 'price maker'.This is feature of ___________.
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perfect competition
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monopoly
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monopolistic competition
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(B) and (C)
Explanation
Monopoly and monopolistic competition are both the markets in which the sellers do price discrimination. They have full control over the prices and this helps them to earn huge profits. Hence, firm in industry is ' price maker " is a feature of monopoly and monopolistic competition.
The structure of the cold drink industry in India is best described as ___________.
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perfect competition
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monopolistic competion
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a monopoly
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oligopolistic competition
Explanation
Oligopoly is a situation in which there are few firms dominating the market. They are highly concentrated. Each of them are divided into certain number of groups. Hence, the structure of the cold drink industry in India is best described as oligopolistic competition.
Single firm in industry is feature of _________.
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perfect competitive
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monopoly
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monopolistically competitive
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(A) and (C)
Explanation
A monopoly is a situation in which there is only one seller market. He has full control over the prices of the product. Hence, single firm in the industry is feature of monopoly.
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