Managerial Economics

21

Even in the long run equilibrium, the pure monopolist (as opposed to the perfectly competitive firm) can make abnormal profits because of

A) Blocked entry B) His low LAC C) High price he charges D) Advertising

Discuss

Answer & Solution

Answer: Option A

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22

Marginal cost curve always cuts the average cost curve

A) From below on the rising portion of the AC curve B) From below on the falling portion of the AC curve C) From below at the minimum point of the AC curve D) From below at any point on the AC curve

Discuss

Answer & Solution

Answer: Option C

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23

Given: $${E_{px}} = \frac{{{\text{Percentage change in }}{{\text{Q}}_y}}}{{{\text{Percentage change in }}{{\text{P}}_x}}}$$
The above relationship is:

A) Arc Cross Price Elasticity B) Cost Output C) Cost Profit D) Capital Budgeting

Discuss

Answer & Solution

Answer: Option A

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24

For a production firm, the pecuniary economies arise from which one of the following sources?

A) Large scale production B) Purchasing and market economies C) Indivisibility of factor inputs D) Learning economies of workers and managers

Discuss

Answer & Solution

Answer: Option B

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25

The limit to the long-run growth of a firm under imperfectly competitive conditions is set by

A) Fear of rising costs B) Fear or prices falling more than costs C) Fear of falling demand D) Fear of external diseconomies

Discuss

Answer & Solution

Answer: Option B

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26

If a demand curve exhibits unit elasticity for all prices, the MR curve

A) Is identical with it B) Lies below the demand curve C) Is identical with the X-axis D) Is identical with the Y-axis

Discuss

Answer & Solution

Answer: Option C

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27

Under bilateral monopoly the price is higher if

A) The monopolist has his way B) The monopsonist has his way C) The monopolist acts as a competitor D) The monopsonist sells his own product in a monopoly market

Discuss

Answer & Solution

Answer: Option A

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28

Which of the following statement is correct?

A) Inflation: An increase in the overall level of prices in the economy B) Productivity: The amount of goods and services produced from each hour of a worker's time C) Phillips curve: A curve that shows the short run trade off between inflation and unemployment D) All of the above

Discuss

Answer & Solution

Answer: Option D

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29

A circumstance in which it might pay a monopolist to cut the price of his product is where

A) MC is falling B) MR is greater than MC C) His advertising costs are increasing D) Average costs seem about to fall

Discuss

Answer & Solution

Answer: Option A

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30

Match the items of the List-I with those of the List-II and indicate the correct answer.

List-I	List-II
a. Positive income elasticity	1. Substitute goods
b. Negative income elasticity	2. Complementary goods
c. Positive cross elasticity	3. Inferior goods
d. Negative cross elasticity	4. Superior goods

A) a-2, b-1, c-4, d-3 B) a-1, b-2, c-3, d-4 C) a-4, b-3, c-1, d-2 D) a-1, b-4, c-2, d-3

Discuss

Answer & Solution

Answer: Option C

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