CBSE Class 12 Economics HOTs The Theory of the Firm under Perfect Competition

Question. What is the condition for the long-run equilibrium of the competitive firm?
1. P=MR
2. LMC=LAC=P
3. SMC=SAC=LMC
4. All of the above
Answer : LMC=LAC=P

Question. What is the break-even price?
Answer : The break-even price is the cost at which a company earns a normal profit (Price=AC). In the long run, the break-even price can be described as P=AR=MC.

Question. What features of the monopolistic competition are monopolistic in nature?
Answer : The features of the monopolistic competition that are monopolistic in nature are mentioned below.
• Product Differentiation
• Price Control
• The decrease in the demand curve

Question. What is a Monopoly in economics?
Answer : Monopoly is a condition where only one seller dominates the whole market space and has control over the price of a product

Question. In which market the demand curve is linear and parallel to X-axis?
1. Monopoly
2. Perfect Competition
3. Oligopoly
4. Mono [polistic Competition
Answer : Perfect Competition

Question. What is the shape of the marginal revenue curve under monopoly?
Answer : The shape of the marginal revenue curve under monopoly slopes downwards from left to right and it lies below the average revenue curve.

Question. What is product differentiation?
Answer : Product differentiation means the substitute produced by different manufacturers to show their product are different from other product available in the market. The product differentiation can be in colour, shape, brand name, packaging, etc.