CBSE Class 12 Economics Forms of Market and Price Determination MCQs

Question :  In which kind of market, a firm is a price- taker?
a) Perfect Competition
b) Monopoly
c) Monopolistic competition
d) Oligopoly
Answer :  A

Question :  Firm’s demand curve under monopoly shows:
a) No relationship between price and demand
b) Inverse relationship between price and demand
c) Positive relationship between price and demand
d) None of these
Answer :  B

Question :  Charging different prices from different buyers for the same good is called :
a) Price extension     
b) Price contraction
c) Price discrimination
d) Price control
Answer :  C

Question :  What is the shape of the average revenue curve in perfect competition?
a) Horizontal straight line 
b) Vertical straight line
c) Rectangular hyperbola
d) Downward to the right
Answer :  A

Question :  Under perfect competition ‘Average Revenue’ and ‘Marginal Revenue’ are indicated by :
a) A common horizontal straight line
b) A common vertical straight line
c) A common rectangular hyperbola
d) Different lines sloping downward
Answer :  A

Question :  In the context of monopolistic competition  one of the following statements is correct?
a) Firm has full control over price
b) Horizontal straight line in demand curve of the firm 
c) Freedom of entry and exit
d) Selling costs do not exist
Answer :  C

Question :  Which characteristic of monopolistic competition is compatible with monopoly?
a) One seller and large number of buyers
b) Full control over price
c) Demand curve slopes downward
d) Freedom of entry and exit
Answer :  C

Question :  Which market induces trusts and cartels?
a) Perfect competition 
b) Monopoly
c) Oligopoly
d) None of them
Answer :  C

Question :  If the demand curve of a firm is a horizontal straight line :
a) A firm can sell any amount at  the existing price
b) A firm can sell only a specified  amount at the existing price
c) All firms will sell equal amount of a commodity
d) Firms can differentiate their product
Answer :  B

Question :  Compared with monopolistic competition, a firm’s demand curve under monopoly is :
a) Equally elastic
b) Less elastic
c) More elastic
d) Infinitely elastic
Answer :  B

Question :  A market situation in which there are only two producers is called :
a) Monopoly
b) Duopoly
c) Oligopoly    
d) None of these
Answer :  C

Question :  If the demand curve of a firm is a horizontal straight line :
a) A firm can sell any amount at  the existing price
b) A firm can sell only a specified  amount at the existing price
c) All firms will sell equal amount of a commodity
d) Firms can differentiate their product
Answer :  A

Question :  Compared with monopolistic competition, a firm’s demand curve under monopoly is :
a) Equally elastic 
b) Less elastic
c) More elastic
d) Infinitely elastic
Answer :  B

Question :  A market situation in which there are only two producers is called :
a) Monopoly
b) Duopoly
c) Oligopoly                
d) None of these
Answer :  B

Question :  In monopolistic competition the products are:
a) Homogeneous only
b) Homogeneous supported with advertisement
c) Differentiated only 
d) Differentiated supported with advertisement
Answer :  B

Question :  Under perfect competition, equilibrium price of the commodity is determined by:
a) Demand for the commodity alone
b) Supply of commodity alone
c) Both demand and supply
d) The government
Answer :  C

Question :  Supply being perfectly inelastic, what will be the effect of increase or decrease in demand on price and equilibrium quantity?
a) Price increases or decreases respectively
b) No effect on equilibrium quantity
c) Both (a) and (b)
d) None of these
Answer : C

Question :  When will increase in supply bring down the price, leaving the quantity demanded unchanged?
a) When demand for the commodity is perfectly elastic
b) When demand for the commodity is perfectly inelastic
c) When demand for the commodity is less elastic
d) When demand for the commodity is more elastic
Answer :  B

Question :  What will be the effect on equilibrium price if supply is decreased without any change in demand?
a) No change in price
b) Price will fall
c) Price will rise
d) None of these
Answer :  C

Question :  The  period of time, when supply is fully adjusted to change in demand is called:
a) Short – period       
b) Very short- period
c) Mid-period 
d) long- period
Answer :  D 

Question :  Market supply curve of perishable goods is a vertical straight line parallel to Y- axis. It happens in which of the following periods?
a) Long- period
b) Short – period
c) Very short- period
d) Market- period
Answer :  C

Question :  What would price ceiling lead to when the maximum price is fixed lower than the equal price?
a) Excess demand
b) Excess supply
c) Deficient demand
d) Deficient supply
Answer :  A

Question :  If demand for a product falls, equilibrium price will :
a) Fall    
b) Rise
c) Either of the two
d) Neither of the two
Answer :  A

Question :  The market price is related to:
a) Short period
b) Very short period
c) Long period            
d) Very long period
Answer :  B

Question : Which is a characteristic of the market ?
(a) One Area
(b) Presence of both Buyers and Sellers
(c) Single Price of the Commodity
(d) All the above
Answer : D

Question : Which of the following is a feature of perfect competition ?
(a) Large Number of Buyers and Sellers
(b) Homogeneous Units of the Product
(c) Perfect Knowledge of the Market
(d) All the above
Answer : D

Question : Which of the following is true in perfect competition ?
(a) Firm is price-taker, not price-maker
(b) Firm’s demand curve is perfectly elastic
(c) AR = MR
(d) All the above
Answer : D

Question : Which one of the following is true for monopoly ?
(a) Firm is price-maker
(b) Demand curve slopes downward
(c) Price discrimination possibility arises
(d) All the above
Answer : D

Question : A market in which there is free entry and exit, the market is:
(a) Monopolistic Competitive Market
(b) Imperfect Competitive Market
(c) Perfectly Competitive Market
(d) None of these 
Answer : C

Question : Price discrimination is found in which market ?
(a) Pure Competition
(b) Perfect Competition
(c) Monopoly
(d) Monopolistic Competition
Answer : C

Question : Market situation where there is only one buyer is:
(a) Monopoly
(b) Monopsony
(c) Duropoly
(d) None of these
Answer : B

Question : Which of the following is not a feature of perfect competition ?
(a) Large number of buyers and sellers
(b) Homogeneity of product
(c) Advertisement and selling cost
(d) Perfect knowledge of the market
Answer : C

Question : Which factor determines Equilibrium Price ?
(a) Demand for Commodity
(b) Supply of Commodity
(c) Both (a) and (b)
(d) None of the above
Answer : C

Question : Price of a commodity is determined at a point where :
(a) Demand exceeds
(b) Supply exceeds
(c) Demand equals supply
(d) None of these
Answer : C

Question : Who gave the concept of ‘Time Element’ in price determination process ?
(a) Ricardo
(b) Walras
(c) Marshall
(d) J. K. Mehta
Answer : C

HOTs Questions

Question. Product differentiation is in which market form?
Answer : Monopolistic Market Competition

Question. What is patent right?
Answer : Patent right is an exclusive license or right conferred to an organization to manufacture particular goods or services under a specific technology.

Question. What is a price taker company?
Answer : A price taker company are those companies who have no option but to accept the price determined by the industry.

Question. What is cooperative oligopoly?
Answer : A cooperative oligopoly is a situation of the market where the different companies cooperate with each other in fixing the price of goods or services.

Question. What is meant by a normal profit?
Answer : A normal profit is the least amount of profit that a firm needs to keep the production going on for a long run.

Question. Define the implication of the following:
1. Interdependence between firms in Oligopoly
2. A large number of sellers in perfect competition
Answer : a) Oligopolies are composed of a few large companies and these companies action can affect the market condition. Therefore, the other contender company will be aware of the market actions and will respond appropriately. Mutual interdependence survives when the action of one company has a significant impact on the other company in the industry. b) A perfectly competitive market is controlled by the existence of a large number of sellers and buyers of a product, which means no buyers or sellers whose purchase and sell is so large that it will impact the total purchase and sale in the market.