CBSE Class 12 Economics Producer Behavior and Supply MCQs

Question :  MC=MR=AC=AR refers to long term equilibrium of 

a) Competitive firm

b) Oligopoly firm

c) Monopoly firm

d) None of these

Answer :  Competitive firm

Question :  A firm reaches shut down point when 

a) TR=TVC    

b) TR=TC

c) TC = AVC

d) MC=AC

Answer :  TR=TVC    

Question :  TR>TC is a situation of

a) Normal profit 

b) Normal losses 

c) Abnormal profits

d) Abnormal losses

Answer :  Abnormal profits

Question :  Normal profits occur when

a) AR>AC

b) AR=AC

c) AR<AC

d) TR>TC

Answer :  AR=AC

Question :  At break-even point , a firm makes :

a) Normal profits

b) Extra normal profits

c) Extra normal losses

d) None of these 

Answer :  Normal profits

Question :  Which of the following statements is correct?

a) There is difference between supply and stock

b) Supply does not depend on governments tax- policy

c) Stock refers to the quantity which comes to market for sale

d) Stock and supply are always equal

Answer :  There is difference between supply and stock

Question :  When supply curve is a vertical straight-line, it indicates:

a) Unitary elastic supply

b) Perfectly elastic supply

c) Perfectly inelastic supply 

d) Relatively elastic supply

Answer :  Perfectly inelastic supply 

Question :  If elasticity of supply is equal to unity, what will be the percentage increase in supply as a result of 15 percent rise in price of a commodity?

a) 8%

b) 12%

c) 0% 

d) 15%

Answer :  15%

Question :  If 8% rise in price causes 27% increase in supply, elasticity of supply will be :

a) 1.5    

b) 0.5

c) 3.5  

d) 2.5

Answer :  1.5    

Question :  Movement along the supply curve occurs due to :

a) Increase in own price of the commodity

b) Decrease in own price of the commodity

c) Facton other than own price of the commodity

d) Both (a) and (b)

Answer :  Both (a) and (b)

Question :  The rise in supply due to rise in price is called:

a) Increase in supply

b) Decrease in supply

c) Extension of supply

d) None of these

Answer :  Extension of supply

Question :  When supply falls due to factors other than own price of the commodity it indicates

a) Contraction in supply

b) Decrease in supply

c) Extension in supply

d) None of these

Answer :  Decrease in supply

Question :  An  upward sloping straight line supply curve shooting from the X- axis indicates that:

a) Elasticity of supply is equal to zero       

b) Elasticity of supply is equal to one

c) Elasticity of supply is greater than one

d) Elasticity of supply is less than one

Answer :  Elasticity of supply is less than one

Question :  Which one of the following is correct?

a) TC= TFC x TVC

b) TC= TFC / TVC

c) TC= TFC + TVC

d) TC= TFC- TVC

Answer :  TC= TFC + TVC

Question :  Average fixed cost (AFC) is indicated by:

a) Rectangular hyperbola

b) a straight line parallel to X- axis

c) a straight line parallel X- axis

d) U- shaped curve

Answer :  Rectangular hyperbola

Question :  Which of the following indicates fixed cost?

a) Electricity bill

b) Expenses on raw material

c) Wages of daily workers

d) Interest on fixed capital

Answer :  Interest on fixed capital

Question :  When production is zero, total cost (TC) will be:

a) Zero

b) Equal to variable cost

c) Equal to total fixed cost  

d) Equal to marginal cost

Answer :  Equal to total fixed cost  

Question :  When MC curve cuts AC curse:

a) AC= MC       

b) AC< MC

c) AC> MC

d) Both AC and MC are falling

Answer :  AC= MC       

Question :  When production level is zero, then fixed cost is:

a) Zero

b) Negative

c) Positive

d) Equal to variable cost 

Answer :  Positive

Question :  The costs which do change with change in the quantity of output are called:

a) Supplementary costs        

b) Money costs 

c) Real costs     

d) None of these

Answer :  Supplementary costs