CBSE Class 12 Economics Market Equilibrium Price Determination Worksheet

Question. Under Monopolistic Competition, Price Elasticity of Demand is —
(a) Nil
(b) Less Elastic
(c) More Elastic
(d) Infinity
Answer: C

Question. In the short run equilibrium of a Firm in Monopolistic Competition, which Curve is U shaped?
(a) AR
(b) AC
(c) MR
(d) MC
Answer: B

Question. Monopolistic Competition differs from Perfect Competition primarily because —
(a) In Monopolistic Competition, Firms can differentiate their products
(b) In Perfect Competition, Firms can differentiate their products
(c) In Monopolistic Competition, entry into the industry is blocked
(d) In Monopolistic Competition, there are relatively few barriers to entry
Answer: A

Question. Under Monopolistic Competition, each Seller tries to develop Brand Loyalty for his product. This statement is —
(a) True
(b) False
(c) Partially True
(d) None of the above
Answer: A

Question. Under Monopolistic Competition, in the long— run, a Firm
(a) will not have excess capacity.
(b) may have excess capacity
(c) has no capacity at all
(d) will leave the industry.
Answer: B

Question. In the long—run, Industry Equilibrium is achieved in Monopolistic Competition only at the lowest point of LAC Curve. This statement is
(a) True
(b) False
(c) Partially True
(d) None of the above
Answer: B

Question. Which of the following is not a feature of Monopolistic Competition?
(a) Large Number of Sellers
(b) Product differentiation
(c) Non—Price competition
(d) None of these
Answer: D

Question. Which of the following markets has the concept of group equilibrium in long—run?
(a) Monopoly
(b) Perfect competition
(c) Monopolistic competition
(d) Oligopoly
Answer: C

Question. 'Excess Capacity' is the essential characteristic of the Firm in the market form of —
(a) Monopoly
(b) Perfect Competition
(c) Monopolistic Competition
(d) Oligopoly
Answer: C

Question. Under Monopolistic Competition, in the long—run, a Firm —
(a) will always be a Optimal Firm.
(b) will never be an Optimal Firm.
(c) may or may not be an Optimal Firm.
(d) will leave the industry.
Answer: C

Question. Non-price competition in popular sense called —
(a) Monopoly market
(b) Oligopoly market
(c) Monopolistic competition
(d) Perfect competition
Answer: C

Question. In Monopolistic Competition, the long—run equilibrium price will be equal to —
(a) Marginal Revenue
(b) Average Cost
(c) Marginal Cost
(d) Both (a) and (c)
Answer: B

Question. In the long—run, Industry Equilibrium is achieved in Monopolistic Competition only if LAC = LMC. This statement is —
(a) True
(b) False
(c) Partially True
(d) None of the above
Answer: B

Question. Which of these does not apply to Monopolistic Competition?
(a) Large Number of Buyers
(b) Large Number of Sellers
(c) Product Differentiation
(d) Price Competition
Answer: D

Question. In long—run, all Firms in Monopolistic Competition —
(a) earn super normal profits
(b) earn normal profits
(c) incur losses
(d) may earn super normal profit, normal profit or in incur losses
Answer: B

Question. Selling outlay is an essential part of which of the following market situation
(a) Monopolistic Competition
(b) Perfect Competition
(c) Monopoly
(d) Pure Competition
Answer: A

Question. Which of the following is not a characteristic feature of Monopolistic Competition?
(a) Many Buyers and Sellers
(b) Identical Products
(c) Easy entry and exit of Firms
(d) Firms take other Firms' prices as given
Answer: B

Question. Which of the following is not a characteristic of Monopolistic Competition?
(a) Ease of entry into the industry
(b) Product Differentiation
(c) Relatively large number of sellers
(d) Homogenous products
Answer: D

Question. Which of these applies to Monopolistic Competition?
(a) Price Competition
(b) Restrictions in entry /exit
(c) Large Number of Sellers
(d) Homogeneous Product
Answer: C

Question. Under Monopolistic Competition, in the long— run, resources —
(a) will be fully used
(b) may be partially used
(c) may not be used at all
(d) will not be required at all
Answer: B

Question. The sale of branded articles is common in a situation of
(a) Excess Capacity.
(b) Monopolistic Competition.
(c) Monopoly.
(d) Pure Competition.
Answer: B

Question. A Firm under Monopolistic Competition advertises —
(a) to compete successfully with the rival Firms
(b) to lower cost of production
(c) to increase sales and profit
(d) because it cannot raise price
Answer: C

Question. In the long—run, Industry Equilibrium is achieved if MC = MR and LAC = LAR. This condition is applicable for —
(a) Perfect Competition
(b) Monopoly
(c) Monopolistic Competition
(d) Oligopoly.
Answer: C

Question. Which of these does not apply to Monopolistic Competition?
(a) Product Differentiation
(b) Free entry /exit
(c) Large Number of Buyers
(d) Single Seller
Answer: D

Question. Through more advertising, a monopolistically competitive Firm has successfully created more demand for its product. It would have resulted in shifting of —
(a) AC Curve upward
(b) MR Curve to the left
(c) AC Curve upward and MR curve to the right
(d) AC Curve upward and MR curve to the right
Answer: D

Question. Under Monopolistic Competition, in the short—run, the Firm can never make Losses.
This statement is —
(a) True
(b) False
(c) Partially True
(d) None of the above
Answer: B

Question. Under Monopolistic Competition, the Firm can earn _________in the short—run.
(a) Normal Profits only
(b) Super Normal Profits
(c) Losses
(d) All of the above.
Answer: D

Question. Under Monopolistic Competition, in the long— run, Output is produced at —
(a) minimum feasible cost
(b) maximum cost
(c) optimal, and not necessarily minimum cost
(d) zero cost
Answer: C

Question. The long—run equilibrium outcomes in Monopolistic competition and Perfect Competition are similar, because in both market structures —
(a) The efficient output level will be produced in the long run
(b) Firms will be producing at minimum average cost
(c) Firms will only earn a normal profit
(d) Firms realize all economies of scale
Answer: C

Question. In short run, a Firm in Monopolistic Competition —
(a) always earns profits
(b) incurs losses
(c) earns normal profit only
(d) may earn normal profit, super normal profit or incur losses
Answer: D

Question. Under Monopolistic Competition, each Firm's control over price is —
(a) Nil
(b) Full and Absolute
(c) Reasonable
(d) None of the above.
Answer: C

Question. Which of these does not apply to Monopolistic Competition?
(a) Aggressive Advertising and Publicity
(b) Product improvement and Development
(c) Price Competition
(d) Efficient after—sales service
Answer: C

Question. Under Monopolistic Competition, the product is
(a) Differentiated
(b) Homogeneous
(c) Necessity Goods
(d) Always Intangible
Answer: A

Question. Under Monopolistic Competition, in the short—run, the condition AR = MR = MC = AC, means that the Firm is earning —
(a) Normal Profits only
(b) Super Normal Profits
(c) Losses
(d) All of the above.
Answer: A

Question. Under Monopolistic Competition, the Firm's Demand Curve is —
(a) Horizontal Line, parallel to X Axis
(b) Vertical Line, parallel to Y Axis
(c) Negatively Sloped
(d) Kinked.
Answer: C

Question. Under Monopolistic Competition, in the short—run, if AR < AC at the point when MC = MR, it means that the Firm —
(a) Normal Profits only
(b) Super Normal Profits
(c) Losses
(d) All of the above.
Answer: C

Question. Under Monopolistic Competition, Price Discrimination is not possible at all. This statement is —
(a) True
(b) False
(c) Partially True
(d) None of the above
Answer: B

Question. Under Monopolistic Competition, each Firm is a_________
(a) Price Maker
(b) Price Taker
(c) Price Maker for its own product.
(d) All of the above.
Answer: C

Question. Under Monopolistic Competition, in the short—run, the Firm will never shut—down. This statement is —
(a) True
(b) False
(c) Partially True
(d) None of the above
Answer: B

Question. Under Monopolistic Competition, in the short—run, the condition for shut—down is —
(a) AR < AC
(b) AR > AC
(c) AR > AVC
(d) AR < AVC
Answer: D

Question. Under Monopolistic Competition, there are _______Sellers.
(a) Many
(b) Only one
(c) A Few
(d) No
Answer: A

Question. Under Monopolistic Competition, in the long—run, if MC = MR and LAC = LAR, then the industry is said to be —
(a) Growing
(b) in troubled times
(c) in Equilibrium
(d) inefficient
Answer: C

Question. Product Differentiation in a Monopolistic Competition could lead to —
(a) Horizontal Demand Curve
(b) Downward Sloping Demand Curve
(c) Vertical Demand Curve
(d) Downward sloping supply curve
Answer: B

Question. Under Monopolistic Competition, in the short—run, if AR > AC at the point when MC = MR, it means that the Firm —
(a) Normal Profits only
(b) Super Normal Profits
(c) Losses
(d) All of the above.
Answer: B

Question. A market structure in which many firms sell product that are similar, but not identical.
(a) Monopolistic Competition
(b) Monopoly
(c) Perfect Competition
(d) Oligopoly
Answer: A

Question. In Monopolistic Competition, a Firm is in long run equilibrium —
(a) at the minimum point of the LAC Curve.
(b) in the declining segment of the LAC Curve.
(c) In the rising segment of the LAC Curve.
(d) when price is equal to Marginal Cost.
Answer: B

Question. Under Monopolistic Competition, a Firm can earn _______ in the long—run.
(a) Normal Profits only
(b) Super Normal Profits
(c) Losses
(d) All of the above.
Answer: A

Question. If Firms in the Toothpaste Industry have the following market shares, which market structure would best describe the industry?

(a) Perfect Competition
(b) Monopolistic Competition
(c) Oligopoly
(d) Monopoly
Answer: C

Question. The American Economist Sweezy developed the —
(a) Production Possibility Curve concept
(b) Diminishing Marginal Utility Theory
(c) Kinked Demand Curve Theory
(d) Price Discrimination Theory
Answer: C

Question. Under Oligopoly, Price Elasticity of Demand is
(a) Nil
(b) Less Elastic
(c) More Elastic
(d) Infinity
Answer: B

Question. Kinked demand curve of the Oligopoly indicates
I. If one firm decreases price other firms also decreases the price
II. If one firm increases price other firms also increases the price
III. If one firm decreases the price other firms does not decrease the price.
IV. If one firm increases the price other firms does not increase the price.
(a) Only I
(b) II and IV
(c) I and IV
(d) II and III
Answer: C

Question. Oligopoly is the market from in which there are
(a) Many Sellers and many Buyers
(b) One Seller and many Buyers
(c) Few Sellers and many Buyers
(d) None of the above
Answer: C

Question. One characteristic not typical of Oligopolistic industry is
(a) Too much importance to Non—Price Competition
(b) Price Leadership
(c) Horizontal Demand Curve
(d) A small number of Firms in the industry
Answer: C

Question. Kinked demand curve is related to—
(a) Oligopoly
(b) Perfect
(c) Monopoly
(d) Monopolistic competition
Answer: A

Question. Which of the following most closely approximates the definition of an Oligopoly?
(a) Tobacco Industry
(b) Vehicle manufacturers in India
(c) Rice Producers
(d) Readymade Garments units in a city
Answer: B

Question. Duopoly is a specific form where are —
(a) No Sellers at all
(b) Only one Seller
(c) Two Sellers
(d) Large Number of Sellers
Answer: C

Question. If the Demand Curve confronting an individual Firm is perfectly elastic then
(a) The Firm is a Price Taker
(b) The Firm cannot influence the Price
(c) The Firm's Marginal Revenue Curve coincides with Average Revenue Curve
(d) All of the above
Answer: D

Question. In which of the following, a Kinked Demand Curve can be seen in a Firm?
(a) Monopolistic competition
(b) Monopoly
(c) Duopoly
(d) Oligopoly
Answer: D

Question. One characteristic not typical of Oligopolistic Industry is
(a) Horizontal Demand Curve
(b) Too much importance to Non—Price Competition
(c) Price Stickiness
(d) A small number of Firms in the industry
Answer: A

Question. When an Oligopolistic Firm changes its price, its rival Firms —
(a) will retaliate or react and change their prices
(b) will not react at all
(c) will exit the market
(d) will appeal to the Government
Answer: A

Question. A Price War in an Oligopoly refers to —
(a) Successive and continued price cuts by the Firms to increase sales and revenues
(b) Free gift offers by all Firms on a competitive basis
(c) Flooding the market with its goods by one Firm leading to price reduction by others
(d) Increase in the price by one Firm and other Firms following in a reverse way by decreasing their prices
Answer: C

Question. A Firm under ________ cannot have sure and definite Demand Curve.
(a) Perfect Competition
(b) Monopoly
(c) Monopolistic Competition
(d) Oligopoly.
Answer: A

Question. Under Oligopoly, the Firm's Demand Curve is —
(a) Horizontal Line, parallel to X Axis
(b) Vertical Line, parallel to Y Axis
(c) Negatively Sloped
(d) Kinked.
Answer: D

Question. In Oligopoly, why it difficult to determine the equilibrium price and output?
(a) All the Firms take their independent decisions
(b) Firms are interdependent making it difficult to specify the particular reaction of the rivals
(c) Very few Firms exist in the market
(d) A large number of Firms exist in the market
Answer: B

Question. Pure Oligopoly is one where —
(a) There are many sellers producing homogeneous product
(b) There are many sellers producing differentiated product
(c) There are few sellers producing homogeneous product
(d) There are few sellers producing differentiated product
Answer: C

Question. Which of these applies to Oligopoly?
(a) A Few Sellers
(b) Group Behaviour between Sellers
(c) Non—Price Competition
(d) All the above
Answer: D

Question. Kinky demand curve model explains the market situation known as
(a) Pure Oligopoly
(b) Collusive oligopoly
(c) Differentiated Oligopoly
(d) Price rigidity
Answer: D

Question. Under Oligopoly, if one Firm reduces its prices, the other Firms will generally C—
(a) reduce their prices
(b) increase their prices
(c) not react at all
(d) exit the market.
Answer: A

Question. Under Oligopoly, the product is —
(a) Differentiated
(b) Homogeneous
(c) Necessity Goods
(d) Always Intangible
Answer: A

Question. Under Oligopoly, each Firm's control over price is —
(a) Nil
(b) Full and Absolute
(c) Subject to Competing Firms' Strategies
(d) None of the above.
Answer: C

Question. As per Kinked Demand Curve Theory of Oligopoly, the Kink is formed at —
(a) Prevailing Price
(b) Higher than Prevailing Price
(c) Lower than Prevailing Price
(d) Origin
Answer: A

Question. A Firm having a Kinked Demand Curve indicates that
(a) If the Firm increases the price, competitive Firms reduce the price
(b) If the Firm increases the price, competitive Firms also increase the price
(c) If the Firm reduces the price, competitive Firms do not reduce the price
(d) If the Firm increases the price, competitive Firm do not increase the price
Answer: D

Question. _____is a situation is which a firm bases its market policy on part of the expected behavior of a few close rivals-
(a) monopoly
(b) oligopoly
(c) perfect competition
(d) monopolish
Answer: B

Question. Price Leadership is form of —
(a) Monopolistic Competition
(b) Monopoly
(c) Non—Collusive Oligopoly
(d) Perfect Competition
Answer: C

Question. Under Oligopoly, if one Firm reduces its prices, the other Firms will generally —
(a) reduce their prices
(b) increase their prices
(c) maintain their prices
(d) exit the market.
Answer: C

Question. Which of these does not apply to Oligopoly?
(a) A Few Sellers
(b) Inter—dependence between Sellers
(c) Only one Buyer
(d) Group Behaviour between Sellers
Answer: C

Question. Which one of the following is the best example of agreement between Oligopolists?
(a) GATT
(b) OPEC
(c) WTO
(d) UNIDO
Answer: B

Question. The demand curve of an oligopolist is
(a) Determinate
(b) Indeterminate
(c) Circular
(d) Vertical
Answer: B

Question. Oligopolistic Industries are characterized by
(a) A few dominant Firms and substantial barriers to entry
(b) A few large Firms and no entry barriers
(c) A large number of small Firms and no entry barriers
(d) One dominant Firm and low entry barriers
Answer: A

Question. The upper part of kinked demand curve is —
(a) Elastic
(b) Inelastic
(c) Perfectly Elastic
(d) Unitary Elastic
Answer: A

Question. The Kinked Demand Hypothesis is designed to explain in the context of Oligopoly —
(a) Price and Output Determination
(b) Price Rigidity
(c) Price Leadership
(d) Collusion among Rivals
Answer: B

Question. Kinked demand curve is found in:
(a) Monopolistic
(b) Perfectly Competitive firm
(c) Perfectly competitive industry
(d) None of the above
Answer: D

Question. As per Kinked Demand Curve Theory of Oligopoly, the demand above the Kink is —
(a) more elastic
(b) less elastic
(c) unit elastic
(d) zero elastic
Answer: A

Question. The Kinked Demand Curve model assumes that price elasticity of demand —
(a) Is higher for a price increase than for a price decrease
(b) Is lower for a price increase than for a price increase
(c) Is perfectly elastic for a price increase perfectly inelastic for a price decrease
Answer: A

Question. The Kinked Demand Curve model of Oligopoly assumes that —
(a) Response to a price increase is less than the response to a price decrease
(b) Response to a price increase is more than the response to a price decrease
(c) Elasticity of demand is constant regardless of whether price increases or decreases
(d) Elasticity of demand is perfectly elastic if price increases and perfectly inelastic if price decreases.
Answer: A

Question. In both the Chamberlin and Kinked Demand Curve models, the Oligopolists —
(a) recognize their independence
(b) do not collude
(c) tend to keep prices constant
(d) all of the above
Answer: D

Question. As per Kinked Demand Curve Theory of Oligopoly, the demand below the Kink is —
(a) more elastic
(b) less elastic
(c) unit elastic
(d) zero elastic
Answer: B

Question. Under Oligopoly, there are Sellers.
(a) Many
(b) Only one
(c) A Few
(d) No
Answer: A

Question. What does the Kinked Demand Curve explain?
(a) Price Differentiation
(b) Other than Price Competition
(c) Rivalry reactions in an Oligopoly
(d) None of the above
Answer: C

Question. Kinked DD curve under oligopoly is designed to show
(a) Price & output
(b) Price rigidity
(c) Price & Leadership
(d) Collusion among rivals
Answer: B