1. Demand curve of a firm under perfect competition is—
(A) Perfectly Inelastic (B) Perfectly Elastic
(C) More Elastic (D) Less Elastic
Ans : (B)
2. Which of the following equation is correct for perfect competition ?
(A) AR = MR = Price (B) AR MR
(C) AR MR (D) Price MR
Ans : (A)
3. Which equation is correct under normal profit ?
(A) AR = AC (B) AR AC
(C) AR AC (D) AR = AC = 0
Ans : (A)
4. The object of every producing firm is—
(A) To maximise production (B) To minimise cost
(C) To maximise profit (D) None of the above
Ans : (C)
5. Who determines price under perfect competition ?
(A) Representative firm (B) Industry
(C) Normal firm (D) Government
Ans : (B)
6. Marshall's representative firm is a long-run average firm while optimum firm is a—
(A) Maximum cost firm (B) Minimum cost firm
(C) Marginal cost firm (D) Average cost firm
Ans : (B)
7. In perfect competition average revenue curve is—
(A) Parallel to x-axis (B) Parallel to y-axis
(C) Slopes down from left to right (D) Slopes upward from left to right
Ans : (A)
8. In the long-run, perfect competitive firm gets—
(A) Only normal profit (B) Abnormal profit
(C) Loss (D) Any of the above
Ans : (A)
9. What minimum price is acceptable by a firm in the short-period ?
(A) Equal to AC (B) Equal to AVC
(C) Equal to AFC (D) Equal to TC
Ans : (B)
10. Selling cost is a must in—
(A) Pure monopoly (B) Perfect competition
(C) Imperfect competition (D) All of the above
Ans : (C)
11. Which category of land is rent less land ?
(A) First category of land (B) Second category of land
(C) Third category of land (D) Marginal land
Ans : (D)
12. Opportunity cast of a factor is known as—
(A) Transfer earning (B) Money cost
(C) Present earning (D) None of the above
Ans : (A)
13. Quasi Rent is—
(A) Equal to firm's total profit (B) More than firm's total profit
(C) Less than firm's total profit (D) None of the above
Ans : (D)
14. Which of the following can not be accepted factor of production ?
(A) Land (B) Labour
(C) Light of sun (D) Capital
Ans : (C)
15. Land is the only factor of production whose supply is ?
(A) More Elastic (B) Perfectly Elastic
(C) Perfectly Inelastic (D) Unitary Elastic
Ans : (C)
16. Rent will be produced at that time when ?
(A) Entire land is fertile (B) Elasticity of supply of land is perfectly elastic
(C) Land is mobile (D) None of the above
Ans : (D)
17. The Example of derived demand is—
(A) Demand for labour (B) Demand for tea
(C) Demand for consumable commodity (D) Income demand
Ans : (A)
18. Which of the following is an active factor of production ?
(A) Land (B) Labour
(C) Capital (D) Organisation
Ans : (B)
19. Who developed the innovation theory of profit ?
(A) Shumpeter (B) Haley
(C) Prof. Knight (D) Karl Marx
Ans : (A)
20. When the rate of money inflation increase then the prices of commodities ?
(A) Increase (B) Decrease
(C) Remain constant (D) Do not change
Ans : (A)
21. In common meaning, inflation is a condition in which—
(A) Price of commodity increases
(B) Value of money decreases
(C) Price of commodity and value of money both increase
(D) Price of commodity increases and value of money decreases
Ans : (D)
22. According to Keynes, real inflation takes place—
(A) Before the level of full employment (B) On the level of full employment
(C) After the level of full employment (D) All above are true
Ans : (C)
23. Which is the main reason of demand pull inflation ?
(A) Increase in money supply (B) Increase in commercial expenditure
(C) Increase in foreign demand for goods (D) All of the above
Ans : (D)
24. The reason for cost push inflation is—
(A) Increase in money wages (B) Increase in rate of profit
(C) Both of above (D) None of the above
Ans : (C)
25. What is necessary to control cost push inflation ?
(A) To impose control on wages of labour (B) To remove market imperfections
(C) Both of the above (D) None of the above
Ans : (C)
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