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What is the correct answer?

4

For the equilibrium of the firm and the industry in the short period in a competitive market, the condition is:

A. P = AC

B. P = MC

C. AC = MC

D. MC = TR

Correct Answer :

B. P = MC


Equilibrium condition in shortrun in perfect competition will prevail at a point where profit is maximized. This happens where price is equal to marginal cost (P=MC) .Also at the point of equilibrium, the marginal cost curve must be upward sloping.}

Related Questions

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4

At the shut-down point in perfect competition:

A. P = AVC

B. TR =TVC

C. The total losses of the firm equal TFC

D. All of the above

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4

Economic problems arise because:

A. Wants are unlimited

B. Resources are scarce

C. Scarce resources have alternative uses

D. All of the above

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4

Production is a function of:

A. Profits

B. Costs

C. Inputs

D. Price

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4

Formulation of an economic theory involves:

A. Statements of various assumptions or postulates

B. Logical deductions from the assumptions made

C. Testing the hypothesis against empirical evidence

D. All of the above

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4

Under Bandwagon effects, people use those goods which are used by their:

A. Friends

B. Relatives

C. Family

D. All of them

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4

In second degree price discrimination, monopolist takes away :

A. All of the consumer surplus

B. All of the producer surplus

C. Some part of the consumer surplus

D. None of them

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4

In Prisoners Dillemma, the players are:

A. Industrialists

B. Prisoners

C. Common men

D. Workers

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4

In modern cost theory, AVC= b1 and MC= b1 in the range of:

A. Excess capacity

B. Reserve capacity

C. Limited capacity

D. None of the above

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4

Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a commodity demanded is smaller than the percentage fall in its price:

A. Equal to one

B. Greater than one

C. Smaller than one

D. Zero

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4

For the given production function, technical inefficiency is defined as:

A. Sets of points relating production function that maximizes output given input (labor) i.e. Q = f(L, K)

B. Sets of points relating production function that produces less output than possible for a given set of input (labor) i.e. Q < f(L, K)

C. Use of imported technology

D. None of the above

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4

When was Adam Smiths major work An Enquiry into the Nature and Causes of Wealth of Nations published?

A. 1756

B. 1777

C. 1776

D. 1801

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4

A market-clearing price:

A. Is a disequilibrium price

B. Is an equilibrium price

C. Means a shortage exists as a market is cleared

D. Must be set by the government

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4

In the short-run, the competitive firm can maximize its profits (or minimize its losses) by:

A. Equating price and marginal revenue

B. Equating price and average total cost

C. Increasing marginal cost and lowering fixed costs

D. Equating marginal cost and marginal revenue

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4

The monopolist who is producing the same output from two (or more than two) plants is concerned with:

A. Single-plant monopolist

B. Multi-plant monopolist

C. Two-plant monopolist

D. Some-plant monopolist

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4

Indifference curve approach (ordinal approach) is superior to utility approach (cardinal approach) because:

A. In ordinal approach we can separate the income effect from the substitution effect of a price change

B. In ordinal approach we can study the consumer behavior more closely

C. In ordinal approach the consumer is assumed more rational

D. In ordinal approach the consumer has more income

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4

The average cost curve is a geometrical illustration of:

A. Hydraulic function

B. Cubic function

C. Pentagonic function

D. Quadratic function

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4

According to Saint Thomas Aquinas value is determined by God, but prices by:

A. Consumers

B. Employees

C. People

D. Labor

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4

In cournot model, firms make decisions separately regarding:

A. output

B. input

C. price

D. advertisement

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4

A country is advised to devalue (reduce external value of) its currency only when its exports face:

A. Inelastic demand in foreign markets

B. Elastic demand in foreign markets

C. Unit elastic demand in foreign markets

D. None of the above

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4

Dumping is international discriminating:

A. Monopoly

B. Oligopoly

C. Duopoly

D. None of the above

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4

In discriminating monopoly (price discrimination), the elasticity of demand of product in two markets are:

A. Different

B. Same

C. Zero

D. None of the above

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4

The monopolist often lead to exploitation of:

A. Producers

B. Workers

C. Managers

D. Consumers

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4

In Recardian theory of value, the stress has been made on:

A. Marginal cost

B. Production cost

C. Labor cost

D. Supply cost

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4

In the case of complements, the cross demand curve slopes:

A. Downwards to the right

B. Upwards to the right

C. Backwards to the top

D. Inwards at the bottom

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4

The number of sellers in oligopoly is:

A. Two

B. One

C. Very large

D. A few

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4

A monopolist has control over the price he charges for his product. He will be able to maximize his profit by:

A. Lowering the price, if the demand curve is elastic

B. Lowering the price, if the demand curve is inelastic

C. Rising the price, if the demand curve is elastic

D. None of the above is applicable

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4

According to the principle of substitution?

A. Many goods have no effective substitutes

B. Nearly all goods have substitutes

C. The prices of substitute goods must be the same

D. Buyers will stop buying a good if its price rises

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4

Moving down along a linear demand curve:

A. Demand becomes less elastic

B. Elasticity does not change

C. Demand has unitary elasticity

D. Demand becomes more elastic

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4

A dominant strategy can best be described as:

A. A strategy taken by a dominant firm

B. A strategy taken by a firm in order to dominate its rivals

C. A strategy that is optimal for a player no matter an opponent does

D. A strategy that leaves every player in a game better off

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4

The elasticity of demand is equal to slope of demand function divided by:

A. Average demand function

B. Qualified demand function

C. Constructive demand function

D. Relative demand function