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Price-taker firms:

A. Advertise to increase the demand for their product

B. Do not advertise, because most advertising is wasteful

C. Do not advertise because they can sell as much as they want at the current price

D. Who advertise will get more profits than those who do not

Correct Answer : C.


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  1. Indifference curves are downward sloping and are drawn bowed toward the origin (convex to the origin)…
  2. Which of the following is not characteristic of perfect competition?
  3. In monopolistic competition (also in kinked demand curve model), a firm sells the amount where:
  4. Cartel is associated with:
  5. If as a result of an increase in prices, total outlay (expenditures) on a commodity decreases, its price-elasticity…
  6. The slope of the iso-cost line (budget line) is determined by:
  7. In which case the elasticity shown by the different points of a curve is the same?
  8. Which of the following is not an explicit cost of production?
  9. The production possibility curve (PPC) is concerned with:
  10. The production function can convey to a firm:
  11. The price under perfect competition is settled by:
  12. The greater the percentage of income spent on a commodity:
  13. When a competitive firm is in equilibrium in the long-run, its output is such that:
  14. An effective price ceiling usually results in:
  15. Who is the founder of classical school of thought?
  16. Cross-elasticity of demand or cross-price elasticity between two perfect complements will be:
  17. Who stated explicitly for the first time the Law of Camparative Costs?
  18. In Prisoner Dilemma, the best choice of strategy is:
  19. The Lambda or Langrange Multiplier is a:
  20. When price decreases and with it the total outlay on a commodity also decreases, it is a case of:
  21. The behavior of MC curve is determined by the behavior of the:
  22. According to current thinking, the law of diminishing returns applies to:
  23. Which of the following is an implicit cost of production?
  24. An indifference curve slopes down towards right since more of one commodity and less of another result…
  25. The proportional demand curve in monopolistic competition (also in kinked demand curve model), is like…
  26. Technological efficiency:
  27. The monopolist who is producing the same output from two (or more than two) plants is concerned with:
  28. Nash Equilibrium is stable:
  29. Dumping is international discriminating:
  30. The optimal strategy for a player is termed as: