The short-run supply curve of the perfectly competitive firm is given by:
The rising portion of its MR over and above the break-even (shut-down) point
The rising portion of its MC over and above the break-even (shut-down) point
The rising portion of its MC over and above the AC curve
The rising portion of its MC curve
Correct Answer :
B. The rising portion of its MC over and above the break-even (shut-down) point
The short-run supply curve for a perfectly competitive firm is the marginal cost (MC) curve at and above the shut-down point. Portions of the marginal cost (MC) curve below the shut-down point are not part of the short-run supply curve b/c the firm is not producing in that range .The short-run supply curve of perfectly competitive firm is also defined as The portion of MC curve that lies above the minimum of the average variable cost curve. A perfectly competitive firm maximizes profit by producing the quantity of output that equates price and marginal cost. As such, the firm moves along its positively-sloped MC curve in response to changing prices.}
Related Questions
By reducing the prices of its products below those of its competitors, a perfectly competitive seller:
Reduces its revenues
Increases its revenues
Can sell nothing
None of the above
If the supply curve is not a straight line but curvilinear, the elasticity on all points of the supply curve is:
Equal
Different
Zero
Infinity
On the total utility curve the economically relevant range is the portion over which:
The total utility is rising at a declining rate
The total utility is raising at an increasing rate
Total utility is maximum
Total utility is declining
Law of variable proportions is based on the assumption of:
Short period of time
Long period of time
Timeless production relationship
All of the above
If a monopolist is producing under decreasing cost conditions, increase in demand is beneficial to the society because:
Consumers get better quality goods
Cost of production falls and hence price will follow
Goods will be sold in many markets
None of the above
When total product increases at a decreasing rate:
MP = AP
MP < AP
MP > AP =0
MP > AP
The pay-off matrix shows:
Possible outcomes
Possible benefits
Possible losses
None of them
The vertical demand curve for a commodity shows that its demand is:
Highly elastic
Perfectly inelastic
Fairly elastic
Moderately elastic
Which of the following models are associated with non-collusive oligopoly?
Bertrand model
Chamberlin model
Kinked demand model (Sweezy Model)
All of the above
The demand for cigarettes is price inelastic implying a unit tax on this commodity will
Will mainly paid by sellers of the product
By mainly paid by cigarette smokers
Be mainly paid by tobacco growers
None of the above
Each short run average cost curve:
Has to touch the long run cost curve
Has to cross the long run cost curve
Has to lie above all points on the long run cost curve
Coincides with the long run cost curve at some point
In monopolistic competition (also in kinked demand curve model), a firm sells the amount where:
Individual demand curve (IDC) is equal to proportional demand curve (PDC)
Individual demand curve (IDC) is greater than proportional demand curve (PDC)
Individual demand curve (IDC) is less than proportional demand curve (PDC)
None of the above
Equilibrium of a discriminating monopolist requires the fulfillment of which one of the following conditions?
It must be profitable to him to sell output in more than one market
Marginal revenue in both markets must be the same
Marginal revenue in both markets must also be equal to the marginal cost of producing the monopolists aggregate output
All the above
The demand of the necessities is:
More elastic
Less elastic
Unit elastic
Zero elastic
Labor Saving Technological Progress can be defined as:
Technological progress that causes to raise the marginal product of capital and labor in the same proportion
Technological progress that causes the marginal product of capital to increase relative to the marginal product of labor
Technological progress that causes the marginal product of labor to increase relative to the marginal product of capital
None of the above
Consumers are likely to get a variety of similar goods under:
Monopoly
Perfect competition
Duopoly
Monopolistic competition
If the production function is homogeneous, the expansion path will be a straight line through the origin whose slope determines the optimal:
L/K ratio
K/L ratio
P/L ratio
P/K ratio
If the production increases under decreasing returns to scale, the cost will:
Increase at decreasing rate
Increase at constant rate
Decrease at increasing rate
Increase at increasing rate
Marshallian demand function is also known as:
Utility demand function
Compensated demand function
Collective demand function
Relative demand function
Which of the following is not an explicit cost of production?
Wage of self-employed proprietor
Depreciation on machinery
Returns on owned capital
Cost of raw materials
The vertical distance between TVC and TC is equal to:
MC
AVC
TFC
AC
Which describes a competitive market?
Many buyers and many sellers
One seller, many buyers
One buyer, many sellers
Few sellers, many buyers
Which of the following conditions is met in the long-run equilibrium in monopolistic competition, where the firm is earning only normal profits?
MC =AC and P
MC = AC and P=MR
P =MC and P
MC=MR and P =AR= ATC
When a consumer reached at the point of saturation then marginal utility (MU) is:
Negative
One
Positive
Zero
If the commodities X and Y are perfect complements then:
None of the above
The central problem of economics is:
Declining productivity
Increasing consumption
Limited material wants
Limited resources and unlimited wants
Increasing returns is not caused by:
Specialization of labor
Technological advancement
Marketing economics
Varying factor proportions
Normally when price per unit of time falls:
Quantity demanded increases
Quantity demanded decreases
Quantity demanded remains constant
Quantity demanded becomes zero
Theory of revealed preference is based on:
Weak orderings
Neutral orderings
Partial orderings
Strong orderings
The Law of Equi-Marginal Utility states:
per income rupee
