Which is the first-order condition for the profit of a firm to be maximum?
AC=MR
MC=MR
MR=AR
AC=AR
Correct Answer :
B. MC=MR
Related Questions
Change in quantity demanded refers to:
Upward shift of the demand curve
Downward shift of the demand curve
Movement on the same demand curve
None of the above
The slope of budget line shows the price ratios of:
Many goods
Few goods
Two goods
Three goods
Any expansion in output by a firm in the short period will always reduce the:
Average variable cost
Average fixed cost
Both average fixed and variable cost
None of the above
Which of the following is assumed to be constant when drawing a demand curve?
Consumer tastes
Prices of inputs
Technology
Number of sellers
In context of oligopoly, the kinky demand curve (kinked demand curve) hypothesis is designed to explain:
Price and output determination
Price rigidity (price stickness)
Price leadership
Collusion among rivals
For a commodity giving large consumers surplus, the demand will be:
Less elastic
More elastic
Unit elastic
Zero elastic
Marginal Productivity Theory deals with the theory of:
Distribution
Exchange
Market structure
Consumer behaviour
Monopolistic firm can fix:
Both price and output
Either price or output
Neither price nor output
None of the above
In perfect competition, the slope of the total revenue curve of a firm is equal to the:
Market price
AVC
TFC
AFC
In monopolistic competition, the firm take advantage due to customers:
Similar choices
Unlimited choices
Differential choices
Few choices
In dominant price leadership model, the dominant firm set the:
price
output
both a and b
none of the above
Elasticity of demand is equal to unity while marginal revenue is:
Positive
Zero
Negative
Indeterminate
The long run average cost curve is the envelope of:
SACs
LACs
SMCs
LMCs
The reaction curve of a firm is attained by joining the:
Isoprofit curve
Super profit curve
Normal profit curve
Indoprofit curve
In monopoly:
The producer will often produce a volume that is less than the amount which would maximize the social welfare.
The producer will often produce a volume that is more than the amount which would maximize the social welfare.
The consumers will often consume a volume that is more than the amount which would maximize the social welfare.
None of the above
A market-clearing price:
Is a disequilibrium price
Is an equilibrium price
Means a shortage exists as a market is cleared
Must be set by the government
Plumbing and pipe-fitting require many of the same skills. If the wage paid to pipe-fitters increased then the effect on the market for plumbers would probably be:
An increase in demand
A decrease in demand
An increase in supply
A decrease in supply
Normal profits are considered as:
Explicit costs
Implicit costs
Social costs
Private cost
Economies of large-scale production:
Lead to greater specialization
Offsets the effects of the law the law of comparative advantage
Lead to greater diversification of individual production
Cause firms to use more capital and less labor
In the case of an inferior good, the income effect:
Partially offsets the substitution effect
Reinforces the substitution effect
Is equal to the substitution effect
More than offsets the substitution effect
Price discrimination is possible:
Only under monopoly situation
Under any market form
Only under monopolistic competition
Only under perfect competition
The slope of the iso-cost line (budget line) is determined by:
Pricing of two factors
Productivity of the two factors
Degree of substitutability of two factors
None of the above
The point on which the average cost is minimum in a firm, short run average cost curve will also be the minimum cost point on the firms long-run average cost curve. This is true:
Always
Never
When LAC is falling
Only at that level of output when LAC is at its minimum
The general form of Cobb-Douglas production function is:
On an indifference map higher indifference curves show:
The same level of price
The same level of satisfaction
The higher level of satisfaction
The lower level of satisfaction
When total product increases at a decreasing rate:
MP = AP
MP < AP
MP > AP =0
MP > AP
If two goods are perfect substitutes then IC will be:
Concave to the origin
Convex to the origin
Positively sloped
Negatively sloped
When elasticity of demand is one (e=1), then following the formula MR=P[1-1/e], the MR will:
Positive
Negative
Zero
None of the above
Supply curves are most elastic:
In the long-run
In the short-run
For luxuries
In the immediate-run
When the law of demand operates the demand curve:
Slopes downward
Slopes upward
Becomes horizontal
Becomes vertical