MCQs For NCERT Class 12 Economics Chapter 4 The Theory of Firm Under Perfect Competition

Please refer to the MCQ Questions for Class 12 Economics Chapter 4 The Theory of Firm Under Perfect Competition with Answers. The following The Theory of Firm Under Perfect Competition Class 12 Economics MCQ Questions have been designed based on the latest syllabus and examination pattern for Class 12. Our experts have designed MCQ Questions for Class 12 Economics with Answers for all chapters in your NCERT Class 12 Economics book.

The Theory of Firm Under Perfect Competition Class 12 MCQ Questions with Answers

See below The Theory of Firm Under Perfect Competition Class 12 Economics MCQ Questions, solve the questions and compare your answers with the solutions provided below.

Question. The concept of supply curve is relevant only for?
A) Monopoly
B) Monopolistic competition
C) Perfect competition
D) Oligopoly

Question. Can MR be negative or zero.
A) Yes
B) Can’t say
C) No
D) Only negative but not zero

Question. What is price line
A) The demand curve
B) The AR curve
C) The MR curve
D) The TR curve

Question. The revenue of a firm per unit sold is its
A) MR
B) AR
C) TR
D) TC

Question. In perfect competition, in the long run, ______________?
A) There are large profits for the firm
B) There is no profit and no loss for the firm
C) There are negligible profits for the firm
D) There are large losses for the firm

Question. In perfect competition, a firm earns profit when __________ exceeds the _____________?
A) Total revenue, total fixed cost
B) Marginal cost, marginal revenue
C) Average revenue, average cost
D) Total cost, total revenue

Question. In perfect competition, in the long run, if a new firm enters the industry the supply curve shifts to the right resulting in_________?
A) Reduction in supply
B) No change in price
C) Fall in price
D) Rise in price

Question. In perfect competition, which of the following curves generally lies below the demand curve and slopes downward?
A) Average revenue
B) Average cost
C) Marginal revenue
D) Marginal cost

Question. Globalization has made Indian Market as?
A) Seller market
B) Buyer market
C) Monopsony market
D) Monopoly market

Question. A competitive firm in the short run incurs losses. The firm continues production, if?
A) P = AVC
B) P > AVC
C) P < AVC
D) P > = AVC

Question. While a seller under perfect competition equates price and MC to maximize profits a monopolist should equate?
A) MR and MC
B) AR and MR
C) AR and MC
D) TC and TR

Question. A rational consumer is a person who?
A) Has perfect knowledge of the market
B) Is not influenced by persuasive advertising
C) Behaves at all times, other things being equal, in a judicious manner
D) Knows the prices of goods in different market and buys the cheapest

Question. At producer’s equilibrium when MR = MC, the firm earns only
A) Abnormal loss
B) Abnormal profit
C) Normal Profit
D) Normal loss

Question. Before producer’s equilibrium when MR > MC, the firm earns only
A) Normal Profit
B) Normal loss
C) Abnormal loss
D) Abnormal profit

Question. The elasticity at a point on a straight line supply curve passing through the origin will be
A) 3.0
B) 1.0
C) 4.0
D) 2.0

Question. Perfect competition is an industry with
A) a few firms producing identical goods.
B) many firms producing goods that differ somewhat.
C) a few firms producing goods that differ somewhat in quality.
D) many firms producing identical goods. 

Question. Firms use marketing to
A) influence a consumer’s buying decision.
B) convince customers that their product is worth its price.
C) persuade buyers that their product is superior to others.
D) All of the above answers are correct. 

Question. In perfect competition, the elasticity of demand for the product of a single firm is
A) infinite, because many other firms produce identical products.
B) zero, because many other firms produce identical products.
C) zero, because the firm produces a unique product.
D) infinite, because the firm produces a unique product. 

Question. Price of a goods is determined at a point where :
A) Demand > Supply
B) Demand < Supply
C) Demand = Supply
D) None of these 

Question. Total economic profit is
A) total revenue minus total opportunity cost.
B) marginal revenue minus marginal cost.
C) total revenue divided by total cost.
D) marginal revenue divided by marginal cost. 

Question. If you have found the percentage of the value of sales accounted for by the four largest firms in an industry, you have found the
A) elasticity of supply value.
B) Herfindahl-Hirschman Index.
C) elasticity of demand value.
D) four-firm concentration ratio. 

Question. The figure above portrays a total revenue curve for a perfectly competitive firm. Curve A is straight because the firm
A) has perfect information.
B) wants to maximize its profits.
C) is a price taker.
D) faces constant returns to scale 

Question. In the above table, if the quantity sold by the firm rises from 6 to 7, its marginal revenue is
A) $90.
B) $30.
C) $105.
D) $15. 

Question. All of the following are examples of product differentiation in monopolistic competition EXCEPT
A) new and improved packaging.
B) lower price.
C) acceptance of more credit cards than the competition.
D) location of the retail store. 

Question. Suppose the cost curves in the above figure apply to all firms in the industry. If the initial price is P1, firms are
A) making an economic profit and some firms will leave the industry.
B) incurring an economic loss and some firms will leave the industry.
C) making an economic profit and some firms will enter the industry.
D) incurring an economic loss and some firms will enter the industry. 

Question. Market situation where there is only one buyer is:
A) Monopoly
B) Monopsony
C) Duropoly
D) None of theseb

Question. Can TR be a horizontal Straight line?
A) May be
B) Can’t say
C) Yes
D) No 

Question. Which of the following market types has all firms selling products so identical that buyers do not care from which firm they buy?
A) perfect competition
B) oligopoly
C) monopolistic competition
D) monopoly 

Question. In the above table, the firm
A) must be in a perfectly competitive industry, because its marginal revenue is constant.
B) cannot be in a perfectly competitive industry, because its short-run economic profits are greater than zero.
C) cannot be in a perfectly competitive industry, because its long-run economic profits are greater than zero.
D) must be in a perfectly competitive industry, because its marginal cost curve eventually rises  

Question. The above figure illustrates a firm’s total revenue and total cost curves. Which one of the following statements is FALSE?
A) At output Q1 the firm makes zero economic profit.
B) At an output above Q3 the firm incurs an economic loss.
C) Economic profit is the vertical distance between the total revenue curve and the total cost curve.
D) At output Q2 the firm incurs an economic loss.

Question. Which of the following is the best example of a natural monopoly?
A) owning the only licensed taxicab in town
B) the United States Postal Service
C) ownership of the only ferry across Puget Sound for twenty miles
D) the cable television company in your hometown 

Question. Which of the following is NOT correct about patents?
A) Patents stimulate innovation.
B) A patent is a barrier to entry.
C) Patents enable a firm to be a permanent monopoly.
D) Patents encourage invention of new products.

Question. For a firm in perfect competition, a diagram shows quantity on the horizontal axis and both the firm’s marginal cost (MC) and its marginal revenue (MR) on the vertical axis. The firm’s profit-maximizing quantity occurs at the point where the
A) MC curve intersects the MR curve from above, going from left to right.
B) slope of the MC curve is zero.
C) MC curve intersects the MR curve from below, going from left to right.
D) MC and MR curves are parallel. 

Question. A perfectly competitive firm’s marginal cost exceeds its marginal revenue at its current output. To increase its profit, the firm will
A) increase its output.
B) raise its price.
C) lower its price.
D) decrease its output.

Question. Which of the following is different about perfect competition and monopolistic competition?
A) Firms in monopolistic competition compete on their product’s price as well as its quality and marketing.
B) In monopolistic competition, entry into the industry is unblocked.
C) Perfect competition has a large number of independently acting sellers.
D) Only firms in monopolistic competition can earn an economic profit in the short run. 

Question. Which statement is correct ?
A) In very short period, supply is perfectly inelastic, price is affected by both demand conditions.
B) Supply curve elasticity depends on time period
C) Both (a) and (b)
D) None of the above 

Question. The concept of supply curve is relevant only for?
A) Monopoly
B) Monopolistic competition
C) Perfect competition
D) Oligopoly 

Question. In perfect competition, since the firm is a price taker, the ________ curve is straight line
A) Total cost
B) Marginal cost
C) Total revenue
D) Marginal revenue 

Question. A firm that shuts down and produces no output incurs a loss equal to its
A) marginal costs.
B) total fixed costs.
C) total variable costs.
D) marginal revenue.

Question.In perfect competition, which of the following curves generally lies below the demand curve and slopes downward?
A) Average revenue
B) Average cost
C) Marginal revenue
D) Marginal cost

Question. While a seller under perfect competition equates price and MC to maximize profits a monopolist should equate?
A) MR and MC
B) AR and MR
C) AR and MC
D) TC and TR 

Question. Based on the table above which shows Chip’s costs, if rice sells for $600 a ton, Chip
A) earns an economic profit, but should shut down in the short run.
B) incurs an economic loss, but should stay open in the short run.
C) incurs an economic loss and should shut down in the short run.
D) earns an economic profit and should stay open in the short run. 

Question. In the above figure, if the firm increases its output from Q2 to Q1, it will
A) reduce its marginal revenue
B) increase its profit.
C) increase its marginal revenue.
D) decrease its profit.

Question. Which one is a feature of monopolistic competition ?
A) Differentiated Product
B) Selling Cost
C) Imperfect Knowledge of the Market
D) All the above

Question. Which of the following is an example of perfect competition?
A) Agriculture
B) Banking sector
C) Car manufacturing
D) Railways