MCQs For NCERT Class 12 Economics Chapter 5 Market Competition

Students can refer to the following Market Competition MCQ Questions Class 12 Economics with answers provided below. The Multiple Choice Questions have been designed by the best Economics teachers for Class 12. You should also refer to MCQ Questions for Class 12 Economics given on our website for all chapters.

Market Competition MCQ Questions Class 12 Economics

Question. One of the requirements for a monopoly is that     
A) the product cannot be produced by small firms.
B) there are several close substitutes for the product.
C) there is a unique product with no close substitutes.
D) products are high priced.

Question. A monopoly is a market with     
A) no barriers to entry.
B) many substitutes.
C) many suppliers.
D) one supplier.

Question. What is the difference between perfect competition and monopolistic competition?     
A) Perfect competition has a large number of small firms while monopolistic competition does not.
B) In perfect competition, firms produce identical goods, while in monopolistic competition, firms produce slightly different goods.
C) Perfect competition has no barriers to entry, while monopolistic competition does.
D) Perfect competition has barriers to entry while monopolistic competition does not.

Question. The market type known as perfect competition is     
A) almost free from competition and firms earn large profits.
B) highly competitive and firms find it impossible to earn an economic profit in the long run.
C) dominated by fierce advertising campaigns.
D) marked by firms continuously trying to change their products so that consumers prefer their product to their competitors’ products.

Question. Which of the following market types has a large number of firms that sell similar but slightly different products?     
A) perfect competition
B) oligopoly
C) monopolistic competition
D) monopoly

Question. In a perfectly competitive market, the type of decision a firm has to make is different in the short run than in the long run. Which of the following is an example of a perfectly competitive firm’s long-run decision? 
A) what price to charge buyers for the product
B) how much to spend on advertising and sales promotion
C) the profit-maximizing level of output
D) whether or not to enter or exit an industry

Question. Perfectly competitive firms are price takers because     
A) each firm is very large.
B) there are no good substitutes for their goods.
C) many other firms produce identical products.
D) their demand curves are downward sloping.

Question. If demand for a seller’s product is perfectly elastic, which of the following is correct? 
A) There is no incentive to sell at a price below the market price.
B) It will not sell any output at all if it tries to price its product above the market price.
C) There are a very large number of perfect substitutes for the seller’s product.
D) All of the above answers are correct.

Question. Which of the following market types has only a few competing firms?   
A) perfect competition
B) monopolistic competition
C) monopoly
D) oligopoly

Question. Which of the following is the best example of a perfectly competitive market?   
A) diamonds
B) athletic shoes
C) soft drinks
D) farming

Question. Which of the following market types has the fewest number of firms?     
A) perfect competition
B) monopoly
C) monopolistic competition
D) oligopoly

Question. A price-taking firm     
A) cannot influence the price of the product it sells.
B) talks to rival firms to determine the best price for all of them to charge.
C) sets the product’s price to whatever level the owner decides upon.
D) asks the government to set the price of its product.

Question. A large number of sellers all selling an identical product implies which of the following?   
A) horizontal market supply curves
B) large losses by all sellers
C) the inability of any seller to change the price of the product
D) market chaos

Question. In a perfectly competitive market, the type of decision a firm has to make is different in the short run than in the long run. Which of the following is an example of a perfectly competitive firm’s short-run decision? 
A) what price to charge buyers for the product
B) whether or not to enter or exit an industry
C) the profit-maximizing level of output
D) how much to spend on advertising and sales promotion

Question. In perfect competition, a firm maximizes profit in the short run by deciding   
A) how much output to produce.
B) whether or not to enter a market.
C) what price to charge.
D) how much capital to use.

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. Perfect competition is characterized by all of the following EXCEPT 
A) well-informed buyers and sellers with respect to prices.
B) a large number of buyers and sellers.
C) no restrictions on entry into or exit from the industry.
D) considerable advertising by individual firms.