Students can refer to the following Non Competitive Markets 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.
Non Competitive Markets MCQ Questions Class 12 Economics
Question. Which of the following four-firm concentration ratios would be the best indication of a perfectly competitive industry?
A) 100 percent
B) 78 percent
C) 0.25 percent
D) 31 percent
Question. Which of the following four-firm concentration ratios is consistent with monopolistic competition?
A) 0 percent
B) 25 percent
C) 100 percent
D) 75 percent
Question. Marketing consists of what?
A) selling at a lower price than rivals sell for
B) producing more output to lower average costs
C) advertising and packaging
D) None of the above answers are correct.
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 monopolistic competition, the products of different sellers are assumed to be
A) similar but slightly different.
B) identical perfect substitutes.
C) either identical or differentiated.
D) unique without any close or perfect substitutes.
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 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. Recently in a small city, building contractors lobbied the city council to pass a law requiring all people working on residential dwellings be licensed by the city. Why would the contractors lobby for this requirement?
A) to reduce the cost of building dwellings
B) There is no good explanation for this type of lobbying.
C) to guarantee that work on dwellings is of high quality
D) to create a legal barrier to entry
Question. If the technology for producing a good enables one firm to meet the entire market demand at a lower price than two or more firms could, then that firm has
A) a legal barrier to entry.
B) a natural monopoly.
C) increasing average total costs.
D) patented the market.
Question. Which of the following goods is the best example of a natural monopoly?
A) natural gas
C) a patented good
D) first-class mail
Question. Firms face competition when the good they produce
A) is in a market with natural barriers to entry.
B) is unique.
C) is in a market with legal barriers to entry.
D) has a close substitute.
Question. Which of the following statements is correct?
A) The market demand and the firm’s demand are the same for a monopoly.
B) Monopolies have perfectly inelastic demand for the product sold.
C) Monopolies are guaranteed to earn an economic profit.
D) All of the above are correct.
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 barrier to entry is an exclusive right granted to the author or composer of a literary, musical, dramatic or artistic work?
A) government license
C) public franchise
Question. A differentiated product has
A) many perfect substitutes.
B) close but not perfect substitutes.
C) no close substitutes.
D) no substitutes of any kind.
Question. As the degree of product differentiation increases among the products sold in a monopolistically competitive industry, which of the following occurs?
A) The cost of production falls.
B) The amount of marketing expenditures decreases for each firm.
C) The demand curve for each seller’s product becomes more horizontal.
D) Each seller’s demand becomes more inelastic.
Question. Which describes a barrier to entry?
A) anything that protects a firm from the arrival of new competitors
B) a government regulation that bars a monopoly from earning an economic profit
C) something that establishes a barrier to expanding output
D) firms already in the market incurring economic losses so that no new firm wants to enter the market
Question. A barrier to entry is
A) an open door.
B) the economic term for diseconomies of scale.
C) illegal in most markets.
D) anything that protects a firm from the arrival of new competitors.
Question. If a monopolistically competitive seller can convince buyers that its product is of better quality and value than products sold by rival firms,
A) demand increases.
B) the firm gains more control over its price.
C) demand becomes more inelastic.
D) all of the above occur.
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. Which of the following would create a natural monopoly?
A) requirement of a government license before the firm can sell the good or service
B) technology enabling a single firm to produce at a lower average cost than two or more firms
C) an exclusive right granted to supply a good or service
D) ownership of all the available units of a necessary input
A) stimulate innovation.
B) encourage the invention of new products and production methods.
C) are exclusive rights granted to the inventor of a product or service.
D) All of the above answers are correct.
Question. Ownership of a necessary input creates what type of barrier to entry?
A) natural barrier to entry
B) a public franchise
C) a government license
D) legal barrier to entry
Question. An industry with a large number of firms, differentiated products, and free entry and exit is called
C) monopolistic competition.
D) perfect competition.
Question. In monopolistic competition, each firm supplies a small part of the market. This occurs because
A) there are barriers to entry.
B) firms produce differentiated products.
C) there are no barriers to entry.
D) there are a large number of firms.
Question. In an industry with a large number of firms,
A) collusion is impossible.
B) one firm will dominate the market.
C) each firm will produce a large quantity, relative to market demand.
D) competition is eliminated.
Question. Which of the following is an example of a monopolistically competitive industry?
A) wheat farming
B) colleges and universities
C) the local electricity producer
D) the domestic automobile producing industry
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.