Set 16

Since TR= P×Q, suppose a perfectly competitive firm increases its
production from 10 units to 11 units. If the market price is $20 per unit, total
revenue for 11 units is:
1. $20
2. $200
3. $210
4. $220
The profit-maximizing level of output for a perfectly competitive firm
occurs where:
1. Marginal revenue equals marginal cost
2. Total revenue equals total cost
3. Average revenue equals average total cost
4. Average revenue equals average variable cost
A downward-sloping demand curve exists for:
1. A monopoly, but not for a perfectly competitive firm
2. A perfectly competitive firm, but not for a monopoly
3. Both a monopoly and a perfectly competitive firm
4. Neither a monopoly nor a perfectly competitive firm
Average revenue for a monopolist is:
1. Greater than price
2. Less than price
3. Less than marginal revenue
4. Greater than marginal revenue
Food chains are operating in Pakistan like Mc Donald, KFC and Pizza Hut
etc. These food chains sell their products in different countries at different
prices. This is an example of:
1. First-degree price discrimination
2. Second-degree price discrimination
3. Third- degree price discrimination
4. Monopolistic competition
You go to the market to purchase mangoes. Suppose 1 KG of mangoes =
E 45. If you purchase 1 KG of mangoes, seller will not discount the rate.
But if you purchase mangoes in bulk amount then he will sell you at lower
price. This is an example of:
1. First-degree price discrimination
2. Second-degree price discrimination
3. Third-degree price discrimination
4. Monopolistic competition
Which of the following is true for both perfect and monopolistic
competition?
1. Firms produce a differentiated product
2. Firms face a downward sloping demand curve
3. Firms produce a homogeneous product
4. There is freedom of entry and exit in the long run
A feature of monopolistic competition that makes it similar to monopoly
is the:
1. Inability to influence the price
2. Downward sloping demand curve
3. Ease of entry into the industry
4. Horizontal marginal revenue curve
Monopolistic competition is a market structure characterised by:
1. A single buyer and several sellers
2. A product with no close substitutes
3. Barriers to entry and exit
4. Differentiated products
A feature of oligopoly that makes it similar to monopoly is the:
1. Inability to influence the price
2. Downward-sloping demand curve
3. Freedom of entry into the industry
4. Horizontal marginal revenue curve
The market structure in which each firm is independent in decisions is known as:
1. Monopolistic com petition
2. Oligopoly
3. Perfect competition
4. Monopoly
In the kinked demand curve model, if one firm reduces its price:
1. Other firms will also reduce their price
2. Other firms will compete on a non-price basis
3. Other firms will raise their price
4. All of the given options
The origins of classical economics can be traced to the work of:
1. Karl Marx
2. Milton Friedman
3. John Maynard Keynes
4. Adam Smith
Say’s Law is a proposition underlying classical economics stating that:
1. Supply creates its own demand
2. Leakages are greater than injections
3. Unemployment is a common condition
4. Consumption expenditures are a function of disposable income
According to classical economics, the economy was unlikely to
experience:
1. Full employment
2. Flexible wages and prices
3. Equality between saving and investment
4. High rates of unemployment
Classical economics was replaced as the dominant theory of
macroeconomic analysis by:
1. Monetarism
2. Rational expectations
3. Keynesian economics
4. Neoclassical economics
Keynesian economics was largely developed to address the economic
problems of the:
1. Stagflation of the 1970s
2. Great Depression of the 1930s
3. English industrial revolution of the late 1700s
4. American industrial revolution of the late 1800s
Keynesian economics was the predominant economic theory:
1. Prior to the late 1700s
2. From the late 1700s to the early 1900s
3. From the 1930s to the 1970s
4. Since the 1970s
Keynesian economics rejected the classical assumption that:
1. Supply creates its own demand
2. Prices and wages are inflexible
3. Self-correction takes a long time
4. Consumption expenditures depend on disposable income
Aggregate demand curve is downward sloping due to the:
1. Interest rate effect
2. Wealth effect
3. International purchasing power effect
4. All of the given option
A primary implication of Keynesian economics is:
1. The best government is the least government
2. Flexible wages and prices ensure full em ployment
3. Self-correction is the best way to eliminate unemployment
4. Economic instability is best corrected through the interference of
  Government
Demand-management policies are designed to shift the:
1. Aggregate Demand curve
2. Aggregate Supply curve
3. Philips curve
4. Production possibilities curve
Aggregate supply is the relation between real production and:
1. Scarcity
2. The price level
3. Aggregate expenditur es
4. Foreign trade
The long-run aggregate supply curve is:
1. Downward sloping
2. Upward sloping
3. Vertical at the full-employment level
4. Horizontal at the full-employment level
A leftward shift of the SRAS curve is a (n):
1. Increase in long-run aggregate supply
2. Decrease in long-run aggregate supply
3. Increase in short-run aggregate supply
4. Decrease in short-run aggregate supply

Set 16

Quiz