Ugc Net ,Upsc and other Economics competitive Exams Micro economics Mcq  1

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Micro economics 

Multiple Choice Questions and Answers

1. Cost functions are derived from

a) demand functions, b) production functions, c) supply functions

2. The U shape of the average total cost curve reflects

a) LDMU, b) The Law Of Variable Proportions, c) Consumer’s Surplus

3. The total fixed cost is a : a) horizontal straight line b) vertical c) hyperbola

4. The shape of average fixed cost is

a) horizontal straight line b) vertical c) rectangular hyperbola

5. The shape of TVC and TC are:

a) rectangular hyperbola b) inverse ‘S’ shape c) horizontal straight line

6. The inverse ‘S’ shape of the TVC and TC are due to 

a) LDMU b) Law of Variable Proportions(c) MRS

7. The MC curve cuts the AC curve at

a) The maximum point b) The initial Point, c) The minimum Point

8. The minimum point of ATC is at ……………. position of the minimum

point of AVC: a) right b) left c) same 

9. If the long run cost curve shifts down wards it is an indication of 

a) technological progress b) lower factor prices c) both of these

10.The U shape of the LAC reflects

a) Law of Variable proportions b) Laws of returns to scale c) none of these 

11.The long run cost curve in the traditional theory is 

a) Envelops curve b) Planning curve c) Both of these

12.In the modern theory of cost, the short run average variable cost is

a) saucer shaped b) U shaped c) none of these

13.The short run average variable cost is saucer shaped because of the

presence of 

a) excess capacity b) reserve capacity c) none of these)

14.Price discrimination is an essential feature of

a) Perfect competition b) Oligopoly c) Duopoly d) monopoly

15.Under monopoly the slope of AR curve is: 

a) Upward sloping b) downward sloping c) horizontal d) None of these

16.Monopoly market is :

a) Single seller market b) single buyer market c) single buyer and 

seller d) None

17.In a monopsony market there is:

a) Single seller b) single buyer c) Two sellers d) two buyers

18.Third degree price discrimination occurs when the monopolist charges 

different prices for the same commodity in different

a) Markets b) places c) continents d) countries

19.Price discrimination is possible:

a) Under any market form b) only under 

monopoly c) Only under monopolistic 

completion d) Only in perfect competition

20.Monopolist maximizes profit at the point where

a) MC = AC b) MC = MR c) AC = AR d) MR = AR

21.At the point of equilibrium of a monopolist MC cuts MR curve

a) From below b) from above c) at point of equality of AC and AR d) None

22.A multiplant monopolist maximizes his profit at the point where:

a) MR = MC1 b) MR = MC2 c) MR1 = MR2 d) MR = MC1= MC2

23.Lerner Index is a measure of:

a) Elasticity of demand b) Monopoly power c) Inequality d) None 

24.For a firm with monopoly power

a) Price equals MC b) Price is less than MC c) Price exceeds MC d) None 

25.Railways is an example of :

a) Simple monopoly b) differentiated monopoly 

c) Natural monopoly d) Monopsony

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