Tag: producer's equilibrium

Quizzes (2) Questions (73)

Questions Related to producer's equilibrium

Multiple choice business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

In the table below that will be equilibrium market price?

Price (Rs.) Demand (tonnes per annum) Supply (tonnes per annum)
12345678 1,000900800700600500400300 4005006007008009001,0001,100

  1. Rs. 2

  2. Rs. 3

  3. Rs. 4

  4. Rs. 5
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Equilibrium market price is a point where the demand equals the supply for a particular commodity. Hence, in the given illustration, demand (700) is equal to supply (700) at Rs.4. Hence, it is equilibrium market price.

Multiple choice business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

If the supply of bottled water decreases, the equilibrium price ___________ and the equilibrium quantity ___________.

  1. Increases; decreases

  2. Decreases; increases

  3. Decreases; decreases

  4. Increases; increases
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

If demand decreases and supply increases then equilibrium quantity could go up, down, or stay the same, and equilibrium price will go down. If demand decreases and supply decreases then equilibrium quantity goes down, and the equilibrium price could go up, down, or stay the same

Multiple choice business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

Which of the following would not, of itself, cause a shift of the demand curve for a product?

  1. A change in consumers preference

  2. A change in consumer income

  3. A change in the price of the product

  4. A change in the price of related products
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

A change in the price of the product leads to movement along the demand curve and not a shift in the demand curve.

Multiple choice business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

Equilibrium level of output for the pure monopolist is where _________.

  1. $MR=MC$

  2. $MR>MC$

  3. $MR< MC$

  4. $P< AC$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

A monopolist maximizes profit by producing at the output level where the additional revenue from selling one more unit (MR) is exactly equal to the additional cost of producing that unit (MC).

Multiple choice business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

Under monopoly form of market, TR is maximum when __________.

  1. MR is zero

  2. MR is maximum.

  3. $MR > 0$

  4. $MR < 0$
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

Total Revenue (TR) is maximized when the marginal revenue (MR) is zero. Beyond this point, selling additional units would actually decrease total revenue because the price reduction required to sell more units outweighs the quantity increase.

Multiple choice business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

When does a firm maximize its profit in an imperfect competition?

  1. $MR > MC$

  2. $MR < MC$

  3. $MR=MC$

  4. $MR+MC=0$
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Regardless of the market structure, profit maximization occurs where marginal revenue equals marginal cost (MR = MC). This ensures that the firm is not leaving potential profit on the table or incurring losses on marginal units.

Multiple choice business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

An increase in demand while supply remains unchanged causes equilibrium price and quantity to ________.

  1. decrease

  2. increase

  3. rise initially and then fall

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

An increase in demand while the supply remains unchanged causes equilibrium price and quantity to increase. Due to increase in demand the quantity demanded will increase this will thereby increase competition in the market which will leaf to increase in price of the product. hence, when the price increases demand decreases to reach to equilibrium and new equilibrium quantity and price will be derived. 

Multiple choice business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

Equating marginal cost and marginal revenue the competitive firm can maximize its profit in _________.

  1. the long run

  2. the short run

  3. the market period

  4. none of the above
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

The condition MR = MC is used to determine the profit-maximizing output level in both the short run and the long run. However, the question specifically asks where a competitive firm can maximize profit using this rule, which applies to the short run as well.

Multiple choice business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit

Using total revenue and total cost curves, the level of output that gives maximum profits will be one where ___________.

  1. TR and TC curves intersect

  2. where the gap between TR and TC is maximum and TR curve lies below TC curve

  3. where the gap between TR and TC is maximum and TR curve lies above TC curve

  4. can't be determined
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Profit is defined as Total Revenue minus Total Cost. To maximize this difference, the firm must operate where the vertical distance between the TR curve and the TC curve is at its greatest, with the TR curve positioned above the TC curve.

Multiple choice business economics and quantitative methods equilibrium of a firm shifts in demand and supply producer's equilibrium income-output determination liquidity preference and profit
Producer's equilibrium is a situation of 'revenue maximisation'.

  1. True

  2. False
Reveal answer Fill a bubble to check yourself
B Correct answer
Explanation

Producer's equilibrium refers to a situation of profit maximization.
It is only when (a) MR = MC, and (b) MC is rising, these two conditions are satisfied, then a producer will reach the point of his equilibrium and maximizing his profit.