Tag: theories of distribution

Questions Related to theories of distribution

The average revenue curve of a monopolist firm is ____________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. upward sloping

  2. downward sloping

  3. parallel to X axis

  4. u shaped

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Correct Option: B

A natural monopoly has declining _________ over large range of output.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. long run average cost

  2. short run average cost

  3. long run total cost

  4. short run total cost

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Correct Option: A
Explanation:

Natural monopoly is a situation which exist due to the high fixed or start up costs to set up a business. It is seen basically where there are unique technology, raw materials.etc. A monopoly based on size and market strength is known as natural monopoly. It also has a long run average cost which is declining over large range of output.

For a monopoly firm the MR curve ___________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. overlaps AR curve

  2. is above the AR curve

  3. lies half way between AR Curve and the Y-axis

  4. is parallel to X-axis

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Correct Option: C

When the demand of a pure monopoly firm is elastic, MR will be _______.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. negative

  2. positive

  3. zero

  4. none

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Correct Option: B

Average revenue of a monopolist firm is __________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. always more than the marginal revenue

  2. always less than the marginal revenue

  3. equal to marginal revenue

  4. any of the above is possible

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Correct Option: A

A monopoly firms demand curve is __________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. same as its supply curve

  2. same as its average revenue curve

  3. same as its marginal revenue curve

  4. a straight line

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Correct Option: B

In the long-run equilibrium of a competitive market, firms operate at:

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. The intersection of the marginal cost and marginal revenue

  2. Their efficient scale

  3. Zero economic profit

  4. All of the above

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Correct Option: D
Explanation:

In the long run, a competitive firm operates at MC = MR, on the minimum of the LAC and earn zero economic profit, i.e, operate at normal profit levels.

Price discrimination will be profitable only if the elasticity of demand in different markets in which the total market has been divided is ____________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. uniform

  2. different

  3. less

  4. zero

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Correct Option: B
Explanation:

Price discrimination will be profitable only if the elasticity of demand in different markets in which the total market has been divided is different, since, that would give the firm an opportunity to charge differing prices and generate higher revenues.

The concept of marginal cost is closely related with which of the following?

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. Variable cost

  2. Fixed cost

  3. Opportunity cost

  4. Economic cost

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Correct Option: A

In a non-competitive market, when the demand of the product increases and the product price increases _______________.

economics theories of distribution liquidity preference and profit revenue and revenue curves simple monopoly and commodity market

  1. the marginal revenue curve will shift to the right

  2. the marginal revenue curve will shift to the left

  3. the firm will move up the marginal revenue curve and hire fewer units of the input

  4. the firm will move down the marginal revenuencurve and hire fewer units of the input

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Correct Option: A
Explanation:

The marginal revenues curve follows from the demand curve/average revenue curve (it is twice as steep as the demand curve), thus if the demand curve shifts upwards the marginal revenue curve will also shift upwards.