Tag: liquidity preference and profit

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

If AR curve is falling straight line, MR curve will lie below it in such a way that any line drawn from a point from y-axis parallel to x-axis to meet the AR curve is intersected by the MR curve _________.

  1. mid-way

  2. more than half-way

  3. less than half-way

  4. any where
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

For a linear demand curve, the MR curve is twice as steep as the AR curve. Geometrically, this means that for any horizontal line drawn from the Y-axis, the MR curve will intersect it exactly halfway between the Y-axis and the AR curve.

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

In the case of consumer's demand curve determines the price, but in the case of producer ___________.
(i) AR curve determines the price
(ii) AR curve determines the price and income
(iii) MR curve determines  the price
(iv) MR curve and AR curve are determines the price

  1. 1 only

  2. 2 only

  3. 3 only

  4. 4 only
Reveal answer Fill a bubble to check yourself
A Correct answer
Explanation

In a monopoly, the firm is a price maker. The price is determined by the demand curve (AR) at the quantity where the firm chooses to produce (where MR equals MC). Thus, the AR curve is the primary determinant of the price.

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

The marginal revenue of the monopolist is ____________.

  1. Larger than price

  2. Equal to price

  3. Smaller than price

  4. Any of the above is possible
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

In a monopoly, the marginal revenue is lower than the price because the demand curve is downward sloping. When prices go down, more units of the product are bought. Because of this, marginal revenue will not always equal price.

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

Competitive behaviour means _________.

  1. when an individual firm is unable to influence the price at which the product is sold in the market

  2. when firms compete with each other to achieve a greater share of the market

  3. both A and B

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

Competition or competitive behaviour means when firms compete with each other in a variety of ways to achieve a higher level of sales or a greater share of the market.

A perfectly competitive market has been defined as one where an individual
firm is unable to influence the price at which the product is sold in the
market.

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

An example of competitive behavior is ______.

  1. Samsung and Apple competing for higher market share 

  2. individual farmers

  3. Pepsi and Coca Cola competing for greater market share

  4. both A and C
Reveal answer Fill a bubble to check yourself
D Correct answer
Explanation
Example of competitive behaviour is when Coke and Pepsi or Samsung and Apple compete with each other in a variety of ways to achieve a higher level of sales or a greater share of the market. Conversely, we do not find individual farmers competing among themselves to sell a larger amount of crop. This is because both Coke and Pepsi or Samsung and Apple possess the power to influence the market price of soft drinks, while the individual farmer does not.
Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

The one rupee note and coins are issued by _____________.

  1. RBI (Central Bank)

  2. Commercial Bank

  3. Ministry of Finance

  4. Central Government
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

Reserve bank of India has the sole right to issue currency notes of various denominations except one rupee notes under Section 22 of Reserve bank of India Act. The one rupee note and coins are issued by ministry of finance and it bears the signature of Finance Secretary.

Multiple choice economics theories of distribution functions of money value, nature and functions of money liquidity preference and profit

Other name for legal reserve requirement is ________________.

  1. Cash reserve ratio

  2. Statutory liquidity ratio

  3. Variable reserve ratio

  4. Bank rate
Reveal answer Fill a bubble to check yourself
C Correct answer
Explanation

The variable reserve ration is a new method of credit control used by central banks in recent times. The variable reserve ratio device springs from the fact that central bank, as a Bankers Bank, must hold a part of the cash reserves of commercial banks.