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1. Which of the following most closely approximates our definition of oligopoly?
(A) The cigarette industry
(B) The barber shops
(C) The gasoline stations
(D) Wheat Farmers

2. One of the essential cond it ions o f perfect competition is-
(A) Product differentiation
(B) Multiplicity of prices for identical products at any one time
(C) Many seller and a few buyers
(D) Only one price for identical goods at any one time
Ans. (D)

3. In equilibrium a perfectly competitive firm will equate-
(A) Marginal social cost with marginal social benefit
(B) Market supply with market demand
(C) Marginal profit with marginal cost
(D) Marginal revenue with marginal cost
Ans. (D)

4. Seller market denotes a situation where-
(A) Commodities are available at competitive rates
(B) Demand exceeds supply
(C) Supply exceeds demand
(D) Supply and demand are evenly balanced
Ans. (B)

5. One of the essential conditions of Monopolistic competition is-
(A) Many buyers but one seller
(B) Price discrimination
(C) Product differentiation
(D) Homogeneous product
Ans. (C)

6. The concept that under a system of free enterprise, it is consumers who decide what goods and servics shall be produced and in what quantities is known as-
(A) Consumer Protection
(B) Consumer’s Decision
(C) Consumer Preference
(D) Consumer’ Sovereignty
Ans. (D)

7. Under which market condition do firm have excess capacity?
(A) Perfect competition
(B) Monopolistic competition
(C) Duopoly
(D) Oligopoly
Ans. (B)

8. The size of the market for a product refers to-
(A) The number of people in the given area
(B) The geographical area served by the producers
(C) The volume of potential sales of the product
(D) The number of potential buyers of the market
Ans. (D)

9. Product differentiation is the most important feature of
(A) Pure competition
(B) Monopolistic competition
(C) Monopoly
(D) Oligopoly
Ans. (B)

10. Different firms constituting the industry, produce homogeneous goods under-
(A) Monopoly
(B) Monopolistic competition
(C) Oligopoly
(D) Perfect competition
Ans. (D)

11. Same price prevails throughout the market under-
(A) Perfect competition
(B) Monopoly
(C) Monopolistic competition
(D) Oligopoly
Ans. (A)

12. A situation of large number of firms producing similar goods is termed as-
(A) Perfect competition
(B) Monopolistic competition
(C) Pure competition
(D) Oligopoly
Ans. (A)

13. Under perfect Competition-
(A) Marginal Revenue is less than the Average Revenue
(B) Average Revenue is less than the Marginal Revenue
(C) Average Revenue is equal to the Marginal Revenue
(D) Average Revenue is more than the Marginal Revenue
Ans. (C)

14. Perfect competition means-
(A) Large number of buyers and less sellers
(B) Large number of buyers and sellers
(C) Large number of sellers and less buyers
(D) None of these
Ans. (B)

15. Monopoly means-
(A) Single buyer (B) Many sellers
(C) Single seller (D) Many buyers
Ans. (C)

16. Consumer’s sovereignty means-
(A) Consumers are free to spend their income as they like
(B) Consumers have the power to manage the economy
(C) Consumer’s expenditures influences the allocation of resources
(D) Consumer goods are free from government control
Ans. (A)

17. Demand curve of a f irm under perfect competition is-
(A) Horizontal On-axis
(B) Negatively sloped
(C) Positively sloped
(D) U- shaped
Ans. (A)

18. The theory of monopolistic competition has been formulated in the United States of America by-
(A) Joan Robinson
(B) Edward Chamberlin
(C) John Bates Clark
(D) Joseph Schumpeter
Ans. (B)

19. Under perfect competition the industry does not have any excess capacity because each firm produces at the minimum point on its-
(A) Long-run marginal cost curve
(B) Long-run average cost curve
(C) Long-run average variable cost curve
(D) Long-run average revenue curve
Ans. (B)

20. In a perfectly competitive market, a firm’s-
(A) Average Revenue is always equal to Marginal Revenue
(B) Marginal Revenue is more than Average Revenue
(C) Average Revenue is more than Marginal Revenue
(D) Marginal Revenue and Average Revenue are never equal
Ans. (A)

21. A market in which there are a few number of large firms is called as-
(A) Duopoly
(B) Competition
(C) Oligopoly
(D) Monopoly
Ans. (C)

22. Number of sellers in the monopoly market structure is-
(A) One
(B) Few
(C) Large
(D) Two
Ans. (A)

23. Diamonds are priced higher than water because-
(A) They are sold by selected firms with monopolistic powers
(B) Their marginal utility to buyers is greater than that of water
(C) Their total utility to buyers is higher than that of water
(D) Consumers do not buy them at lower prices
Ans. (B)

24. Price and output are determinates in market structure other than-
(A) Monopoly
(B) Perfect competition
(C) Oligopoly
(D) Monopsony
Ans. (B)

25. In a free enterprise economy, resource allocation is determined by-
(A) The pattern of consumer’s spending
(B) the wealth of the entrepreneurs
(C) decision of the Government
(D) the traditional employment of factors
Ans. (A)

26. Buyers and Sellers will have perfect Knowledge of market conditions under-
(A) Duopoly
(B) Perfect Competition
(C) Monopolistic competition
(D) Oligopoly
Ans. (B)

27. One of the features of a free market economy is-
(A) Active state intervention
(B) Public ownership of factors of production
(C) Rationing and price control
(D) Consumer’s sovereignty
Ans. (D)

28. Money market is a market for_____.
(A) Short term fund
(B) Long term fund
(C) Negotiable instruments
(D) Sale of shares
Ans. (A)

29. In which of the following market forms, a firm does not exercise control over price?
(A) Monopoly
(B) Perfect competition
(C) Oligopoly
(D) Monopolistic competition
Ans. (B)

30. Bilateral monopoly situation is-
(A) When there are only two sellers of a product
(B) When there are only two buyers of a product
(C) When there is only one buyer and one seller of a product
(D) When there are two buyers and two sellers of a product
Ans. (C)

31. Which among the following is a characteristic of Laissezfaire system?
(A) No government intervention
(B) Market forces are highly regulated
(C) It is a socialist system
(D) Maximum government intervention
Ans. (A)

32. Which of the following is not an assumption of perfect competition?
(A) There are many buyers and single sellers
(B) Average total costs continually decrease.
(C) The good sold by all sellers in the market is assumed to be homogeneous.
(D) Buyers and sellers in the market are assumed to have perfect information
Ans. (A)

33. In perfect competition a firm maximizes profit by _____.
(A) Setting price such that price is equal to or greater than its marginal costs
(B) Setting output such that price equals average total costs
(C) Setting output such that price equals marginal costs
(D) Setting price so that it is greater tha marginal cost

34. Match the characteristics with their market structure-
(i) Differentiated products, but close substitutes for consumers so their demand curves are elastic
(ii) Homogeneous product, all goods are perfect substitutes for consumers
(A) (i) Monopolistic Competition, (ii) Pure Competition
(B) (i) Monopolistic Competition, (ii) Pure Monopoly
(C) (i) Pure Competition, (ii) Monopolistic Competition
(D) (i) Pure Monopoly, (ii) Pure Competition
Ans. (A)

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