Question # 1

Laws of returns are also known as:

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Laws of substitution

Laws of consumption

Laws of cost

All of three

Firm earns abnormal profit, when

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AC=AR

AR>AC

AR<AC

AC=MC

The difference between total revenue (TR) and total cost (TC) is called

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Loss

Profit

Profit or loss

Utility

Under perfect competition in the long run a firm

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Always earns abnormal profit

Always earns normal profit

Usually earns abnormal profit

Usually faces loss

When average product increases, marginal product is:

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Also increases

Decreases

Zero

Negative

A monopolist firm usually earns

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Normal profit

Abnormal profit

Minimum loss

Abnormal loss

When average product is maximum, marginal product is:

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Positive

Equal to AP

Zero

Negative

Firm earns maximum profit at the point where

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Difference between total costs and total revenue is highest and the total revenue curve is above

Total costs and total revenue curves intersect each other

Total costs curve is above the total revenue curve

Difference between total costs and total revenue is minimum

If the demand for commodity being produced increases, then a firm in the short run ------- its variable factors

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Increases

Decreases

Keeps the same

None of three

When total production increases, marginal product is:

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Positive

Negative

Zero

Infinite

A firm is in equilibrium when its

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Marginal revenue is equal to marginal cost

Marginal revenue is more than marginal cost

Marginal revenue is less than marginal cost

Marginal revenue is equal to average cost

If there are large number of firms in some particular industry, then situation is called

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Perfect competition

Imperfect competition

Monopoly

Monopolistic competition

A monopolistic firm has control of

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Whole market supply by one firm

Whole market supply by two firms

Whole market supply by a few firms

None of these

When total revenue and total cost of a firm are equal, the firm earns

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Abnormal profit

Normal profit

Normal loss

Abnormal loss

To increase profit a firm minimizes

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Revenues

Costs

Demand

Supply

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Principles of Economics Icom Part 1 English Medium Chapter 7 Online Test MCQs With Answers

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