Question # 1

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

If variable costs of a firm are covered partly under perfect competition, then that firm

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Will run with normal profit

Will run with abnormal profit

Will run with minimum loss

Will not continue its business and close down

Till marginal cost curve remains below the marginal revenue curve, from the economic point of view, increase in production for a firm is

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Beneficial

Unbeneficial

May be beneficial or unbeneficial

Neither beneficial nor unbeneficial

Law of decreasing return is also known as:

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Increasing cost

Constant cost

Diminishing cost

Both (a) and (c)

Which law is applicable when human and natural forces are balance ?

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Increasing cost

Constant cost

Diminishing cost

Both (a) and (c)

When average product increases, marginal product is:

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Also increases

Decreases

Zero

Negative

When a firm earns abnormal profit in the short run, then its

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MC=MR=AR=AC all are equal

MC=MR=AR while AC is less

MC=MR=AR while AC is more

MC=MR=AR while AV is sometimes equal to them and sometimes less than tham

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

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

Under monopoly, number of firms is

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Large

Few

One

Two

When average product is maximum, marginal product is:

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Positive

Equal to AP

Zero

Negative

To increase profit a firm minimizes

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Revenues

Costs

Demand

Supply

Usually elasticity of demand in equilibrium situation under monopoly is

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Equal than unity

Less than unity

more than unity

Zero

Firm earns abnormal profit, when

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AC=AR

AR>AC

AR<AC

AC=MC

When total production is maximum, marginal product is:

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Positive

Negative

Zero

Infinite

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