Description : In the long-run equilibrium, a competitive firm earns - (1) Super-normal profit (2) Profits equal to other firms (3) Normal profit (4) No profit
Last Answer : (3) Normal profit Explanation: Making the assumption that the market demand curve remains unchanged, higher market supply will reduce the equilibrium market price until the price = long run average cost. ... of firms in and out of the industry and a long-run equilibrium has been established.
Description : In the long-run equilibrium, a competitive firm earns (1) Super-normal profit (2) Profits equal to other firms (3) Normal profit (4) No profit
Last Answer : Normal profit
Description : Surplus earned by a factor other than land in the short period of referred to as- (1) economic rent (2) net rent (3) quasi-rent (4) super-normal rent
Last Answer : (3) quasi-rent Explanation: Quasi-rent is the surplus which is received in the short period because of demand exceeding the supply by the man made factors besides land. It is an analytical term ... opportunity cost is defined as the current income minus the income available in the next best use.
Description : Surplus earned by a factor other than land in the short period of referred to as (1) economic rent (2) net rent (3) quasi-rent (4) super-normal rent
Last Answer : quasi-rent
Description : Quasi-Rent arises from (a) Land (b) Labour (c) Capital (d) Factors whose supply in the short run is inelastic.
Last Answer : (c) Capital
Description : In case of monopoly, a firm in the long run can have A.Loss B.Super Normal Profit C.Break even D.All of these
Last Answer : B.Super Normal Profit
Description : In short run, if a competitive firm incurs losses, it will - (1) stop production. (2) continue to produce as long as it can cover its variable costs. (3) raise price of its product. (4) go far advertising campaign.
Last Answer : (1) stop production. Explanation: In the short run, a firm that is operating at a loss (where the revenue is less that the total cost or the price is less than the unit cost) must ... will shutdown if the sale of the goods or services produced cannot even cover the variable costs of production.
Description : In short run, if a competitive firm incurs losses, it will (1) stop production. (2) continue to produce as long as it can cover its variable costs. (3) raise price of its product. (4) go far advertising campaign.
Last Answer : stop production.
Description : Quasi rent is a ______ phenomenon. (1) medium term (2) long term (3) short term (4) no time
Last Answer : (3) short term Explanation: Quasirent is a term in economics that describes certain types of returns to firms. It differs from pure economic rent in that it is a temporary phenomenon. It ... run, such as the granting of patents or other legal protections for intellectual property by governments.
Description : Quasi rent is a_________ phenomenon. (1) medium term (2) long term (3) short term (4) no time
Last Answer : short term
Description : In equilibrium, a perfectly competitive firm will equate - (1) marginal social cost with marginal social benefit (2) market supply with market demand (3) marginal profit with marginal cost (4) marginal revenue with marginal cost
Last Answer : (4) marginal revenue with marginal cost Explanation: A perfectly competitive firm's supply curve is that portion of its marginal cost curve that lies above the minimum of the average variable cost ... marginal cost curve. The marginal cost curve is thus the perfectly competitive firm's supply curve.
Description : In equilibrium, a perfectly competitive firm will equate (1) marginal social cost with marginal social benefit (2) market supply with market demand (3) marginal profit with marginal cost (4) marginal revenue with marginal cost
Last Answer : marginal revenue with marginal cost
Description : In a pure monopoly firm a firm can make abnormal profit at the long run equilibrium level due to (a) Price discrimination;(b)Cost effectiveness ; (c) Banned entry of new firms ; (d) Sales promotion
Last Answer : (c) Banned entry of new firms ;
Description : In the short run if the price is above the average total cost in a monopolistic competitive market, the firm makes (a) Profits and new firms join the market ; (b) Profit and bar entry to new firms; (c) Makes losses and exit the market ; (d) Quick profit and disappears
Last Answer : (a) Profits and new firms join the market ;
Description : Any factor of production can earn economic-rent, when its supply will be - (1) Perfectly elastic (2) Perfectly inelastic (3) Elastic in nature (4) All of the above
Last Answer : (2) Perfectly inelastic Explanation: Economic rent is the revenue that can be earned from the land or other natural resource for which there is a fixed supply - as economists like to say, the supply ... inelastic, the amount of its supply does not depend on any income that the resource can produce.
Description : Any factor of production can earn economic-rent, when its supply will be (1) Perfectly elastic (2) Perfectly inelastic (3) Elastic in nature (4) All of the above
Last Answer : Perfectly inelastic
Description : Minimum payment to factor of production is called - (1) Quasi Rent (2) Rent (3) Wages (4) Transfer Payment
Last Answer : (4) Transfer Payment Explanation: In economics, factors of production are the inputs to the production process. There are three basic factors of production: land, labour, capital. The payment for use and ... to keep a factor of production in its present use. It is also known as opportunity cost.
Description : Minimum payment to factor of production is called (1) Quasi Rent (2) Rent (3) Wages (4) Transfer Payment
Last Answer : Transfer Payment
Description : Which of the following statements is correct? (1) Most workers will work for less than their reservation wage. (2) The reservation wage is the maximum amount any firm will pay for a worker. (3) ... reservation wage. (4) Economic rent is the amount one must pay to enter a desirable labour market.
Last Answer : (3) Economic rent is the difference between the market wage and the reservation wage. Explanation: The difference between the actual market wage and the reservation wage is called economic rent. Therefore ... per-son becomes unemployed (The Goals of Macroeconomic Policy by Martin Prachowny. p. 58).
Description : Which of the following statements is correct ? (1) Most workers will work for less than their reservation wage. (2) The reservation wage is the maximum amount any firm will pay for a worker. (3) ... reservation wage. (4) Economic rent is the amount one must pay to enter a desirable labour market.
Last Answer : Economic rent is the difference between the market wage and the reservation wage.
Description : At "Break-even point", (1) the industry is in equilibrium in the long run. (2) the producers suffers the minimum losses (3) the seller earns maximum profit (4) the firm is at zero-profit point
Last Answer : (4) the firm is at zero-profit point Explanation: The break-even point (BEP) is the point at which cost or expenses and revenue are equal: there is no net loss or gain, and one has "broken even." For businesses, reaching the break-even point is the first major step towards profitability.
Description : At “Break-even point”, (1) the industry is in equilibrium in the long-run. (2) the producers suffers the minimum losses (3) the seller earns maximum profit (4) the firm is at zero-profit point
Last Answer : the firm is at zero-profit point
Description : What is the economic system in which means of production and distribution are privately owned and operated for profit under competitive conditions?
Last Answer : The definition of capitalism is an economic system in which the means of production and distribution are privately or corporately owned and the operations are funded by profits. An example of capitalism is the prison system in the United States being operated by private companies.
Description : Cost of production of the producer is given by: (1) sum of wages paid to labourers. (2) sum of wages and interest paid on capital. (3) sum of wages, interest, rent and supernormal profit. (4) sum of wages, interest, rent and normal profit.
Last Answer : (4) sum of wages, interest, rent and normal profit. Explanation: The following elements are included in the cost of production: (1) Purchase of raw machinery, (2) Installation of plant and machinery ... also added, (k) The normal profit of the entrepreneur is also included In the cost of production.
Last Answer : sum of wages, interest, rent and normal profit.
Description : In the long run a firm in perfect competition earns (a) Normal profit only ; (b) Abnormal profit ; (c) Average profit of past five years; (d) 12.33% profit on capital employed
Last Answer : (a) Normal profit only ;
Description : ‘Normal Profit’ means (a) Profit earned by the marginal firm in a normal year. (b) Minimum amount needed to keep a firm in the same business. (c) The payment made to marginal firm for its ability. (d) Surplus profit earned by the least efficient firm
Last Answer : (c) The payment made to marginal firm for its ability.
Description : A firm that makes profit in excess of normal profit is earning (a) Economic profit ; (b) Costing profit ; (c) Normal profit ; (d) Super normal profit
Last Answer : ; (d) Super normal profit
Description : A firm that break even after all the economic costs are paid in earning (a) Economic profit ; (b) Accounting profit ; (c) Normal profit ; (d) Super normal profit
Last Answer : (c) Normal profit ;
Description : The remuneration of the entrepreneur in production is - (1) Pure profit (2) Gross profit (3) Net profit (4) Super-normal profit
Last Answer : (3) Net profit Explanation: Economists divide the factors of production into four categories: land, labor, capital, and entrepreneurship. An entrepreneur is a person who combines the other factors ... commodities on the basis of demand, looking after efficient distribution) from the gross profit.
Description : The remuneration of the entrepreneur in production is (1) Pure profit (2) Gross profit (3) Net profit (4) Super-normal profit
Last Answer : Net profit
Description : Total profit of a firm in a perfect competitive market is – (a) Total revenue less total cost ; (b) Marginal revenue less marginal cost; (c) Total revenue less marginal cost ; (d) Total revenue less variable cost
Last Answer : (a) Total revenue less total cost ;
Description : What will happen if a firm in perfect competitive market, increase its output by 50% (a)Total sales revenue will also increase by 50% ; (b) (b)Selling price will come down by 50%; (c)Total sales revenue will decrease by 50% ; (d)Profit will increase by 25%
Last Answer : (a)Total sales revenue will also increase by 50% ;
Description : A competitive firm maximizes its total profit when ……………… (a) Average cost equal average realization ; (b) Marginal cost equals Price; (d) Total revenue is the maximum ; (d) MR = AR
Last Answer : (d) Total revenue is the maximum ;
Description : The demand curve facing a perfectly competitive firm is - (1) downward sloping (2) perfectly inelastic (3) a concave curve (4) perfectly elastic
Last Answer : (4) perfectly elastic Explanation: A perfectly competitive industry is comprised of a. large number of relatively small firms that sell identical products. Each perfectly competitive firm is so small ... at the going market price. This translates into a horizontal or perfectly elastic demand curve.
Description : The demand curve facing a perfectly competitive firm is (1) downward sloping (2) perfectly inelastic (3) a concave curve (4) perfectly elastic
Last Answer : perfectly elastic
Description : Economic profit or normal profit is the same as - (1) optimum profit (2) accounting profile (3) maximum profit (4) net profit
Last Answer : (4) net profit Explanation: Normal profit or economic profit is an economic condition occurring when the difference between a firm's total revenue and total cost is equal to zero. Simply put, normal ... occurs when revenues are greater than costs, and not equal, as in the case of normal profit.
Description : Economic profit or normal profit is the same as : (1) optimum profit (2) accounting profile (3) maximum profit (4) net profit
Last Answer : net profit
Description : A firm has decided to alter its pricing and promotional strategies in response to slower than expected job growth and declining personal incomes. The firm is responding to changes in its: A. Socio-cultural environment B. Political environment C. Economic environment D. Competitive environment
Last Answer : C. Economic environment
Description : The Diamond Model suggests that four factors determine a firm's competitive advantage: a) 1) home demand conditions; 2) home supply conditions; 3) firm strategy and structure; 4) supporting ... home demand conditions; 2) home supply; 3) firm strategy; 4) related and supporting industries.
Last Answer : home demand conditions; 2) home factor conditions; 3) firm strategy, structure and rivalry; 4) related and supporting industries
Description : The Diamond Model assumes that: a) Multinational firms must develop global strategies based only on home demand conditions. b) Multinational firms must pay less attention to global consumers than domestic ... a firm plays a key role in shaping that firm's competitive advantage in global markets.
Last Answer : The national home base of a firm plays a key role in shaping that firm's competitive advantage in global markets.
Description : Minimum Support Price is announced by the government to provide : (a) incentives to farmers for raising production (b) incentives to traders to earn maximum profit from farmers (c) incentives to moneylenders to lend maximum to farmers (d) none of the above
Last Answer : (a) incentives to farmers for raising production
Description : If an industry is characterized by economies of scale then - (1) barriers to entry are not very large (2) long run unit costs of production decreases as the quantity the firm produces increases (3) ... of the large scale operation (4) the costs of entry into the market are likely to be substantial
Last Answer : (2) long run unit costs of production decreases as the quantity the firm produces increases Explanation: In microeconomics, economies of scale are the cost advantages that an enterprise obtains due to expansion ... in unit cost as the size of a facility and the usage levels of other inputs increase.
Description : Under perfect competition, the industry does not have any excess capacity because each firm produces at the minimum point on its - (1) long-run marginal cost curve (2) long-run average cost curve (3) long-run average variable cost curve (4) long-run average revenue curve
Last Answer : (2) long-run average cost curve Explanation: Under perfect competition, the firms operate at the minimum point of long-run average cost curve. In this way, the actual longrun output of ... ideal output. This gives the mea-sure of excess capacity which lies unutilized under imperfect competition.
Description : Under perfect competition, the industry does not have any excess capacity because each firm produces at the minimum point on its (1) long-run marginal cost curve (2) long-run average cost curve (3) long-run average variable cost curve (4) long-run average revenue curve
Last Answer : long-run average cost curve
Description : If an industry is characterised by economies of scale then (1) barriers to entry are not very large (2) long run unit costs of production decreases as the quantity the firm produces increases (3) ... of the large scale operation (4) the costs of entry into the market are likely to be substantial
Last Answer : long run unit costs of production decreases as the quantity the firm produces increases
Description : A profit maximizing firm will invest up to the level of investment where (a) The cost of borrowing equals marginal efficiency of capital (b) The cost of borrowing is greater than marginal ... marginal efficiency of capital (d) The cost of borrowing is equal to marginal propensity to consume.
Last Answer : (a) The cost of borrowing equals marginal efficiency of capital
Description : Why is rent earned by land even in the long run? (1) Land has original and indestructible power (2) Land is a man made factor (3) Its supply is inelastic in the short run (4) Its supply is inelastic in the long run
Last Answer : (4) Its supply is inelastic in the long run Explanation: Rent accrues to land which is fixed in supply even in the longer run. It is permanent. In contrast to it is a quasi rent, introduced by Marshall, which is inelastic in the short run, but elastic in the longer run.
Description : Why is rent earned by land even in the long run ? (1) Land has original and indestructible power (2) Land is a man made factor (3) Its supply is inelastic in the short run (4) Its supply is inelastic in the long run
Last Answer : Its supply is inelastic in the long run
Description : Which of the following is true about the way by which SDG&E has been regulated by the PUC? a. SDG&E has been allowed to earn very high economic profits b. The profits of SDG&E are calculated as ... the demand for electricity would fall, the price of electricity would also fall d. All of the above
Last Answer : b. The profits of SDG&E are calculated as a percent of the value of the capital goods