# The Theory of Firm Under Perfect Competition MCQ Class 12 Economics

Please refer to Chapter 4 The Theory of Firm Under Perfect Competition MCQ Class 12 Economics with answers below. These multiple-choice questions have been prepared based on the latest NCERT book for Class 12 Economics. Students should refer to MCQ Questions for Class 12 Economics with Answers to score more marks in Grade 12 Economics exams. Students should read the chapter The Theory of Firm Under Perfect Competition and then attempt the following objective questions.

## MCQ Questions Class 12 Economics Chapter 4 The Theory of Firm Under Perfect Competition

The Theory of Firm Under Perfect Competition MCQ Class 12 Economics provided below covers all important topics given in this chapter. These MCQs will help you to properly prepare for exams.

Question. When ___________, the firms are earning just normal profit:
(a) AC = AR
(b) MC = AC
(c) AR = MR
(d) MC = MR

A

Question. In perfect competition, since the firm is a price taker, the ________ curve is straight line
(a) Total cost
(b) Marginal cost
(c) Total revenue
(d) Marginal revenue

D

Question. Which of the following is an example of perfect competition?
(a) Agriculture
(b) Banking sector
(c) Car manufacturing
(d) Railways

A

Question. If all units are sold at same price how will it affect AR and MR?
(a) B. AR > MR
(b) A. AR = MR
(c) D. AR + MR = 0
(d) C. AR < MR

B

Question. Can TR be a horizontal Straight line?
(a) May be
(b) Can’t say
(c) Yes
(d) No

D

Question. The product of AR and price at every unit sold is the firm’s
(a) TR
(b) TVC
(c) MR
(d) AR

A

Question. In perfect competition, when the marginal revenue and marginal cost are equal, profit is?
(a) Maximum
(b) Zero
(c) Negative
(d) Average

A

Question. In the perfectly competitive market, in the long run, competitive prices equal the minimum possible ________ cost of good?
(a) Average
(b) Total
(c) Variable
(d) Marginal

A

Question. Which of the following type of competition is just a theoretical economic concept, not a realistic case where actual competition and trade take place?
(a) Monopolistic competition
(b) Monopoly
(c) Oligopoly
(d) Perfect competition

D

Question. A firm can sell as much as it wants at the market price. The situation is related to?
(a) Monopoly
(b) Monopolistic competition
(c) Perfect competition
(d) Oligopoly

C

Question. When AR = Rs. 10 and AC = Rs. 8, the firm makes?
(a) Gross profit
(b) Super normal profit
(c) Normal profit
(d) Net profit

B

Question. In the long run the market price of a commodity is equal to its minimum average cost of production under the___________?
(a) Monopolist competition
(b) Perfect competition
(c) Oligopoly
(d) Monopoly

B

Question. Marginal revenue in any competitive situation is?
(a) TRn– Pn-1
(b) TRn– TRn-1
(c) TRn/ Qn-1
(d) None of above

B

Question. In which of the following types of market structures, are resources, assumed to be mobile?
(a) Oligopoly
(b) Perfect competition
(c) Monopolistic competition
(d) Monopoly

B

Question. Beyond producer’s equilibrium when MR<MC, the firm earns only
(a) Abnormal profit
(b) Normal loss
(c) Abnormal loss
(d) Normal Profit

C

Question. A producer’s equilibrium is a situation when
(a) AR = MR
(b) MR = MC
(c) AR = AC
(d) TR = TC

B

Question. The elasticity at a point on a straight-line supply curve passing through the origin making an angle of 45° will be
(a) 4.0
(b) 2.0
(c) 3.0
(d) 1.0

D

Question. Which of the following is an example of perfect competition?
(a) Agriculture
(b) Banking sector
(c) Car manufacturing
(d) Railways

A

Question. According to which economist “Price of a commodity is determined by the forces of demand and supply”:
(a) Jevons
(b) Valros
(c) Marshall
(d) None of these.

C

Question.Which is a characteristic of the market ?
(a) One Area
(b) Presence of both Buyers and Sellers
(c) Single Price of the Commodity
(d) All the above

D

Question. A rational consumer is a person who?
(a) Has perfect knowledge of the market
(b) Is not influenced by persuasive advertising
(c) Behaves at all times, other things being equal, in a judicious manner
(d) Knows the prices of goods in different market and buys the cheapest

A

Question.What is price line
(a) The demand curve
(b) The AR curve
(c) The MR curve
(d) The TR curve

C

Question. Other name by which average revenue curve known:
(a) Indifference curve
(b) Profit curve
(c) Average cost curve
(d) Demand curve

D

(a) Price ceiling
(b) Price floor
(c) Both (a) and (b)
(d) None of these.

C

Question.Which of the following is a feature of perfect competition ?
(a) Large Number of Buyers and Sellers
(b) Homogeneous Units of the Product
(c) Perfect Knowledge of the Market
(d) All the above

D

Question. None of these Rent is = ?
(a) Actual Income – Transfer Earnings
(b) Actual Income + Transfer Earnings
(c) Transfer Earnings
(d) None of these

A

Question. Profits of the firm will be more at:
(a) MR = MC
(c) Both of above
(d) None

C

Question. Beyond producer’s equilibrium when MR<MC, the firm earns only
(a) Abnormal profit
(b) Normal loss
(c) Abnormal loss
(d) Normal Profit

C

Questions. Excess demand can be seen in:
(a) Fixed market price
(b) Lowest fixed price
(c) Highest fixed price
(d) None of these.

C

Question. The concept of supply curve is relevant only for?
(a) Monopoly
(b) Monopolistic competition
(c) Perfect competition
(d) Oligopoly

C

Question. Which one of the following is true for monopoly ?
(a) Firm is price-maker
(b) Demand curve slopes downward
(c) Price discrimination possibility arises
(d) All the above

D

Question. A competitive firm in the short run incurs losses. The firm continues production, if?
(a) P = AVC
(b) P > AVC
(c) P < AVC
(d) P > = AVC

D

Question. A Seller Cannot influence the market price under:
(a) Perfect Competition
(b) Monopoly
(c) Monopolistic Competition
(d) All of these

A

Question. The elasticity at a point on a straight line supply curve passing through the origin will be
(a) 3.0
(b) 1.0
(c) 4.0
(d) 2.0

B

Question. In perfect competition, in the long run, ______________?
(a) There are large profits for the firm
(b) There is no profit and no loss for the firm
(c) There are negligible profits for the firm
(d) There are large losses for the firm

B

Question. What does a monopolist market show ?
(a) Production process
(b) Distribution system
(c) Nature of market
(d) None of these

C

Question.The concept of supply curve is relevant only for?
(a) Monopoly
(b) Monopolistic competition
(c) Perfect competition
(d) Oligopoly

C

Question. What should firm do when Marginal revenue is greater than marginal cost?
(a) Firm should expand output
(b) Effect should be made to make them equal
(c) Prices should be covered down
(d) All of these

A

Question. The elasticity at a point on a straight-line supply curve passing through the origin making an angle of 45° will be
(a) 4.0
(b) 2.0
(c) 3.0
(d) 1.0

D

Question .What is price line
(a) The demand curve
(b) The AR curve
(c) The MR curve
(d) The TR curve

C

Question. In the perfectly competitive market, in the long run, competitive prices equal the minimum possible ________ cost of good?
(a) Average
(b) Total
(c) Variable
(d) Marginal

A

Question. Market situation where there is only one buyer is:
(a) Monopoly
(b) Monopsony
(c) Duropoly
(d) None of these

B

Question. Other name by which average revenue curve known :
(a) Indifference curve
(b) Profit curve
(c) Average cost curve
(d) Demand curve

D

Question. In perfect competition, a firm:
(a) Determines price
(b) Obtains price
(c) Both (a) and (b)
(d) None of these

B

Question. Can MR be negative or zero.
(a) Yes
(b) Can’t say
(c) No
(d) Only negative but not zero

A

Question. In which market is AR equal to MR ?
(a) Perfect competition
(b) Oligopoly
(c) Imperfect competition
(d) Monopoly

A

Question. A producer’s equilibrium is a situation when
(a) AR = MR
(b) MR = MC
(c) AR = AC
(d) TR = TC

B

Question. In perfect competition, which of the following curves generally lies below the demand curve and slopes downward?
(a) Average revenue
(b) Average cost
(c) Marginal revenue
(d) Marginal cost

C

Question. Price of a commodity is determined at a point where :
(a) Demand exceeds
(b) Supply exceeds
(c) Demand equals supply
(d) None of these

C

Question. How many categories of production duration have been made by Marshall on the basis of supply ?
(a) Two
(b) Three
(c) Four
(d) Seven

B

Question. A firm can sell as much as it wants at the market price. The situation is related to?
(a) Monopoly
(b) Monopolistic competition
(c) Perfect competition
(d) Oligopoly

C

Question. Market Price is found in:
(a) Short Period Market
(b) Long Period Market
(c) Very Long Period Market
(d) None of these