Question

1. When a business has a market share of 100% it is known as:

A. A competitive market

B. A monopoly

C. An oligopoly

D. Monopolistic competition

2. What happens in the long run in perfect competition?

A. Abnormal profits are earned

B. Businesses are allocatively inefficient

C. A firm produces where average revenue is greater than average cost

D. A firm produces where marginal revenue equals marginal cost

3. From the following, when do losses always occur?

A. Marginal revenue equals the price

B. Average revenue is less than average cost

C. Average revenue equals average cost

D. Marginal cost equals average cost

4. In a monopoly market...

A. there are no barriers to entry

B. abnormal profits are only earned in the short run

C. the demand curve for a business is downward sloping

D. a profit maximising business produces where average revenue equals marginal revenue

Answer 1

1.Ans: A) A monopoly

Explanation:

When a business has a market share of 100% it is known as a monopoly becuase the firm sells all the product in the market.

2.Ans: D)  A firm produces where marginal revenue equals marginal cost.

Explanation:

Under perfect competition , in the long run , the frims earn normal profit where price equals marginal cost.

Under this market , price = marginal revenue = average revenue due to an unique price in the maket.

In the long run , P = MR =AR = MC = ATC

3.Ans: B) Average revenue is less than average cost

Explanation:

Profit = Average revenue - Average cost

So when Average revenue > Average cost , then there will be profit.

So when Average revenue < Average cost , then there will be loss.

4.Ans: C) the demand curve for a business is downward sloping.

Explanation:

Under monopoly market , firm charges different price to the consumers for its product. If it reduces price of the product then there will be more demand of its product and vice versa. So the  demand curve for a business is downward sloping.