Economics - Study Mode

[#406] A monopolist is able to maximize his profits when
Correct Answer

(D) His marginal cost is equal to marginal revenue

Explanation

Solution: A monopolist is able to maximize his profits when his marginal cost is equal to marginal revenue. The profit-maximizing choice for the monopoly will be to produce at the quantity where marginal revenue is equal to marginal cost: that is, MR = MC.

[#407] In imperfect competition
Correct Answer

(A) Excess capacity always exists

Explanation

Solution: In imperfect competition excess capacity always exists. Excess capacity is a characteristic of natural monopoly or monopolistic competition.

[#408] The shape of PPC is concave due to
Correct Answer

(B) Rising opportunity cost between two goods

Explanation

Solution: The shape of PPC is concave due to rising opportunity cost between two goods. Most of the PPF curves are concave due to the inadaptability of the resources. The law of increasing opportunity cost states: as the production of one good rises, the opportunity cost of producing that good increases.

[#409] Which of the following is not the name of LAC curve?
Correct Answer

(C) Round curve

Explanation

Solution: Round curve is not the name of LAC curve.

[#410] A frim has variable cost of Rs.1000 at 5 units of output. If fixed costs are Rs.400, what will be the average total cost at 5 units of output?
Correct Answer

(B) 280

Explanation

Solution: Total costs (TC) = FC + TVC. Average Fixed Costs (AFC) = FC/Q.
TC = 400+1000 = 1400.
AFC = 1400/5 = 280.