Naveen’s Gopali Economics

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MICRO ECONOMICS Naveen Johar: Master in Economics, UGC-JRF, Topper in IIT Kharagpur
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Time: 2.5 hours [Maximum Marks : 100]
Number of Pages in this Booklet: 10 Number of Questions in this Booklet: 64

Q. 1 to 55 each question one mark. (55 marks)

Q.1 Marginal Revenue of a monopoly firm is less than the price. Because:

(i) Demand curve has a positive slope

(ii) Demand curve has a negative slope
(iii) Monopolist not exercised its power
(iv) Monopolist is in equilibrium

Q.2 A solution of Walrasian general equilibrium will exist if and only if

(i) Perfect Competition
(ii) Monopolistic structure
(iii) Monopoly
(iv) Perfect Knowledge

Q.3 What is Cost in Economics?

(i) Explicit Cost (ii) Implicit Cost
(iii) Explicit + Implicit (iv) Profit

Q.4 What is profit in Economics?

(i) TR-TC (explicit) (ii) TR – TC (opportunity cost)
(iii) TR – TC (Implicit) (iv) TR – TC (Profit)

Q.5 What is Opportunity Cost?

(i) Explicit Cost (ii) Implicit Cost
(iii) Economic Cost (iv) Profit

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Q.6 Labor Force
(i) Unemployed (ii) Employed
(iii) Unemployed + Employed (iv) None of above

Q.7 Unemployment rate

!"#$%&!' /0!"#$%&!'
(i) (ii)
()*%+ -%+.! ()*%+ -%+.!

()*%+ -%+.! ()*%+ -%+.!

(iii) (iv)
1"#$%&!' 20!"#$%&!'

Q.8 Labor force participation ratio

()*%+ -%+.! ()*%+ -%+.!
(i) (ii)
3'2$4 5%#2$)46%0 4%4)$ #%#2$)46%0

3'2$4 5%#2$)46%0 7%4)$ #%#2$)46%0

(iii) (iv)
()*%2+ -%+.! ()*%2+ -%+.!

Q.9 What is Profit?

(i) Income of labor (ii) Income of land
(iii) Income of Entrepreneur (iv) Income of Capital

Q.10 What is Normal Profit?

(i) Entrepreneur earns more than Income (Profit)
(ii) Entrepreneur earns less than Income (profit)
(iii) Entrepreneur earns equal to Income (profit)
(iv) Entrepreneur earns cost to Income (profit)

Q.11 What is Supernormal Profit ?

(i) Economic Profit (+) (ii) Economic Profit (-)
(iii) Economic Profit (o) (iv) None of above

Q.12 What is minimum Loss ?

(i) Economic Profit (+) (ii) Economic Profit (-)
(iii) Economic Profit (o) (iv) None of above

Q.13 What is normal profit?

(i) Economic Profit (+) (ii) Economic Profit (-)
(iii) Economic Profit (o) (iv) None of above

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Q.14 Law of variable proportionate know as
(i) MP first increase then decrease and become negative.
(ii) TP Increases at increasing rate then TP increase at decreasing rate and start
decreasing.
(iii) (i) & (ii)
(iv) None of above

Q.15 Supply curve of firm (long run)

(i) MC curve above AC (ii) MC curve below AC
(iii) AC curve above MC (iv) AC curve below MC

Q.16 Supply curve of firm (short run)

(i) MC curve above AVC (ii) MC curve below AC
(iii) MC curve above AC (iv) None of above

Q.17 Supply curve of Market (Short run)

(i) Horizontal (ii) Upward
(iii) Vertical (d) None of above

Q.18 Supply curve of Market (Long run)

(i) Horizontal (ii) Upward
(iii) Vertical (d) None of above

Q.19 Supply curve of Market known as

(i) Minimum cost curve (ii) Moderate cost curve

(iii) (i) & (ii) (d) None of above

Q.20 Production efficiency of firm at

(i) Minimum of AC (ii) downward part of MC
(iii) Upward part of MC (d) Minimum of MC

Q.21 Profit maximizing decision at firm

(i) Ist stage (ii) 2nd stage
(iii) 3rd stage (iv) All of above

Q.22 Profit maximizing output decision of firm

(i) MC = MR (MC cut from below)
(ii) MC = MR (MC cut from above)
(iii) AR = MC (AR cut from MC)
(iv) AR = AC
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Q.23 Which one is correct at efficient level of production
(i) MC decrease AC Increase
(ii) MC Increase AC Minimum
(iii) MC Increase AC Increase
(iv) All of above

Q.24 Which is/are correct

(i) MR decrease AR Increase
(ii) MR Increase AR Increase
(iii) MC Constant AR Constant
(iv) (i) & (ii)

Q.25 Firm under perfect competition earn (short run)

(i) Normal Profit
(ii) Supernormal Profit
(iii) Minimum Loss
(iv) All of above

Q.26 Firm under perfect competition earn (Long run)

(i) Normal Profit (ii) Supernormal Profit
(iii) Minimum Loss (iv) All of above

Q.27 Monopolistic firm earn (long run)

(i) Normal Profit

(ii) Supernormal Profit
(iii) Minimum Loss
(iv) All of above

Q.28 Monopolistic firm earn (Short run)

(i) Normal Profit
(ii) Supernormal Profit
(iii) Minimum Loss
(iv) All of above

Q.29 Monopoly firm earn (long run)

(i) Normal Profit
(ii) Supernormal Profit
(iii) Minimum Loss
(iv) All of above

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Q.30 Monopoly firm earn (Short run)
(i) Normal Profit
(ii) Supernormal Profit
(iii) Minimum Loss
(iv) All of above

Q.31 Market supply curve exist only firm

(i) firms under monopolistic structure
(ii) firms under perfect competitive structure
(iii) firm monopoly
(iv) All of above

Q.32 Efficient labor demand of firm

(i) MC minimum (ii) MP minimum
(iii) AC minimum (iv) AP maximum

Q.33 Which is/are correct.

(i) MP increases AP Increase
(ii) MP decrease AP Increases
(iii) ii & ii
(iv) All of above

Q.34 Labor exploitation

(i) ARP > AFC (ii) MRP > AFC

(iii) AFC > MRP (iv) MRP > ARP

Q.35 Highest labor exploitation under

(i) Perfect competition in both market
(ii) Imperfect competition in both market
(iii) Imperfect competition in ends market
(iv) None of above

Q.36 Profit maximizing demand of labor

(i) MRP = MFC (MRP cut from above)
(ii) MRP = MFC (MRP cut from below)
(iii) MRP = MFC (both intersect)
(iv) AFC = ARP

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Q.37 Profit through TR – TC mechanism exist only under
(i) firms under perfect competitive structure
(ii) firms under imperfect competitive structure
(iii) firms under monopoly
(iv) None of above

Q.38 Consumer Surplus

(i) Maximum willing to pay – Actual pay
(ii) Minimum willing to pay – Actual pay
(iii) Maximum willing to pay – Actual Receive
(iv) Minimum willing to pay – Actual Receive

Q.39 Producer Surplus

(i) Maximum willing to pay – Actual pay
(ii) Actual receive – minimum cost
(iii) Actual receive – cost
(iv) None of above

Q.40 Total Surplus

(i) Maximum willing to pay – mini cost
(ii) Maximum willing to pay – cost
(iii) Maximum willing to pay – Actual pay
(iv) None of above

Q.41 I¢Q downward because

(i) K & L substitutable at given technology

(ii) K & L substitutable
(iii) K & L complement
(iv) None of above

Q.42 I¢Q Convex to origin because

(i) Dimiming MRTS
(ii) Constant MRTS
(iii) Increase MRTS
(iv) None of above

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Q.43 The producer will substitute capital for labor till he reaches that point at
Isoquant at which
(i) The price of the good he produces equal wage rate
(ii) Marginal rate of technical substitution equals interest rate
(iii) Marginal rate of technical substitution equal marginal returns
(iv) MRTS equal to ratio at MP at labor and capital

Q.44 Isocost equation is

! #$
(i) wL + rk = C (ii) K = " − "
(iii) (i) & (ii) (d) None of above

Q.45 Isocost line equation

(i) wL + rk = C (ii) wL + L = C
! %
(iii K = " − " L (d) None of above

Q.46 Slope of Isocost

& '
(i) − '
(ii) − &
& '
(iii) '
(iv) &

Q.47 What is true of a monopolistically competitive market in long-run equilibrium?

a. Price is greater than marginal cost.
b. Price is equal to marginal revenue.
c. Firms make positive economic profits.
d. Firms produce at the minimum of average total cost.

Q.48 If a profit-maximizing, competitive firm is producing a quantity at which

marginal cost is between average variable cost and average total cost, it will
a. keep producing in the short run but exit the market in the long run.
b. shut down in the short run but return to production in the long run.
c. shut down in the short run and exit the market in the long run.
d. keep producing both in the short run and in the long run.

Q.49 Furquan opens up a tea stall for two hours.

He spends $10 for ingredients and sells $60 worth of tea. In the same two hours,
he could have mowed his neighbor’s lawn for $40. Furquan has an accounting
profit of _____ and an economic profit of ____.
a. $50, $10
b. $90, $50
c. $10, $50
d. $50, $90

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Q.50 Grand Utility curve is locus of all
(i) Distribution, consumption and allocation efficient points
(ii) Distribution, consumption points
(iii) Distribution allocation points
(iv) None of above

Q.51 Which one is best for growth of Economy

(i) Perfect competitive structure
(ii) Monopolistic structure
(iii) Monopoly
(iv) None of above

Q. 52 If the production of a good yields a negative externality, then the social-cost

curve lies ________ the supply curve, and the socially optimal quantity is
________ than the equilibrium quantity
a. above, greater
b.above,less
c. below, greater
d. below, less

Q.53 Jen values her time at $60 an hour. She spends 2 hours giving Colleen a
massage. Colleen was willing to pay as much at $300 for the massage, but they
negotiate a price of $200. In this transaction,
a. consumer surplus is $20 larger than producer surplus.
b. consumer surplus is $40 larger than producer surplus.
c. producer surplus is $20 larger than consumer surplus.
d. producer surplus is $40 larger than consumer surplus.

Q.54 The demand curve for cookies is downward-sloping. When the price of cookies
is $2, the quantity demanded is 100. If the price rises to $3, what happens to
consumer surplus?
a. It falls by less than $100.
b. It falls by more than $100.
c. It rises by less than $100.
d. It rises by more than $100.

Q.55 Bergson Criteria for social welfare maximization exist

(i) Axiomatically
(ii) Mathematically
(iii) Conditionally
(iv) None of above

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Q. 56 to 64 are (Numerical Answer Types) NAT each question five mark.
(45 marks)

Q.56 Pawan buys an iPhone for $240 and gets consumer surplus of $160.
a. What is her willingness to pay?
b. If she had bought the iPhone on sale for $180 what would her consumer
surplus have been?
c. If the price of an iPhone were $500, what would her consumer surplus has
been?

Q. 57 The cost of producing flat-screen TVs has fallen over the past decade. Let’s
consider some implications of this fact.
a. Draw a supply-and-demand diagram to show the effect of falling production
costs on the price and quantity of flat-screen TVs sold.
b. In your diagram, show what happens to consumer surplus and producer
surplus.
c. Suppose the supply of flat-screen TVs is very elastic. Who benefits most
from falling production costs—consumers or producers of these TVs?

Q. 58 There are four consumers willing to pay the following amounts for haircuts:
Gloria: $35 Jay: $10 Claire: $40 Phil: $25

There are four haircutting businesses with the following costs:

Firm A: $15 Firm B: $30 Firm C: $20. Firm D: $10

Each firm has the capacity to produce only one hair- cut. To achieve efficiency,
how many haircuts should be given? Which businesses should cut hair and
which consumers should have their hair cut? How large is the maximum
possible total surplus?

Q. 59 Give an example of a price ceiling and an example of a price floor.

a. Which causes a shortage of a good—a price ceiling or a price floor? Justify
your answer with a graph.
b. What mechanisms allocate resources when the price of a good is not allowed
to bring supply and demand into equilibrium?

Q. 60 Explain why economists usually oppose controls on prices. (150 words)

Q.61 Give an example of an opportunity cost that an accountant would not count as a
cost. Why would the accountant ignore this cost?

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Q. 62 Define total cost, average total cost, and marginal cost. How are they related?

Q. 63 Give an example of a government-created monopoly. Is creating this monopoly

necessarily bad public policy? Explain in 150 words.

Q. 64
A. Give two examples of price discrimination. In each case, explain why the
monopolist chooses to follow this business strategy.

B. For each of the following characteristics, say whether it describes a perfectly

competitive firm, a monopolistically competitive firm, both, or neither.

a. sells a product differentiated from that of its competitors

b. has marginal revenue less than price
c. earns economic profit in the long run
d. produces at the minimum of average total cost in the long run

Deliberated Practice is being considered must for every success. In this respect Gopali
Community of Economics has started for upcoming June 2022 UGC-NET/JRF
(Economics) Exam.
Initially Mock tests are based on what is being taught in our classes and finally it
would be based on entire syllabus.
For more information follow us at fb.me/GopaliEconomics or Join our Facebook
group ‘Gopali Community of Economics’ for answer key and videos.

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