Important Questions Class 11 Economics Part B Unit 4

Important Questions with Answers for CBSE Class 11 Economics Part B Unit 4 – Forms of Market and Price Determination under perfect competition with simple applications, which is outlined by expert Economics teachers from the latest version of CBSE (NCERT) books

Question 1

What is the break-even price?

Answer:

The break-even price is the cost at which a company earns a normal profit (Price=AC). In the long run, the break-even price can be described as P=AR=MC.

Question 2

When AR=Rs.10 and AC=Rs. 8, the firm makes?

(a) Gross Profit

(b) Normal Profit

(c) Net Profit

(d) Supernormal Profit

Answer:

(d) Supernormal Profit

Question 3

Define perfect competition.

Answer:

Perfect competition is a market where a large number of buyers and sellers sell a similar product at the same price.

Question 4

What is a Monopoly in economics?

Answer:

Monopoly is a condition where only one seller dominates the whole market space and has control over the price of a product.

Question 5

Which is an ideal market?

(a) Monopolistic Competition

(b) Oligopoly

(c) Monopoly

(d) Perfect Competition

Answer:

(d) Perfect Competition

Question 6

In which market, the demand curve is linear and parallel to X-axis?

(a) Monopoly

(b) Perfect Competition

(c) Oligopoly

(d) Monopolistic Competition

Answer:

(b) Perfect Competition

Question 7

What is Oligopoly?

Answer:

Oligopoly refers to a market structure where a few large sellers sell the same or different products.

Question 8

Explain the implication of free entry and free exit of a firm in the perfect competition market.

Answer:

The implication of free entry and free exit of a firm in the perfect competition market is that in this market structure, no company earns an unusual profit. Each company just earns a normal profit.

Question 9

What is product differentiation?

Answer: Product differentiation means the substitute produced by different manufacturers to show their products are different from other products available in the market. The product differentiation can be in colour, shape, brand name, packaging, etc.

Question 10

Under perfect competition, the cost lies below the average cost curve; the company would

(a) Incur losses

(b) Make an unusual profit

(c) Make normal profits

(d) Profit cannot be determined

Answer:

(a) Incur losses

Question 11

When a firm’s Total Revenue =Total Cost, it cannot cover its normal profit

(a) False

(b) True

(c) Can’t say

(d) None of these

Answer:

(a) False

Question 12

What is the normal profit?

Answer:

Normal profit is referred to as the minimum or least amount of profit which is required to keep an organisation engaged in the production process for the long run.

Question 13

What is a patent right?

Answer:

Patent right is an exclusive license or right conferred to an organisation to manufacture particular goods or services under a specific technology.

Question 14

What is a price taker company?

Answer:

Price taker companies are those companies that have no option but to accept the price determined by the industry.

Question 15

What is a price maker company?

Answer:

A price maker company is that company which can influence the price of a product on its own.

Question 16

What is cooperative oligopoly?

Answer:

A cooperative oligopoly is a situation of the market where the different companies cooperate with each other in fixing the price of goods or services.

Question 17

What are the advertisement costs?

Answer:

An advertisement cost is a cost which a company has to suffer while promoting their products and services and result in sales. Advertisement can be done through newspaper, TV, radio, magazine, etc.

Question 18

What is unusual or abnormal profit?

Answer:

Unusual or abnormal profits are those when the Total revenue > Total cost.

Question 19

Define the implication of the following:

  1. Interdependence between firms in Oligopoly
  2. A large number of sellers in perfect competition

Answer:

(1) Oligopolies are composed of a few large companies and these companies’ actions can affect the market condition. Therefore, the other contender company will be aware of the market actions and will respond appropriately. Mutual interdependence survives when the action of one company has a significant impact on the other company in the industry.

(2) A perfectly competitive market is controlled by the existence of a large number of sellers and buyers of a product, which means that no buyers or sellers will purchase and sell shares that are so large that it will impact the total purchase and sale in the market.

Question 20

The demand curve of Oligopoly is?

(a) Kinked

(b) Vertical

(c) Horizontal

(d) Rising left to Right

Answer:

(a) Kinked

Question 21

The concept of the supply curve is relevant only for?

(a) Oligopoly

(b) Monopoly

(c) Monopolistic Competition

(d) Perfect Competition

Answer:

(d) Perfect Competition

Question 22

In perfect competition, when the marginal revenue and marginal cost are equal, profit is?

(a) Zero

(b) Average

(c) Maximum

(d) Negative

Answer:

(c) Maximum

Question 23

In perfect competition, a company earns an abnormal profit when average revenue exceeds the?

(a) Total revenue

(b) Average cost

(c) Total fixed cost

(d) Marginal revenue

Answer:

(b) Average cost

Question 24

When a negative sloping straight-line demand curve, the total revenue curve is.

(a) A rectangular hyperbola

(b) Convex to the original

(c) An inverted vertical parabola

(d) Concave to the origin

Answer:

(c) An inverted vertical parabola

Question 25

Oligopoly that has identical products is known as.

(a) Pure oligopoly

(a) Collusive oligopoly

(a) Independent oligopoly

(a) None of the above

Answer:

(a) Pure oligopoly

Question 26

Explain the effect of a ‘price ceiling’.

Answer:

The direct effect of a price ceiling may be termed as black marketing. It is a state, where the product under the government’s authority is illegally sold at higher rates than the price fixed by the government. It might be possible when a buyer is willing to pay higher rates for the product than not to buy.

Question 27

A market for a good is in equilibrium. Demand for good ‘increases’. Explain the chain effects of this change.

Answer:

The chain effects of this change are:

1. When the price is constant, surplus demand emerges

2. This also increases the competition among the buyers insisting them to raise the price

3. A rise in the price of a product cause fall or decrease in the demand and expansion or rise in supply

4. The cost of the product continues to increase until the market is balanced at a greater price

Stay tuned to BYJU’S for more CBSE Class 11 Economics Important Questions, question papers, sample papers, syllabus and Commerce notifications.

Leave a Comment

Your Mobile number and Email id will not be published. Required fields are marked *

*

*