Calculating Profits

Q.

Gross Profit Less Expenses Is Known as:

1. Drawings

2. Net profit

3. Net Turnover

4. Cost of goods sold

Q. Explain the implication of the following.
(a) Freedom of entry and exit of firms under perfect competition
(b) Non-price competition under oligopoly.

Q. Under perfect competition, the firm will be earning normal profit in the long-run because of which condition?

1. Large number of buyers and sellers
2. Perfect market
3. Freedom of entry and exit
4. Homogeneous commodity

Q. Distinguish between 'Total Cost and Total Revenue'.

Q. A competitive firm cannot earn supernormal profit in the long run because __________.

1. both (A) and (B)
2. LMC = LMR
3. new firms are to be attracted to the industry
4. the entry of new firms is restricted

Q. When price line is below minimum LRAC, firm produces _____________.

1. output level where price line intersects LRMC
2. none of the above
3. zero output
4. output level where LRAC intersects LRMC

Q. There are no barriers in the way of firms leaving or joining industry in a perfectly competitive market. Explain the significance of this feature.

Q. In the long run a firm in perfect competition market will have ___________.

1. normal profit
2. super normal profit
3. just revenue equal to cost
4. none of these

Q. Long-term equilibrium of an industry under a perfectly market conditions is achieved when ________.

1. all the firms are earning normal profit
2. there is no further entry or exit of firms from the industry
3. all of the above
4. all the firms are in equilibrium

Q. In the short period, a perfectly competitive firm earns ________.

1. normal profit
2. super normal profit
3. can incur losses
4. all the above

Q. A firm under perfect competition gets only a break-even price in the long run.

1. True
2. False