PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A.

FOUNDATION : – 1 –

CHAPTER – 4
PRICE DETERMINATION OF DIFFERENT MARKETS
UNIT-1: MEANING & TYPES OF 6. Which one of the following is not element of
MARKETS market?
Meaning of Market (a) buyer

1. In Economics, the term ‘markt refers to a : (b) Service

(a) Place where buyer and seller bargain a (c) Firm

product or service for a price. (d) Bargaining for price
(b) Place where buyer does not bargain (June 2023)
(c) Place where seller does not bargain 7. Market consists of :

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(d) None of the above (a) Buyer and Seller

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2. Which one is not a part of the elements of a (b) One price for one product at a given time
market?

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(c) Both (a) and (b)
(a) Buyers and sellers

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(d) None
(b) A product or service
(c) Bargaining for a price
(d Volume of business
A
R HY Classification of Market
8.
(CA CPT May 2019)

The Price Elasticity of demand of a firm in

D
(Jan. 2021) Pure Competition is:

A
3. A market is a network of dealings between (a) Infinite

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which of the following? (b) Finite

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(a) Dealers and wholesellers (c) Large
(b) Buyers and sellers (d) Small
(c) Owners and channel partners 9. On the basis of nature of transaction, a mar-
(d) Sales man and competitors ket may be classified into:
(June 2022) (a) Wholesale and retail market
4. Which of the following is not an element of a (b) Cash and forward rate
market? (c) National and international market
(a) Knowledge about market condition (d) Regulated and unregulated market
(b) No bargaining for a price (Nov. 2020)
(c) A product or service 10. When commodities are sold in small quanti-
(d) Buyers and seller ties are called as which of the following?
(July 2021) (a) Wholesale market
5. Which of the following is not the element of (b) Regulated market
markets? (c) Spot market
(a) A product /service (d) Retail market
(b) Bargaining of price 11. For market the essential condition is:
(c) Knowledge about market conditions (a) A particular geographical place
(d) Advertisement (or) brand awareness (b) Control of the government

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 2 –
(c) Close contact between buyers and sellers (c) Bricks and sand
(d) None of these (d) Supply of capital
12. Who conceived the ‘time element’ in markets? (June 2022)
(a) Alfred Marshall 18. On the basis of nature of transactions, market
(b) Adam Smith can be classified a ___________

(c) Robert Malthus (a) Wholesale market and retail market

(d) Schumpeter (b) Future market and spot market

13. On the basis of nature of transaction, a mar- (c) Regulated market and unregulated market
ket can be classified into which of the follow- (d) Money market and Future market
ing? 19. Example of a commodity said to have an In-
(a) Cash and forward market ternational market is ?
(b) National and international market (a) PerishableGoods

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(d) Retail and wholesale market
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(c) Organized and unorganized market (b) High Value and Small Bulk Comodies
(c) Product whose trading is restricted by gov-

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(June 2023) ernment.

A A
14. _____________ conceived the “Time” element 20. Stock exchange market is an example of :

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in markets and on the basis of this markets (a) Unregulated market
and on the basis of this markets are classified (b) Regulated market
into very short period, Short-Period, Long-
(c) Spot market

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Period & Very Long period.
(d) None of the above

A
(a) Alfred Marshall
21. The market for ultimate consumer is known as :

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(b) Schumpeter
(a) Wholesale market

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(c) Adam Smith
(b) Regulated market
(d) Paid Samuelson
(c) Unregulated market
15. On the basis of nature of transactions, a mar-
ket may be classified into: (d) Retail market

(a) Spot market and future market (CA CPT Dec. 2016)

(b) Regulated market and unregulated market 22. The __________ is the market where the
comodities and bought and sold in bulk or large
(c) Wholesale market and retail market
quantities, Transactions generally take place
(d) Local market and national market between trades.
(CA CPT June 2017) (a) Wholesale market
16. Secular period is also known as : (b) Regulated market
(a) Very short period (c) Local market
(b) Short period (d) retail market
(c) Very long period (July 2021)
(d) Long period 23. ___________ are those markets in which firm
(Jan. 2021) buy the resources they need (Land, Labour,
17. Very short period market is suitable for which Capital and entrepreneurship) to produce
of the following products ? goods and services.

(a) Gold and silver (a) Regular Markets

(b) Vegetable and fruits (b) Producer’s Markets

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 3 –
(c) Product Markets 30. The classification of market on the basis of
(d) Factor Markets Area does not include___________.

24. A market where goods are exchanged for (a) Local Market
money payable either immediately or within (b) Regional Market
short span of time is : (c) Spot Market
(a) Forwarded market (d) National Market
(b) Regulate market 31. Monopsony means:
(c) Wholesale market (a) Where there are large firms
(d) Spot market (b) There is a single buyer
(Nov. 2020) (c) Small number of large buyers
25. When the commodities are sold in small quan- (d) Single seller and single buyer
tities, it is called as :

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(CA CPT May 2019)
(a) Retail Market
32. Which of the following Competition is char-

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(b) Wholesale Market acterized by many sellers, who are selling iden-

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(c) Small Market tical products to many buyers?

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(d) Local Market (a) Perfect Competition

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26. Stock exchange is example of : (b) Monopolistic Competition
(a) Regulated Market (c) Monopoly
(b) Spot Market (d) Oligopoly
(c) Forward Market
(d) Retail Market

AD 33. In ____________, there are few sellers who are

selling competing products to many buyers.

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27. Generally, perishable goods like butter, eggs,

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milk, vegetables etc. will have.
(a) Regional market
(b) Local market
(a) Monopoly
(b) Perfect Competition
(c) Oligopoly
(d) None of these
(c) National market 34. The degree of control is very considerable in
(d) None of the above case of :

28. ___________ implies that the time available is (a) Monopoly

adequate for altering the supplies by altering (b) Perfect Competition
even the fixed factors of production. (c) Oligopoly
(a) Very Short Period (d) None of these
(b) Short Period
(c) Long Period Concepts of TR, AR & MR
(d) Secular Period
35. Average Revenue is also known as
29. A market where there is no restrictions on the
(a) Price
transactions is called as :
(b) Income
(a) Regulated market
(c) Revenue
(b) Unregulated market
(d) None of the above
(c) Spot market
36. Average revenue curve is also known as :
(d) Future market
(a) Profit Curve
(Nov. 2019)
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 4 –
(b) Demand Curve (a) ˆ10
(c) Average Cost Curve (b) ˆ11
(d) Indifference Curve (c) ˆ9
37. Total revenue curve is : (d) ˆ20
(a) Positively Sloped (CA CPT May 2019)
(b) Negatively Sloped 44. If a seller obtains ˆ6,000 after selling 50 units
(c) Downward Sloped and ˆ6,204 after selling 53 units, then mar-
ginal revenue will be:
(d) Vertical to X axis
(a) 68
38. Average revenue curve also called as :
(b) 118
(a) Firm’s demand curve
(c) 120
(b) Total revenue curve
(d) 204

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(c) Marginal revenue curve
(Nov. 2020)

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(d) Quantity curve
45. Average revenue is equal to :
(Dec. 2021)

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(a) The change in Price due to a one unit change
39. Another name of average revenue curve

A A
in output
is___________.

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(b) Nothing but price of one unit of output
(a) Production possibility curve
(c) The change in quantity divided by change
(b) Demand curve
in price

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(c) Supply curve
(d) Graphically it denotes the firm’s supply
(d) Indifference curve

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curve
(June 2023)

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46. If a seller obtains 3,000 after selling 50 units
40. Average revenue is the revenue earned:

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and 3,100 after selling 52 units, then marginal
(a) Per unit of input revenue will be :
(b) Per unit of output (a) 59.62
(c) Different units of input
(b) 50.00
(d) Different units of output
(c) 60.00
41. Average Revenue can be symbolically written
(d) 59.80
as:
(CA CPT Dec. 2013)
(a) MR/Q
47. Assume that when price is 40, the quantity
(b) Price×quantity
demanded is 15 units and when price is 38, the
(c) TR/Q
quantity demanded is 16 units. Based on this
(d) None of the above information, what is the marginal revenue re-
42. Total profits are maximized when: sulting from an increase in output from 15
(a) TR equals TC units to 16 units.

(b) The TR curve and the TC curve are parallel (a) 36

(c) TC exceeds TR (b) 32

(d) Exceeds TC (c) 24

43. When price is ˆ20, Quantity demanded is 10 (d) 08

units and price is decreased by 55 then quan- (Nov. 2019)
tity demand increased by 10% then Marginal 48. Marginal revenue can be-defined as the change
revenue is _________ in total revenue resulting from the:
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 5 –
(a) Purchase of an additional unit of a commod- (c) ˆ10
ity (d) ˆ1
(b) Sales of an additional unit of a commodity 54. Another name of demand curve is :
(c) Sale of subsequent units of a product (a) MR curve
(d) None of the above (b) AR curve
49. Suppose a seller realises ˆ100 by selling 10th (c) TR curve
unit of commodity and ˆ120 by selling 11th
(d) MC curve
unit. What is the MR of 11th Unit?
(June 2022)
(a) 100
55. Marginal revenue curve slopes __________
(b) 120
and marginal cost curve slopes __________.
(c) 20
(a) Downwards, upwards
(d) 10

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(b) Downwards, downwards
(June 2023)
(c) Upwards, upwards

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50. MR of nth uit is given by :
(d) Downwards, no change

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(a) TRn/TRn-1
(Dec. 2021)

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(b) TRn+TRn-1
56. Answer the following questions:

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(c) TRn-TR
Units 0 1 2 3 4 5 6
(d) All of these
Total 100 180 250 310 360 400 430
(CA CPT Feb. 2008)

D
Revenue
51. When a firm produces 7 units of production Find the marginal revenue at 5th unit is :

A
and the TR is ˆ42 after raising the production

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(a) 40
to 8 units TR reached ˆ46 marginal revenue
(b) 45

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will be:
(a) 5 (c) 55

(b) 6 (d) 60

(c) 4 (Nov. 2020)

(d) 8 57. Assume that at price 100 per unit, the quan-
tity demanded is 900 units. When price falls to
(Nov. 2020)
90 the quantity demanded increases to 100
52. Total revenue curve initially increases at a di- units. Compute the marginal revenue.
minishing rate due:
(a) ˆ0
(a) Diminishing average revenue curve
(b) ˆ10
(b) Diminishing marginal revenue curve
(c) ˆ90
(c) Diminishing average fixed revenue curve
(d) ˆ100
(d) Diminishing costs curve
(June 2021)
53. Assume that when price is ˆ20, the quantity
58. A seller realizes ˆ25,000 after selling 15 units
demanded is 9 units, and when price is ˆ19,
and he realizes ˆ35,000 after selling 25 units,
the quantity demanded is 10 units. Based on
what is the marginal revenue here ?
this information, what is the marginal revenue
resulting from an increase in output from 9 (a) ˆ2,500
units to 10 units ? (b) ˆ100
(a) ˆ20 (c) ˆ1,000
(b) ˆ19
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 6 –
(d) ˆ3,500 (c) 12,050
(July 2021) (d) 18,550
59. The quantity demanded of pens increases from (Nov. 2020)
15 to 20, if there is 25% decrease in the price. 64. Which of the following statement is not cor-
If the price initially is ˆ20/- per pen then, what rect?
is the marginal revenue resulting from an in-
(a) Marginal revenue is the revenue of an addi-
crease in the quantity demanded of pens from
tional unit sold of a commodity
15to 20?
(b) Total revenue is obtained by multiply the
(a) 15
total number of units sold with the price per
(b) 20 unit of a commodity.
(c) 0 (c) Average revenue is the revenue earned per
(d) 5 unit of an output.

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60. Assume that when price is 10, the quantity (d) Total revenue is the sum total of average
demanded is 5 units and when price is 12 the revenue

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quantity demanded is 4 units. Based on this

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information, what is the Marginal Revenue
(June 2022)
65. The amount realized by the firm by selling cer-

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resulting from increase in output from 4 units

A
tain units of commodity is called as :

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to 5 units.
(a) Average Revenue
(a) ˆ5
(b) Cost of Operations
(b) ˆ4

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(c) Total Revenue
(c) ˆ2

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(d) Marginal Revenue
(d) ˆ3

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66. ABC Ltd. realizes total revenue of ˆ6,000 by
61. Assume that when price is ˆ20, the quantity
the sale of 120 units and ˆ6050 by the sale of

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demanded is 15 units, and when price is 18,
121 units. What is the average revenue when
the quantity demanded is 16 units. Based on
ABC Ltd. sells 121 units.
this information, what is the marginal revenue
resulting from an increase in output from 15 (a) 50
units to 16 units? (b) 100
(a) 18 (c) 6,000
(b) 16 (d) 6,050
(c) 12 (Nov. 2020)
(d) 28
62. Total revenue = Relationship of AR, MR TR &
(a) Price×quantity Elasticity of DD
(b) Price×income 67. When TR is at its peak then MR is equal to :
(c) Income × quantity (a) Zero
(d) None of the above (b) Positive
63. When ABC Ltd. sells 130 units @50 P.U. then (c) Negative
total revenue will be: (d) None of the above
(a) 6,000 (CA CPT May 2019, Jan. 2021)
(b) 6,500 68. When the price of a commodity is 20, the quan-
tity demanded is 9 units and when its price is

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 7 –
19, the Quantity demanded is10 units. Based (c) Negative
on this information what will be the marginal (d) More than one
revenue resulting from an increase in output
(Nov. 2019)
from 9 units to 10 units?
73. As a price of ˆ20 the quntity demanded is 10
(a) ˆ20
units. With 5% decrease in price the demand
(b) ˆ19 increases by 10%. The marginal revenue for
(c) ˆ10 the 11the unit will be:
(d) ˆ01 (a) ˆ20
(CA CPT Dec. 2014) (b) ˆ12
69. Which one of the following expressions is cor- (c) ˆ9
rect for Marginal Revenue? (d) ˆ11
1 e  (Nov. 2019)

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(a) MR = AR  e 
  74. Which of the following is correct?

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(b) MR = TRn-TRn+1 9a) MR = AR (e-1)/e

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(b) MR = AR (e+1)/e
 TR

A
(c) MR =  Q

A
(c) MR=AR (1-e)/e

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(d) None of the above
TR
(d) Mr = Q (CA CPT Nov. 2018)
75. When e = 1 then MR is :

D
(CA CPT June 2016)
(a) Positive

A
 1
70. Given the relation Mr = P 1  e  (b) Zero

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 
(c) One

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if e < 1, then :
(d) Negative
(a) MR < 0
76. When e < 1 then MR is :
(b) MR > 0
(c) MR = 0 (a) Negative
(d) None of these (b) Zero
(CA CPT June 2011) (c) Positive

 1 (d) One
71. Given the relation MR=P 1  e  ,
  77. When e > 1 then MR is :
if e > 1, then; (a) Zero
(a) MR > 0 (b) Negative
(b) MR < 0 (c) Positive
(c) MR = 0 (d) One
(d) None 78. Demand for a product is unitary elastic then :
(CA CPT Feb. 2007) (a) MR = 0
72. When Total Revenue (TR) is at the peak Mar- (b) MR > 0
ginal Revenue is equal to : (c) MR < 0
(a) Zero (d) None of the above
(b) Positive (CA CPT May 2019)

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 8 –
79. If there is a change is both demand & supply e
but the change in demand is less than the (c) MR = AR ×
e 1
change in supply, then what is the influence
on price. (e  1)2
(d) MR = AR×
e
(a) No change
85. Marginal revenue will be positive where price
(b) increase
elasticity of demand is
(c) Decrease
(a) Zero
(d) Uncertain change
(b) More than one
80. Given, AR = 5 and Elasticity of demand = 2 (c) Loss than one
Find MR.
(d) Equal to one
(a) +2.5 (July 2021)
(b) - 2.5 86. The Marginal Revenue corresponding to the

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(c) + 1.5 middle point of the demand curve (or AR

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(d) +2.0 Curve) will be:

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(a) Zero

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(CA CPT June 2013 Jan. 2021)

A
81. What should firm do when Marginal revenue (b) One

A
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is greater tha marginal cost ?
(a) Firm should expand output
(b) Effect should be made to make them equal
(c) Loss than one
(d) More than one
87. Total revenue curve initially increases at a di-

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(c) Prices should be covered down minishing rate due to :

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(d) all of these (a) Diminishing average revenue curve

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(CA CPT May 2007) (b) Diminishing marginal revenue curve

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82. Suppose a firm is producing a level of output (c) Dimnishing average fixed revenue curve
such that MR>MC, what should be firm do to (d) Diminishing cost curve
maximize its profits ? (Jan. 2021)
(a) The firm should do nothing
(b) The firm should hire less labour Behavioural Policies
(c) The firm should increase price
88. According to Behavioural Principles:
(d) The firm should increase output.
(a) A firm should not produce at all if its total
83. In a Straight line demand Curve the price elastic- variable costs are not met
ity at the middle point is equal to ___________.
(b) A firm will be making maximum profits by
(a) 0 expending output to the level where marginal
(b) 1 revenue is equal to marginal cost
(c) > 1 (c) Both (a) and (b)
(d) < 1 (d) None of these
84. Which one of the following is Correct ? (CA CPT May 2019)
e 1 89. Time element was conceived by :
(a) MR = AR ×
e (a) Adam Smith
e 1 (b) Alfred Marshall
(b) MR2 = AR2 ×
e (c) Pigou
(d) Lionel Robinson
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 9 –
90. In very short period market : 93. As per Behavioural Principles. It will be prof-
(a) Supply changes but demand remains same itable for the firm to expand output whenever
Marginal __________ is ___________ than
(b) Supply changes but price remains same
Marginal ____________.
(c) Supply remains fixed
(a) Cost, greater, Revenue
(d) Supply and demand both changes
(b) Revenue, greater, Cost
(CA CPT May 2018)
(c) Revenue, less, cost
91. In the long run :
(d) None of the above
(a) Only demand can change
94. As per Behavioural Principle, which one of fol-
(b) Only supply can change lowing Statement is Correct?
(c) Both demand and supply can change (a) If any unit of production adds more to rev-
(d) None of these enue than to Cost, that cost, that unit will

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(CA CPT Feb. 2008) increase Profits
(b) If any unit of production adds more to Cost,

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92. A Firm should ___________ if the total rev-
enue from its product does not _________ its than to revenue it will decrease profits.

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total valuable cost. (c) Profits will be maximum of the point where

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(a) Produce, equal additional revenue from a uni equals to its

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additional cost.
(b) Produce at all ,equal or exceed
(d) All of the above.
(c) Not Produce, equal

D
(d) Not Produce, equal or exceed

UNIT 2 : DETERMINATION OF PRICES

P A
Determination of Prices - A General View

market price ?
Price
(ˆ)
Demand
(tonnes per
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95. In the table below what will be equilirium

Supply
(tonnes per
96. Equilibrium price for an industry in perfect
competition is fixed through:
(a) Input and output
(b) Market demand and market supply
annum) annum)
(c) Market demand and firm supply
1 1,000 400
(d) None of the above
2 900 500
(CA CPT May 2018)
3 800 600
97. Equilibrium price may be determined
4. 700 700 through:
5. 600 800 (a) Only demand
6. 500 900 (b) Only supply
7. 400 1,000 (c) Both demand & supply
8. 300 1,100 (d) None
(a) 2 (CA CPT May 2007)
(b) 3 98. When Marginal Revenue is Equal to Marginal
(c) 4 cost then __________ ?
(d) 5 (a) Minimum loss
(b) Maximum Profit

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 10 –
(c) Minimum profit Changes in Demand & Supply
(d) Maximum loss 103. When increase in demand is equal to increase
99. The equillibrium quantity increases but the in supply and equilibrium price remains con-
change in equilibrium price is uncertain, when: stant, then what about equilibrium quantity?

(a) Both demand and supply decrease (a) Increases

(b) Demand increase and supply decreases. (b) Decrease

(c) Both supply and demand increase. (c) Remains Constant

(d) Demand increases and supply increases. (d) None of the above

(July 2021) (CA CPT May 2019)

100. From the following table, what will be equi- 104. with a given supply curve, a decrease in de-
librium market price? mand causes:

Price Demand Supply (a) An overall decrease in price but an increase

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(In ˆ) (Tonnes (Tonnes in equilibrium quantity.

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per annum per annum) (b) An overall increase in price but a decrease
in equilibrium quantity

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1 500 200
(c) An overall decrease in price and a decrease

A
2 450 250

A
in equalibrium quantity.

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3 400 300
(d) No change in overall price but a reduction
4 350 350
in equilibrium quantity
5 300 400

D
105. If supply decreases and demand remains con-
6 250 450 stant, then equilibrium price will be:

A
7 200 500 (a) Increases
8
(a) 2
(b) 3
(c) 4
150

UP 550 (b) Decreases

(c) No change
(d) Become Negative
(CA CPT Nov. 2018)
(d) 5 106. Assume that in the market for good Z there is
(CA CPT Nov. 2016) a simultaneous increase in deand and the
quntity supplied. The result will be:
101. The equilibrium is restored automatically
through: (a) An increase in equilibrium price and quan-
tity.
(a) The fundamental working of the market
(b) An decrease in equilibrium price and quan-
(b) Price movements eliminate short-age or Sur-
tity.
plus
(c) An ncrease in equilibrium quantity and un-
(c) Both (a) and (b)
certain effect on equilibrium price
(d) None of these
(d) A decrease in equilibrium price and increase
102. ___________ is the price at which demand for in equilibrium quantity.
a commodity is equal to its supply:
107. An increase in supply with demand remaining
(a) Normal Price the same, brings about.
(b) Equilibrium Price (a) An increase in equilibrium quantity and de-
(c) Short run Price crease in equilibrium price.
(d) Secular Price (b) An increase in equilibrium price and de-
(CA CPT June 2008) crease in equilibrium quantity.
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 11 –
(c) Decrease in both equilibrium price and quan- (a) Excess supply exists
tity. (b) Excess demand exists
(d) None of these (c) Either (a) not (b)
(CA CPT June 2010) (d) Neither (a) Not (b)
108. An increase in supply with unchanged demand (CA CPT Aug. 2007)
leads to :
113. Lower prices in railways for senior citizens is
(a) Rise in price and fall in quantity a typicals example of :
(b) Fall in both price and quantity (a) Concessional pricing
(c) Rise in both price and quantity
(b) Marginal cost pricing
(d) Fall in price and rise in quantity.
(c) Differential pricimg
(CA CPT Nov. 2007)
(d) Subsidized pricing
109. Suppose the technology for producing personal

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(Dec. 2021)
computers improves and, at the same time,
114. If the price of a commodity is fixed, then with

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individuals discover new uses for personal
computers so that there is greater utilisation every increase in its sold quantity the total rev-

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of personal computers. Which of the follow- enue will ____________ and the marginal rev-

A
enue will______________.

A
ing will happen to equilibrium price and equi-

R HY
librium quantity? (a) Increase also increase
(a) Price of increase quantity cannot be deter- (b) Increase remain unchanged
mined (c) Increase decline

D
(b) Price will decrease quantity cannot be de- (d) Remainfixed increase

A
termined
(CA CPT Dec. 2017)

P
(c) Quantity will increase price can not be de-
113. If supply increase in a greater proportion than
termined

U
demand:
(d) Quantity will decrease price cannot be de-
(a) The new equilibrium price and quantity will
termined.
be greater than the original equilibrium price
110. Which of the following may lead to changes in and quantity.
demand and Supply ?
(b) The new equilibrium price will be geater
(a) Which of the following may lead to changes than the original equilibrium price but
in demand and Supply? eqilibrium quantity will be higher.
(a) Income and population (c) The new equilibrium price and quantity will
(b) Tastes and Preferences be lower than the original equilibrium price
(c) Technology & Prices of Factory of Produc- and quantity
tion (d) The basic decision making unit of any firm
(d) All of the above is its ownes.

111. Changes in Demand & Supply may be due to : 119. Suppose that a sole proprietorship is earning
otal revenues of ˆ1,00,000 and is incurring ex-
(a) Increase in Price
plicit costs of ˆ75,000. If the owner could work
(b) Decrease in Price
for another company for ˆ30,000 a year, we
(c) Change in determinations of Demand & would conclude that:
other
(a) The firm is incurring an economic loss
(d) None of the above
(b) Implicit costs are ˆ25,000.
112. If price is forced to stay below equilibrium
(c) The total economic costs are ˆ1,00,000
price then consequently it can be said that:
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 12 –
(d) The individual is earning an economic profit (a) When demnd increases and supply decrease,
of ˆ25,000. the equilibrium price rises but nothing cer-
120. Shift of the Demand curve to the _________ tain can be said about the change in equilib-
means incease in demand. rium quantity.

(a) right (b) When both demand and supply increase, the
equilibrium quantity increases but the
(b) left
change in equilibrium price is uncertain.
(c) downward
(c) When both demand and supply decrease, the
(d) no change in Demand Curve equilibrium quantity increases but the
121. If demand does not change but there is an in- change in equilibrium price is uncertain
crease in supply due to improved technology (d) When demand decreases and supply in-
then: creases, the equilibrium price falls but nthing
(a) Demand Curve will shift to the right. certain can be said about the change in equi-

L
(b) Demand Curve will shift to the Left. librium quantity.

U
(c) Supply curve will shift to the right. (Dec. 2021)

Y
126. There can be simultaneous change in oth de-

H
(d) Supply curve will shift to the Left.
mand and Supply. In that case, the equilibrium

A
122. When the Supply and demand curves shift in

A
price will be:

R HY
the some direction and both demand and Sup-
ply ___________, the equilibrium quantity (a) Increased
_______ but te change in equilibrium price is (b) Decreased
_________.

D
(c) Changes as per the Proportionate change in
(a) Increase, Increase, Uncertain demand & Supply.

A
(b) Increase, Increases, Increases

P
(c) Increase, Increases, decreases
(d) None of the above
127. Identify the effect on equilibrium price and
(d) None of the above

U
123. When demand increases and supply
_________, the equilibrium price ________ but
nothing certain can be said about the change
quantity demanded due to Increase in supply,
with demand remaining the same.
(a) The equilibrium price will group, quantity
demanded will go up.
in equilibrium quantity. (b) The equilibrium price will go down, quan-
(a) Decreases, decreases tity demanded will go up.
(b) Decreases, rises (c) The equlibrium price will go down, quan-
tity demanded will go down.
(c) Decreases, remain constant
(d) The equilibrium price will go up quantity
(d) None of the above
demanded will go down.
124. If demand increases without any correspond-
(Dec. 2021)
ing increase in supply, there will be:
(a) Increase in equilibrium price
(b) Quantity sold increases
UNIT 3: PRICE OUTPUT DETERMI-
NATION UNDER DIFFERENT
(c) Quantity purchased increases
MARKET FORMS
(d) All of the above
Perfect Competition
125. Identify correct possible outcome when the
128. Which of the following is not an essential con-
supply and demand curve shift in the same
dition of pure competition?
direction.

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 13 –
(a) Large number of buyers and sellers (c) No supernormal profits in the long-run
(b) Homogeneous product (d) Inefficient allocation of resources
(c) Freedom of entry (Dec. 2021)
(d) Absence of transport cost 134. _________ is a ideal Market.
(CA CPT Nov. 2006) (a) Monopoly
129. Under per fect competition, price elasticity of (b) Monopolistic
demand of a firm is : (c) Perfect Competition
(a) Large (d) Oligopoly
(b) Slight (CA CPT Dec. 2008)
(c) Infinite 135. A firm, to attain the equilibrium position un-
(d) Extreme der perfect competition has to satisfy which of
the following conditions?

L
(Nov. 2019)
130. Under which of the following forms of market (a) MR > MC

price of its product:

H U
structure does a firm has no control over the

Y
(b) MR = MC
(c) MR curve should cut MC curve from below

A A
(a) Monopoly (d) MC curveshould cut MR curve from below

R HY
(b) Oligopoly (July 2021)
(c) Monopolistic competition 136. Which of these are characteristics of Perfect
(d) Perfect competition Competition.

AD
(CA CPT Feb. 2007)
131. Which of the following is not a coalition of per-
(a) Many Sellers & Buyers
(b) Homogeneous Product
fect competition?

UP
(a) A large number of firms
(b) Perfect mobility of factors
(c) Informative advertising to ensure that
(c) Free Entry and Exit
(d) All of the above
(CA CPT Dec. 2008)
137. Under which of the following market condi-
onsumers have good information. tion both average and marginal revenue are
(d) Freedom of entry and exit into and out of same ?
the market. (a) Perfect competition
(Jan. 2021) (b) Monopoly
132. Which of the following is not a condition of (c) Monopolistic competition
perfect competition?
(d) Oligopoly
(a) A large number of firms.
(June 2023)
(b) Perfect mobility of factors
138. In the market structure, demand curve is also
(c) Informative advertising to ensure that con- known as :
sumers have good information
(a) Marginal cost curve
(d) Freedom of entry and exit into and out of
(b) Average revenue curve
the market.
(c) Total production curve
133. Which is not the characteristic of perfect com-
petition? (d) Marginal utility curve

(a) Large number of sellers (Jan. 2021)

(b) Freedom of entry and exit 139. Price-taking firms that operate in a perfectly
competitive market, are said t be “small” rela-
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 14 –
tive to the market. Which of the following best (a) The firm has some but not complete, con-
describes this smallness? trol over its product price.
(a) The individual firm must have fewer than (b) There are so many buyers and sellers in the
10 employees. market that any individual firm cannot af-
(b) The individual firm faces a downward-slop- fect the market.
ing demand curve (c) Each firm produces a homogeneous prod-
(c) The individual firm has assets of less than uct.
ˆ20 lakhs. (d) There is easy entry into or exit from the
(d) The individual firm is unable to affect mar- market place.
ket price through its output decisions. 144. MR Curve = AR = Demand Curve is a feature
140. Suppose that the demand curve for the XYZ of which kind of Market ?
Co. slopes downward and to the right. We can (a) Perfect Competition
conclude Suppose that the demand curve for

L
(b) Monopoly
the XYZ Co. slopes downward and to the
(c) Monopolistic

U
right.We can conclude:
(d) Oligopoly

H Y
(a) The firm operates in perfectly competitive
(CA CPT Dec. 2008)

A
market

A
143. Which of the following is NOT characteristic

R HY
(b) The firm can sell all that it was to at the es-
tablished market price of a “Price taker”.

(c) The XYZ Co. is not a price taker in the mar- (a) TR = P × Q

D
ket because it must lower price to sell addi- (b) AR = Price
tional units of output.

A
(c) MR = Price

P
(d) The XYZ Co. will not be maximize profits (d) Negatively sloping demand curve
because price and revenue are subject to
146. If a perfect competition firm is making losses

U
change.
then which condition is suitable. to carry on
(Nov. 2019) business as long as it covering variable cost.
141. Conditions for equilibrium of a firm are : (a) Shutdown
(a) MR = MC (b) Expand it’s plant
(b) MC should cut MR from below (c) Do nothing
(c) MR= AR and MC should cut MR from (d) Reduce productions
belwo
(Nov. 2019)
(d) MR=MC and MC should have a positive
147. Demand curve is equal to M.R. curve in which
slope
market?
142. What is true about the perfect competition
(a) Oligopoly
market?
(b) Monopoly
(a) AR = MR= PRICE
(c) Monopolistic Competition
(b) AR = AC = P
(d) Perfect Competition
(c) AR > AC
(CA CPT Dec. 2009)
(d) None
148. A perfect market is characterized by :-
(Nov. 2019)
(a) Existence of large number of buyers and
143. The firm in a perfectly competitive market is sellers
a price-taker. This designation as a price-taker
(b) Homogenous produce
is based on the assuption that:
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 15 –
(c) Perfect knowledge of the market (a) Monopolistic competition
(d) All of the above (b) Monopoly
(CA CPT Dec. 2021) (c) Perfect competition
149. Elasticity of demand under perfect competi- (d) Oligopoly
tion is: (CA CPT Dec. 2014)
(a) One 155. One of the following is not correct about per-
(b) Two fect competition:
(c) Zero (a) Purchase and Sale of homogeneous goods
(d) Infinite (b) Existence of marketing costs
(Nov. 2019) (c) Absence of transportation costs

150. ‘Zero economic profit’ emerges due to which (d) Perfect mobility of factors of production.
of the following condition? (CA CPT June 2015)

cost.

U L
(a) Average revenue is more than average total 156. Under which of the following form of market
structure does a firm have no control over the

Y
price of its production ?

H
(b) Average revenue is just equal to average to-

A
tal cost (a) Monopoly

total cost.
A
R HY
(c) Marginal revenue is just equal to average

(d) Marginal revenue is just equal to marginal

(b) Monopolistic Competition
(c) Oligopoly
(d) Perfect Competition

D
cost. (CA CPT Dec. 2015)

A
(July 2021) 157. The price elasticity of demand for a product is

P
151. One of the essential conditions of Perfect Com- infinite under :
petition is :

U
(a) Perfect competition
(a) Product differentiation (b) Monopolistic competition
(b) Many sellers and few buyers (c) Monopoly
(c) Only one price for identical goods at any (d) Oligopoly
one time (CA CPT June 2016)
(d) Multiplicity of prices for identical product 158. Which of the following markets would most
at any one time. closely satisfly the requirements for a perfectly
(CA CPT June 2014) competition Market ?
152. Agricultural goods markets depict (a) Electricity
charactristic of a competitive market ? (b) Cable television
(a) There are many buyers and sellers in the (c) Cola
market
(d) Milk
(b) The goods offered for sales are largely the
159. The condition for pure competition is:
same.
(a) Large number of buyer and seller free entry
(c) Firms generate small but positive supernor-
and exist.
mal profits in the long run.
(b) Homogeneous product
(d) Firms can freely enter or exit the market.
(c) Both (a) and (b)
153. A market structure in which many firms sell
products that are similar and identical is (d) Large number of buyer and seller, homoge-
known as : neous product, perfect knowledge about the
product.
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 16 –
160. Which of the following statement is not cor- (a) Homogeneous
rect ? (b) Large number of buyer and sellers
(a) under monopoly there is no difference be- (c) Free entry and exist
tween a firm and industry.
(d) Selling cost.
(b) A monopolist may restrict the output and
(CA CPT Nov. 2018)
raise the price.
166. Perfectly Competitive markets have ________
(c) Commodities offered for sale under a per-
transactions Costs.
fect completion will be heterogeneous.
(a) Absolutely no
(d) Product differentiation is peculiar to mo-
(b) Very Low
nopolistic completion.
(c) High
(CA CPT June 2017)
(d) Very high
161. Under which of the following forms of market
167. Which among the following market situation

L
structure does a firm have no control over the
is known as a ‘myth in the market?
price of its product?

U
(a) Duopoly
(a) Monopoly

H Y
(b) Oligopoly
(b) Monopolistic Completion

A
(c) Discriminating

A
(c) Oligopoly

R HY
(d) Perfect Competition
(d) Perfect Competition
(Nov. 2019)
(CA CPT June 2017)
168. Which of the following statement is correct?

D
162. What is incorect about Perfect Competition ?
(a) Price rigidity is an important feature of mo-

A
(a) All Firms are Price takers
nopoly

P
(b) Firms have to accept the price of total de-
(b) Selling cost are possible under perfect
mand & total supply.

U
completion
(c) The assumption of Price taking does not
(c) An industry consists of many firm.
applies to Consumers.
(d) Under perfect completion factor of produc-
(d) All are incorrect
tion do not move freely as these are legal
163. The essential feature f Pure competition is restriction.
_____________.
(CA CPT Nov. 2018)
(a) Presence of Monopoly
169. An industry in economic terminology consists
(b) Absence of Monopoly of ___________ number of __________ firms.
(c) Dual existence of Pure Competition & Mo- (a) Large independent
nopoly
(b) Large dependent
(d) All of the above
(c) Small, independent
164. The Condition of perfect Competition are ful-
(d) Small, dependent
filled to same extent in case of :
170. In case of perfect Competition, the industry is
(a) Agricultural Products
in equilibrium, when ___________.
(b) Financial Instruments
(a) There is enough demand of products in the
(c) Precious Metals market.
(d) All of the above (b) There is enough supply of products in the
165. Which out of these are not a feature of per- market.
fect competition? (c) Total output of the industry is equal to the
total demand.
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 17 –
(d) Total output is less than the quantity de- 177. Which of the following is not a characteristic
manded. of a “price-taker”?
171. Price under perfect competition is determined (a) TR = P×Q
by the : (b) AR = Price
(a) Firm (c) Negatively - sloped demand curve
(b) Industry (d) Marginal Revenue - Price
(c) Government 178. In perfect competition, since the firm is a price
(d) Society taker, the ___________ curve is a straight line.
(CA CPT June 2013) (a) Marginal cost
172. A competition in which many sellers selling (b) Total cost
identical product to a large number of byers. (c) Total revenue
(a) Input and Output (d) Marginal revenue
(b) Oligopoly
(c) Perfect competition

U L (CA CPT June 2008)

179. Average revenue curve is also known as :

H Y
(d) Imperfect competition (a) Profit curve

A A
173. Equilibrium price for an industry in perfect (b) Demand curve

R HY
competition is fixed through:
(c) supply curve
(a) Input and Output
(d) Average cost curve
(b) Market demand and market Supply

D
(CA CPT June 2012)
(c) Market demand and firms supply
180. For a prie-taking firm:

A
d) None of the above

P
(a) Marginal revenue is less than price
(CA CPT June 2013)
(b) Marginal revenue is equal to price.

U
174. Who sets the price of the product under per-
(c) Marginal revenue is greater than price.
fect competition?
(d) The relationship between marginal revenue
(a) Government
and price is indeterminate.
(b) Consumers
181. Which of the following statements is accurate
(c) Sellers regarding a perfectly conpetitive firm?
(d) Both buyers and sellers (a) Demand curve is downward sloping
(CA CPT Dec. 2016) (b) Average revenue need not be equal in price
175. A firm is said to be in equilibrium when (c) Average revenue need not be equal to price
_____________.
(d) Price is given and is determined by the equi-
(a) It is maximizing its profits librium in the entire market.
(b) It has no incentive to expand production 182. What is the shape of perfectly competitive Av-
(c) It has no incentive to contract production erage Revenue Curve?
(d) All of the above (a) Parallel to X axis
176. What is the shape of the demand curve faced (b) Parallel to Y axis
by a firm under perfect competition? (c) Fall from leftto right
(a) Horizontal (d) Rise from left to right
(b) Vertical (CA CPT Nov. 2018)
(c) Positively sloped 183. Under which of the following market struc-
(d) Negatively sloped ture AR of the firm will be equal to MR ?
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 18 –
(a) Monopoly 189. Under which of the following market struc-
(b) Monopolistic Competition ture AR of the firm will be equal to MR?

(c) Oligopoly (a) Monopoly

(d) Perfect Competition (b) Moopolistic Competition

(CA CPT Feb. 2007) (c) Oligopoly

184. Under perfect competition a firm is the : (d) Perfect Competition

(a) Price maker and not price-taker (CA CPT Dec. 2010)

(b) Price-taker and not price-maker 190. Perfectly competitive firm faces

(c) Neither price-maker nor price-taker (a) Perfectly elastic demand curve

(d) None of the above (b) Perfectly melastic demand curve

185. Which of the following is supply curve of com- (c) Zero

L
petitive firm to short run? (d) Negative
(a) Average variable cost curve (CA CPT June 2011)
(b) Average total cost curve
(c) Marginal cost curve

H U Y
191. It will be profitable for a firm to expand out-
put till which of the following conditions?

A A
(d) Average fixed cost curve. (a) Marginal revenue is greater than Marginal

R HY
Cost
(June 2023)
(b) Marginal revenue is less than Marginal Cost
186. Under which Market Situation demand curve
(c) Marginal Cost is greater than Marginal Rev-

D
is linear and parallel to X axis:
enue
(a) Perfect Competition

A
(d) Marginal Revenue is equal to Marginal Cost.

P
(b) Monopoly
(June 2022)
(c) Monopolistic Competition

U
192. Which of the following is not the characteris-
(d) Oligopoly
tic of MR ?
(CA CPT Dec. 2008)
(a) When TR is minimum the MR is zero
187. Price taker firms_____________.
(b) MR can be negative
(a) Do not advertise their product because it
(c) MR slopes downward from left to right
misleads the customers.
(d) MR Curve is below AR Curve
(b) Advertise their roducts to boost the level of
demand. (CA CPT Nov. 2018)

(c) Do not advertise but give gifts along with 193. MR. Curve in perfect competition is :
the sold items to attract customers. (a) Parallel to X-axis
(d) Do not advertise because they can skills as (b) Parallel to Y axis
much as they wish at the prevailing price. (c) Fall from left to right
(CA CPT June 2010) (d) Rise from left to right
188. In which typeof the following market product (CA CPT Nov. 2018)
is homogeneous in nature ?
194. In perfect Competition when the firm is a price
(a) Pure oligopoly taker, which curve among the following will
(b) Pure monopoly be a straight line ?
(c) Pure duopoly (a) Marginal Cost
(d) Pure competition (b) Average cost
(June 2023)
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 19 –
(c) Total Cost (a) Duopoly Competition
(d) Marginal Revenue (b) Prfect Competition
(CA CPT Dec. 2011) (c) Monopolistic Competition
195. The firm in a perfectly competitive market is (d) Natural market
a price taker. this designation as a price taker (June2023)
is based on the assumption that:
200. Which perfect completion firm is described as:
(a) The firm has some but not complete control
(a) Price taker and not price maker.
over its product price.
(b) Price maker and not price taker
(b) Thee are so many buyers and sellers in the
market that any one buyer or seller cannot (c) Neither price maker not price taker
affect teh market. (d) None of the above
(c) Each firm produces a homogeneous prod- (CA CPT June 2017)

L
uct. 201. Which of the following Statement is false as
(d) There is easy entry into or exist from the regards Perfect Competition ?
market place.

H U Y
(CA CPT Dec. 2014)
(a) Firm is said to be in equilirium when it maxi-
mizes its profit

A A
196. It is the amount of revenue from sales which (b The output which gives maximum profit to

R HY
exactly equls the amount of expense. the firm is called equilibrium output.
(a) Shut down point (c) In the equilibrium State, the firm has no in-
(b) Brea-even Point centive either to increase or decrease its out-

D
put.
(c) Profit point

A
(d) Firms in a Competitive market are Price
(d) None

P
Makers.
(Nov. 2019)

U
202. Which is the first order condition for the profit
197. A competitive firm should shut down production of a firm to be maximum ?
if the price is :
(a) AC = MR
(a) Below AVC
(b) MC = MR
(b) Equal to AVC
(c) MR = AR
(c) Below ATC
(d) AC = AR
(d) Equal to ATC
203. For maximum profit, the condition is:
198. Which of the following is incorrect?
(a) AR = AC
(a) Even monopolistic can earn losses.
(b) MR = MC
(b) Firms in perfect competitive market is price
(c) MR = AR
taker.
(d) MC = AR
(c) It isalways beneficial for a farm in a per-
fectly competitive market to discriminative (CA CPT Nov. 2006)
prices. 204 Condition for producer equilibrium is :
(d) Kinked demand curve is related to an (a) TR = TVC
oligopolistic market. (b) MC = MR
(CA CPT Dec. 2016) (c) TC = TAC
199. In which of the following, prices are deter- (d) None of these
mined by market forces of demand and sup-
(CA CPT June 2008)
ply?
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 20 –
205. In market, the price and output equilibrium (d) Indifference Curve
is determined on the basis of : (CA CPT May 2016)
(a) Total revenue and total cost 211. Condition for equilibrium of firm :
(b) Total cost and marginal cost (a) MR = MC
(c) Marginal revenue and marginal cost (b) AR = AC
(d) Only marginal cost (c) MC curve cuts MR curve from below
(CA CPT June 2012) (d) Both (a) and (c)
206. In a perfectly competitive market the demand (CA CPT May 2018)
curve of a firm is :
212. Demand curve s horizontal in the case of :
(a) Elastic
(a) Monopoly
(b) Perfectly elastic
(b) Perfect Competition
(c) Inelastic

L
c) Imperfect Competition
(d) Perfectly inelastic

U
(d) Monopolistic Competition
(CA CPT Dec. 2012)
(CA CPT May 2019)

H Y
207. The firm will attain equilibrium at a point
213. In the short run, a firm operates with a

A A
where MC curve cuts ___________ from be-
____________ amount of capital and must

R HY
low.
choose the level of its _________ so as to
(a) AR curve _____________ profit.
(b) MR curve (a) Fixed, Variable inputs, maximize
(c) AC curve
(d) AVC curve

AD (b) Variable, fixed inputs, minimize

(c) Fixed, Fixed inputs, maximize

UP(CA CPT June 2015)

208. If in a short run perfect competition earn su-
per normal profit then which condition satisfy?
(a) ATC > MC
(d) Valuable, Variable inputs, minimize.
214. At the equilibrium position of a firm Under
perfect Competition, ___________.
(a) The Marginal revenue is equal to the
(b) ATC < MC marginal Cost.
(c) MR < AR (b) The MC Curve cuts MR Curve from below.
(d) MR > AR (c) Both (a) & (b)
(Nov. 2019) (d) Either (a) or (b)
209. Which is the first order condtion for the firm 215. A purely competitive firm’s supply schedule
to maximize the profit. in the short run is determined by :
(a) AC = MR (a) Its average revenue
(b) AC = AR (b) Its marginal revenue
(c) MC = MR (c) Its marginal utility for money curve
(d) MR = AR (d) Its marginal cost curve
(CA CPT Dec. 2016) 216. Which of the following conditions exhibits long
210. Average revenue curve is also known as : run equilibrium of the industry under perfect
competition?
(a) Profit Curve
(a) MR = LMC = AR = LAC = SAC = SMC
(b) Demand Curve
(b) MR = LMC = AR > LAC
(c) Average Cost Curve

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 21 –
(c) MR = LMC=AR<LAC (a) Normal profit
(d) MR= LMC-AR>SAC (b) Net profit
217. In a perfectly Competitive Industry, the MC (c) Gross profit
Curve of a firm depicts: (d) Super normal profit
(a) The industry demand Curve (CA CPT May 2007)
(b) The Firm’s demand Curve 223. In a perfectly competitive market, if MR is
(c) The industry’s supply greater than MC, then a firm should:
(d) The Firm’s supply Curve (a) Increase its production
218. As regards short run supply curve of the firm (b) Decrease its production
in a Competitive market, for Prices (c) Decrease its sales
____________
(d) Increase its sales
Average Variable Cost, the firm will Supply

L
(CA CPT Dec. 2013)
________________ units becase the firm is
224. In a perfectly competitive market, if MR is

U
__________ to meet even its variable Cost.
greater than MC, then a firm should :
(a) Above maximum, Unable

H Y
(a) Increase its production
(b) Below, Zero Unable

A A
(b) Decrease its production

R HY
(c) Above, Maximum, able
(c) Decrease its sales
(d) Below, Zero, able
(d) Increase its sales
219. When the average revenues are more than its

D
average total Cost, the Firm is said to have (CA CPT Dec. 2018)
225. If a perfectly competitive firms earns super nor-

A
earned:
mal profits then __________.

P
(a) Normal Profits
(b) Super Normal Profits (a) AR > MR

(c) Exceptional Profits

(d) Expected Profits
U
220. The total Cost of production is ˆ40,000 (1,000
units). If the firm is selling the product at ˆ45
(b) AR < MR
(c) AR = MR
(d) None of the above
(CA CPT May 2019)
per unit, it is earning__________. 226. When ___________ we know that the firms are
(a) Normal Profits @ ˆ5 Per Unit earning just normal profits.
(b) Normal Profits @ ˆ45 Per Unit (a) AC = AR
(c) Super normal profits @ ˆ5 Per Unit (b) MC = MR
(d) Super Normal profits @ ˆ45 Per Unit. (c) MC = AC
221. Price elasticity of demand by a firm facing per- (d) AR = MR
fect competition is : 227. When ______________ we know that the firms
(a) Large must be producing at the minimum point of the
(b) Very small average cost curve and so there will be produc-
tive efficiency.
(c) Small
(a) AC = AR
(d) Infinite
(b) MC = AC
(Dec. 2021)
(c) MC = MR
222. When AR = ˆ10 and AC = ˆ8 the firm makes
___________ : (d) AR = MR

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PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 22 –
228. A firm encounters its : shutdown point” when (a) Perfect Competition
(a) Average total cost equals price at the profit- (b) Pure Competition
maximizing level of output. (c) Monopolistic Competition
(b) Average variable cost aequal price at the (d) Oligopoly
profit-maximizing level of output.
(Nov. 2020)
(c) Average fixed cost equals price at the profit-
234. A firm will shut down in the short run if :
maximizing level of output.
(a) It is suffering a loss
(d) Marginal cost equals price at the profit-maxi-
mizing level of output. (b) Fixed costs exceeds revenue

229. When ___________ there will be a locative effi- (c) Variable costs exceed revenues
ciency meaning thereby that the cost of the last (d) Total costs exceed revenues
unit is exactly equal to the price consumers are (CA CPT June 2008)
willing to pay for it and so that the right goods

L
235. A firm encounters “shut down” point when
are being sold to the right people at the right price.
____________.

U
(a) MC = MR
(a) Marginal cost equals the price of the profit

H Y
(b) MC = AC maximizing level of output.

A A
(c) MC = AR (b) Average fixed cost equals the price at the

R HY
(d) AR = MR profit maximizing level of output.
230. A firm will close down in the short period, if its (c) Average variable cost equals the price at the
AR is less than: profit maximizing level of output
(a) AC
(b) AVC

AD (d) Average total cost equals the price at the

profit maximizing level of output.

P
(c) MC (CA CPT Dec. 2011)

U
(d) None of the above 236. In a competitive market, if price exceeds Av-
erage Variable Cost (AVC) but remains less
(CA CPT June 2014)
than Average Cost (AC) at the equilibrium, the
231. A competitive firm in the short run incur losses. firm is :
the firm continues production, if :
(a) Making a profit
(a) P> AVC
(b) Plannng to quit
(b) P = AVC
(c) Experiencing loss but should continue pro-
(c) P < AVC duction.
(d) P > AVC (d) Experiencing loss but should discontinue
(CA CPT Nov. 2006) production.
232. If under perfect competition, the price line lies (CA CPT Dec. 2012)
below the average cost curve, the firm would: 237. A competitive firm in the short run incurs
(a) Make only Normal profits losses. The firm continues production if :
(b) Incur losses (a) P > AVC
(c) Make abnormal profit (b) P = AVC
(d) Profit cannot be determined (c) P < AVC
(CA CPT Nov. 2007) (d) P  AVC
233. In Which market prices are determined by the (CA CPT May 2018)
market forces of demand and supply? 238. In perfect Competition, If a firm is unable to
meet its average variable Cost, it will be bet-
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 23 –
ter for it to shut-down. this shut- (a) It operates at its minimum average cost
down____________. (b) The price is more than the average fixed cost
(a) is permanent (c) The marginal cost is greater than marginal
(b) is temporary revenue
(d) The fixed cost is lower than the total vari-
(c) May be temporary as the firm resumes pro-
able cost.
duction when the market price rises
(CA CPT Dec. 2014)
(d) none of the above
245. “I am making a loss, but with the rent I have
239. The Firm can be in an equivilibrium position to pay, I can’t afford to shut down at this point
and still makes losses. this is the situation of time.” If this entrepreneur is attempting to
where ____________. maximize profits or minimize losses.
(a) AR = AC (a) Rational, if the firm is covering its variable
(b) AR > AC cost.

L
(c) AR < AC (b) Rational, if the farm is covering its fixed cost
(d) Either (b) or (c) (c) Irrational, since plant clsing is necessary to

H
there will be no __________
U
240. Under perfect competition, in the long run,

Y
eliminate losses
(d) Irrational since fixed costs are eliminated if

A A
(a) Normal profit a firm shut down.

R HY
(b) Super normal profits (CA CPT Dec. 2015)

(c) Production 246. In long run equilibrium undue perfect comple-

tion is/are satisfied by which condition.

D
(d) Costs.
(a) MC = MR

A
241. In the long-run equilibrium of a competitive
(b) AC = AR

P
market, firms operate at :
(c) CMC = LAC = P
(a) The intersection of the marginal cost and

U
(d) All of the above
marginal revenue
(CA CPT May 2018)
(b) Their efficent scale
247. In Long run perfect competitive market in-
(d) Zero economic profit curs:
(d) All of these answers are correct (a) Normal profit
242. Under ___________ market condition, firms (b) Super normal profit
make normal profits in the long run.
(c) Losses
(a) Perfect competition
(d) Constant Returns.
(b) Monopoly
248. A long run Competitive equilibrium of a
(c) Oligopoly perfectly comptitive industry occurs when :
(d) None
(a) All Firms in the indusry are in equilibriu.
(CA CPT Nov. 2006)
(b) No Firm has an incentive either to enter or
243. What are the conditions for the long run equi-
librium of the competitive firm ? exit the industry.
(a) LMC = LAC = P (c) The price of the product is such that the
(b) SMC = SAC = LMC quantity supplied by the indusry is equal to
(c) R = MR the quantity demanded by Conditions hold
(d) All of these true.
(CA CPT Aug. 2007) (d) All above three condition bold true
244. In the long run, which of the following state-
ment is true for a firm in a perfectly competi-
tive industry ?
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 24 –
249. In the long run, under perfect 254. A market structure where there is only a single
competition,there will be optimum allocation buyer and a single seller is called:
of resources and __________________ (a) Duopoly
(a) LAR = LMR (b) Monopoly
(b) LAR = LMR = P (c) Bilateral monopoly
(c) LAR = LMR = P = LMC (d) Oligopsony
(d) LAR = LMR = P = LMC = LAC (Dec. 2021)
250. Price Discrimination cannot persist under the 255. Under which of the following forms of market
following market form: structure does a firm has a very considerable
(a) Perfect Competition control over the price f its product?
(b) Monopoly (a) Monopoly
(c) Monopolistic (b) Monopolistic Competition
(d) Oligopoly

U L (c) Oligopoly
(d) Perfect Competition

H Y
Monopoly (CA CPT Dec. 2013)

A A
251. Monopoly may arise in a product market 256. Under monopoly market conditions MR is

R HY
because _____________. _____________ than the AR.
(c) Preventin (a) Less
(a) a significantly import and resource for the (b) Greater

D
production of the commodity is owned by a (c) Equal

A
single firm.
(d) Variable

P
(b) the government between the firm patent right
(June 2022)
to produce the commodity.

U
252. the distinction between a single firm and an
(c) the costs of production and economies of
Industry vanishes in which of the following
scale makes production by a single producer
market conditions?
more efficient.
(a) Perfect Competition
(d) All of the above
(b) Imperfect Competition
252. Which of the following is not a feature of the
monopoly market ? (c) Pure Competition

(a) Large seller of the product (d) Monopoly

(b) No close-Substitutes (CA CPT June 2014)

(c) Market power 258. Monopoly firm faces which demand curve?

(d) Single seller of the product (a) Downward Sloping

(July 2021) (b) Horizontal

253. Monopolist can determine: (c) Rising

(a) Price (d) All of these

(b) Output (Nov. 2019)

(c) Either price or output 259. Which of the following is the distinguishing
characteristic of oligopolies?
(d) None
(a) A standardized product
(CA CPT Feb. 2008)
(b) The goal of profit maximization

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 25 –
(c) The interdependence among firms 266. Market form in which there is only one buyer
(d) Downward-sloping demand curves faced by and one seller is :
firms. (a) Oligopoly
260. In a monopoly market, a producer has control (b) Duopoly
only over : (c) BilateralMonopoly
(a) Price of the commodity (d) Monopsony
(b) Demand of the commodity (CA CPT May 2018)
(c) Both (a) and (b) 267. Which market is having a single seller and
(d) Utility of the product single Buyer ?
(CA CPT June 2015) (a) Doupoly
261. Which is not characteristic of monopoly? (b) Monopsony
(a) The firm is price-taker (c) Bilateral Monopoly
(b) There is a single firm

U L
(c) The firm produces a unique product
(d) None of the above
(CA CPT Nov. 2018)

H Y
(d) The existence of some advertising 268. Price under monopoly is higher than price

A A
(CA CPT Dec. 2016) under:

R HY
262. Monopoly is undesirable due to : (a) Perfect competition

(a) It has prices higher than competitive FIRMS (b) Monopolistic competition
(c) Oligopoly

D
(b) It produces less output that competitive
firms. (d) Duopoly

(d) All of the above

P A
(c) It discriminates on prices
269. Monopoly is a situation in which :
(June 2022)

U
(CA CPT May 2018) (a) There is a Single Seller of a product.
263. A Monopolist is a : (b) The Product has no close Substitute
(a) Price-maker (c) Both (a) & (b)
(b) Price-taker (d) Neither (a) nor (b)
(c) Price-adjuster 270. Which of the following is the characteristics
(d) None of the above of Monopoly?
264. Under monopoly, the degree of control over (a) Industry is dominating by larger number of
price is : firms
(a) None (b) Freedom to enry and exit
(b) Some (c) No close substitutes
(c) Very considerable (d) Only two firms in the market
(d) None of the above (June 2023)
265. The demand curve of the firm and industry 271. In a Monopolistic market, there are _________
will be same in which form of market: barriers to entry.
(a) Monopolistic competition
(a) No
(b) Perfect completion
(b) Negligible
(c) Monopoly
(c) Light
(d) Oligopoly
(d) Strong
(CA CPT May 2018)
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 26 –
272. Which is the characteristic feature of mo- (a) Falls from left to right
nopoly? (b) Is parallel to X-axis
(a) Homogenous goods (c) Is parallel to Y-axis
(b) Strong barriers to entry (d) Rise from left to right
(c) Perfect competition (CA CPT Nov. 2018)
(d) Perfectly elastic demand curve. 278. The MR curve cuts the horizontal line between
(CA CPT May 2019) Y-axis and demand curve into:
273. Discriminating monopoly implies that the (a) Two unequal parts
monopolist charges different prices for his (b) Two equal parts
commodity :
(c) May be equal or unequal parts
(a) From different group of consumers
(d) None of these
(b) For different uses

L
(CA CPT Feb. 2008)
(c) At different places
279. The demand curve of the firm and industry

U
(d) Any of the above will be same in which form of market:

H Y
274. In which form of the market structure is the (a) Monopolistic Competition

A
degree of control over the price of its product

A
(b) Perfect Competition

R HY
by a firm very large?
(c) Monopoly
(a) Monopoly
(d) Oligopoly
(b) Imperfect Competition

D
(CA CPT June 2009)
(c) Oligopoly
280. Natural Monopoly arises when :

A
(d) Perfect competition

P
(a) There is enormous goodwill enjoyed by a
275. Suppose that the demand curve for the XYZ
firm.

U
Co. slopes downward and to the right. We can
conclude that : (b) There ar sringent legal and regularly require-
ment
(a) The firm operates in a perfectly competitive
market. (c) There are very large Economies of Scale.

(b) The firm can sell all that it wants to at the (d) There are Business Combinations and
established market price. Cartels.

(c) The XYZ Co. is not a price-taker in the mar- 281. When elasticity of demand is Equal to one in
ket because it must lower price to sell addi- monopoly, marginal Revenue will be:
tional units of output. (a) Equal to one
(d) The XYZ Co. will not be able to maximize (b) Greater than one
profits because price and revenue are sub- (c) Less than one
ject to change.
(d) Zero
276. The demand curve of a monopoly firm will be:
(CA CPT Dec. 2010)
(a) Upward sloping
282. If a firm under monopoly wants to sell more,
(b) Downward sloping its average revenue curve will be a ________
(c) Horizontal line.
(d) Vertical (a) Horizontal
277. What is the shape of monopolist Average Rev- (b) Vertical
enue Curve? (c) Downward sloping

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PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 27 –
(d) Upward sloping 287. Which of the following is true, when the firm
(CA CPT Dec. 2016) is at equilibrium?

283. Marginal Revenue is equal to : (a) MC < MR

(a) The change in price divided by the change (b) MC curve cuts the MR curve from below
in output. (c) Both (a) and (b)
(b) The change in quantity divided by the change (d) None of the above
in price. (CA CPT May 2019)
(c) The change in P×Q due to a one unit change 288. A monopolist is able to maximize his profits
in output. when :
(d) Price, but only if the firm is a price searcher. (a) His output is maximum
284. When price is less than average variable ost at (b) He charges a high price
the profit-maximizing level of output, a firm
(c) His average cost is minimum

L
should:
(d) His marginal cost is equal to marginal rev-

U
(a) Produce where marginal revenue equals
enue.
marginal cost if it is operating in the short run.

H Y
(CA CPT Feb. 2007)
(b) Produce where marginal revenue equals

A A
marginal cost if it is operating is the long run. 289. For a monopolist, the necessary condtion for

R HY
equilibrium is :
(c) Shutdown, since it will lose nothing in that
case. (a) P = MC

(d) Shutdown, since it cannot even cover its (b) P = MR = AR

AD
variable costs if it stays in business.
285. At price P1, the firm in the figure would pro-
(c) MR = MC
(d) None

P
duce: (CA CPT June 2008)

U
(a) Zero output 290. A monopolist can fix:
(b) O3 (a) Both price and output
(b) O5 (b) Either price or output
(c) O6 (c) Neither price nor output
(d) None of the above.
(CA CPT Dec. 2012)
291. Under monopoly, which of the following is cor-
rect:
(a) AR and MR both are downward sloping
(b) MR lies halfway between AR and Y-axis
(c) MR can be zero or even negative
286. Profits of the firm will be more at : (d) All of the above
(a) MR = MC (CA CPT June 2013)
(b) Additional revenue from extra unit equals 292. Supernormal profits occur, when :
its additional cost (a) Total revenue is equal to total cost
(c) Both of above (b) Total revenue is equal to variable cost
(d) None (c) Average revenue is more than average cost.
(CA CPT May 2007) (d) Both (a) & (b)

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PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 28 –
294. A monopolist has to determine : (c) same, same, same
(a) Upward (d) different, same, same
(b) Downward (Dec. 2021)
(c) Horizontal to X-axis 300. Price discrimination is one of the features of :
(d) Horizontal to Y-axis (a) Monopoistic competition
295. In case of Monopoly, the firm and industry are (b) Monopoly
____________. (c) Perfect competition
(a) Different (d) Oligopoly
(b) Identical 301. When the monopolist divides the consumers
(c) Similar into separate sub-markets and charges differ-
(d) Opposite to each other ent prices in different sub-markets it is known
as :

L
296. Suppose that, at the profit-maximizing level
of output, a firm finds that market price is less (a) First degree of price discrimination

U
than average total cost, but greater than aver- (b) Second degree of price discrimination.

H Y
age variable cost. Which of the following state- (c) Third degree of price discrimination
ment is correct?

A A
(d) None of the above

R HY
(a) The firm should shutdown in order to mini-
302. Under ___________ the monopolist will fix a
mize its losses.
price which will take away the entire consum-
(b) The firm should raise its price enough to ers’ surplus.

D
cover its losses
(a) Second degree of price discrimination.

A
(c) The firm should move its resources to an-
(b) First degree of price discrimination.
other industry

P
(c) Third degree of price discrimination.
(d) The firm should continue to operate in the

U
short run in order to minize its losses. (d) None of the above

297. If the average cost is higher than the average 303. Price discrimination is related to :
evenue then the firm incurs: (a) Time
(a) Normal profit (b) Size of the purchase
(b) Abnormal profit (c) Income
(c) Loss (d) Any of the above
(d) No profit, no loss 304. Under monopoly price discrimination depends
298. Price discrimination will be profitable only if upon:
the elasticity of demand in different sub-mar- (a) Elasticity of demand for commodity
kets is : (b) Elasticity of supply for commodity
(a) Uniform (c) Size of market
(b) Different (d) All of the above
(c) Less (CACPT Aug. 2007)
(d) Zero 305. Which one of the following statement is
299. Price discrimination refers to the practices of Incorrect?
charging __________ prices for __________ (a) Competitive firms are price takers and not
units of the _________ commodity. price makers.
(a) different, different, same (b) Price discrimination is possible in monopoly
(b) same, different,same only.
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 29 –
(c) Duopoly may lead to monopoly 311. A discriminating monopolist to reach equilib-
(d) Competitive firm always seeks to discrimi- rium position, his decision on total output de-
nate prices. pends upon:

(CA CPT Dec. 2010) (a) How much total output should be produce?

306. For a discriminating monopolist the condition (b) How the total output should be distributed
for equilibrium is : between the two sub-market ?

(a) MR>MC (c) Both (a) and (b)

(b) MR1 = MR2 (d) None

(c) MRa = MRb = MC (CA CPT May 2019)

(d) All of the above 312. Price discrimination is possible only in :

(CA CPT Dec. 2012) (a) Monopoly

307. Price discrimination can take place only in : (b) Perfect Competition

(a) Monopolistic competition

(b) Oligopoly

U L (c) Oligopoly
(d) Monopolistic Competition

H Y
(c) Perfect competition (CA CPT May 2019)

A A
(d) Monopoly 313. Which of the following is not an objective of

R HY
price discrimination?
(CA CPT Dec. 2009)
(a) To enjoy economics of scale
308. Price Discrimination is possible only when.
(b) To dispose off surplus stock

D
(a) Seller is alone
(c) To escape foregn market
(b) Goods are homogeneous

A
(d) To secure equity through pricing

P
(c) Market is controlled by the government
(June 2023)
(d) None of the above.

U
314. Price discrimination will not be profitable, if
(CA CPT June 2010)
the elasticity of demand is __________ in dif-
309. For price discrimination to be successful, the ferent markets.
elasticity of demand for the commodity in the
(a) Uniform
two markets should be :
(b) Different
(a) Same
(c) Less
(b) Different
(d) Zero
(c) Constant
(CA CPT Dec. 2014)
(d) Zero
315. Product differentiation is the condition of
(CA CPT June 2014)
which of the following market?
310. Price discrimination will be profitable only if
(a) Perfect competition
the elasticity of demand in different markets
is : (b) Monopoly

(a) Uniform (c) Monopolistic competition

(b) Different (d) Oligopoly

(c) Less (June 2022)

(d) Zero 316. The price discrimination under monopoly will

be possible under which of the following con-
(CA CPT Dec. 2015)
ditions ?

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PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 30 –
(a) The seller has no control over the supply of (b) To earn maximum profits
his product. (c) To enjoy economies of scale
(b) The market has the same condition all over. (d) To secure equity through pricing
(c) The pice elasticity of demand is different in (CA CPT June 2017)
different markets.
322. In the long run monopolist :
(d) The price elasticity of demand is uniform.
(a) Incur losses
(CA CPT Dec. 2010)
(b) Most earn super normal profits
317. Monopolist can fix him price of goods whose
(c) Wants to shut down
elasticity is :
(d) Earns only normal profits
(a) Less than 1
(CA CPT May 2018)
(b) More than 1
323. Competitive firms in the long run earn:
(c) Elastic

L
(a) Super normal profit
(d) Inelastic

U
(b) Normal profit
(CA CPT June 2011)
(c) Losses

H Y
318. “Price Discrimination” can be best exercised
(d) None

A
by the Seller in :
(a) Oligopoly
(b) Monopoly
A
R HY
(c) Monopolistic competition
(CA CPT Nov. 2018)
324. In the long-run monopolist can :
(a) Incur losses

D
(d) Perfect competition (b) Must earn super normal profits

A
(CA CPT Dec. 2011) (c) Wants to shut-down

P
319. A discriminating monopolist will charge a (d) Earns only normal profits

U
higher price in the market in which the de- (CA CPT June 2009)
mand for its product is : 325. In the long run a monopolist always earns:
(a) Highly elastic (a) Normal profit
(b) Relatively elastic (b) Abnormal profit
(c) Relatively inelastic (c) Zero profit
(d) Perfectly elastic (d) Loss
(CA CPT June 2016) (CA CPT Dec. 2013)
320. Price discrimination is profitable only when: 326. Abnormal profits exist in the long run only
(a) Different markets are kept separate under _____________
(b) Distance between the consumer and the (a) Perfect competition
market is more (b) Monopoly
(c) Elasticity of demand in different markets is (c) Monopolistic competition
different.
(d) Oligopoly
(d) The consumers are segregated on the basis
327. Te Electricity Companies Sell electricity at a
of their purpose of use of the commodity.
cheaper rate for home Consumption in rural
(CA CPT Dec. 2016) areas than for industrial use. It is example of :
321. Which amongst the following is not an objec- (a) Price-discrimination
tive of price discrimination?
(b) Pice-Adjustment
(a) To hold the extra stocks

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PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 31 –
(c) Price-Variability (a) Monopolistic Competition
(d) Price-blased attitude (b) Monopoly
328. Combination of Monopoly Market and (c) Perfect competition
Monopsony Market and Monopsony Market (d) Oligopoly
is called as:
(Nov. 2019)
(a) Duopoly Market
335. Which of the following is an example of mo-
(b) Oligopoly Market nopolistic competition?
(c) Bilateral Monopoly Market (a) De Beers and Diamond
(d) Monopolistic Market (b) Hotels and pub
(c) Microsoft and Window
Imperfect Competition (d) Dell and Lenovo
329. Which of the following is not a characteristic

L
(July 2021)
of a perfectly competitive market?
336. Monopolistic competition differs from perfect

U
(a) Large number of firms in the industry competition primarily because:

H Y
(b) Outputs of the firms are perfect substitutes (a) In monopolistic competition, firms can dif-

A
for one another

A
ferentiate their products.

R HY
(c) Firms face downward-sloping demand (b) In perfect competition firms can differenti-
curves ate their products
(d) Resources are very mobile (c) In monopolistic competition there are rela-

D
330. Firms in a monopolistic market are tively few barriers to entry.

A
price________: (d) In monopolistic competition, there are

P
(a) Takers relatively few barriers to entry.

U
(b) Highly elastic 337. Which market have characteristic of product
(c) Highly inelastic differentiation?

(d) Zero (a) Perfect competition

(CA CPT May 2007) (b) Monopoly

332. Which of the following is not a characteristic (c) Monopolistic Competition

of monopolistic competition? (d) Oligopoly
(a) Ease of entry into the industry (CA CPT Dec. 2008)
(b) Product differentiation 338. Which of the following is not the feature of an
(c) A relatively large number of sellers imperfect competition ?

(d) A homogeneous product (a) Product differentiation

333. In the long run Monopolistic comp. and per- (b) Few sellers
fect comp. are same because of : (c) Homogeneous products
(a) Normal Profit (d) Price wars
(b) Abnormal Production (CA CPT June 2010)
(c) Losses 340. The structure of the toothpaste industry in
(d) None of these India is best described as :

(Nov. 2019) (a) Perfectly competitive

334. Extreme Product differentiation is found in (b) Monopolistic

which market?
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 32 –
(c) Monopolistically competitive (c) For any falling average revenue (or price)
(d) Oligopolistic schedule, the marginal revenue is always
equal to the price of a commodity.
341. Railways charges comparatively cheaper fares
from senior citizens. this is an example of : (d) For any constant average revenue (or price)
schedule, the marginal revenue is equal to
(a) Market analysis
average revenue.
(b) Profit discrimination
(Dec. 2021)
(c) Price discrimination
346. Non-price competition is very popular in :
(d) Demand forcasting
(a) Monopoly market
(Nov. 2020)
(b) Monopolistic competition
342. Which of the following is a correct statement?
(c) Oligopoly market
(a) Firms have to incur a good deal of costs on
(d) Perfect competition
advertising and other sales promotion mea-

L
sures in oligopoly market. (CA CPT June 2013)

U
(b) A monopolist always earns super-normal 347. Selling outlay is an essential part of which of
the following market situations?

H Y
profit.
(a) Perfect Competition

A
(c) Identical products are not found in a com-
petitive market

A
R HY
(d) Close substitute are available under mo-
nopoly.
(b) Monopoly
(c) Monopolistic Competition
(d) Pure Competition

D
(June 2022) (CA CPT June 2014)

A
343. Which of the following statements is incorrect? 348. Which of the following is not a characteristic

P
(a) Under monopoly there is no difference be- of a monopolistically competitive market?
tween a firm and an industry.

U
(a) Free entry and exit
(b) A monopolist may restrict the outut and raise (b) Abnormal profits in the long run
the price.
(c) Many sellers
(c) Commodities offered for sale under a per-
(d) Differentiated products
fect competition will be heterogeneous.
349. Downward sloping and comparatively more
(d) Product differentiation pecular to monopo-
elastic demand curve is found in :
listic completion.
(a) Perfect competition
344. A market structure in which many firms sell
products that are similar but not identical is (b) Monopoly
known as: (c) Monopolistic competition
(a) Monopolistic competition (d) Duopoly
(b) Monopoly 350. Which of the following statements is correct ?
(c) Perfect competition (a) Price rigidity is an important feature of mo-
(d) Oligopoly nopoly.

345. In a perfectly competitive market, which of the (b) Selling costs are possible under perfect com-
following statement is not true with regards petition
to TR, AR, MR ? (c) Under perfect competition factors of produc-
(a) AR represents demand function of a tion do not move freely as there are legal
commodity to the firm restrictions.

(b) MR keeps on falling and touches zero be- (d) An industry consists of many firms.
fore it becomes negative
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 33 –
351. Electricity companies sell electricity as a (a) Oligopoly
cheaper rate for power consumption in rural (b) Monopoly
areas than for industrial eonsumptions. This
(c) Discriminating Monopoly
is an example of :
(d) Perfect Competition
(a) Product discrimination
(CA CPT Nov. 2018)
(b) Perfect competition
357. What is the characteristic of monopolistic
(c) Price discrimination
Competition ?
(d) Price taker
(a) Price elasticity is low for the product con-
(July 2021) cerned.
352. Which market has the concept of ‘group’ equi- (b) Large number of sellers
librium in the long-run?
(c) No degree of control over price
(a) Oligopoly
(d) One buyer

L
(b) Monopoly
(CA CPT May 2019)

U
(c) Monopolistic competition
358. Price varies by attributes such as location or

H Y
(d) Perfect competition by Customer segment is __________ degree of

A
(CA CPT Dec. 2016) Price Discrimination.

A
R HY
353. The long run equilirium outcomes in monopo-
listic competition and perfect competition are
similar, because in both market structures:
(a) First
(b) Second
(c) Third

D
(a) The efficient output level will be produced
(d) Fourth

A
on the long run.
359. Monopolistic Competitive firms __________

P
(b) Firms will be producing as minimum aver-
age cost. (a) are small in size

U
(c) Firms realize all economies of scale (b) have small share in total market

(d) Firms will only earn normal profit (c) are very large in size

(Jan. 2021) (d) Both (a) and (b)

354. In monopolistic competition excess capacity in (CA CPT Dec. 2010)

the firm : 360. The long-run equilibrium out-comes in
(a) Always exists monoplistic competition and perfect competi-
tion are similar, because in both market struc-
(b) Sometimes exists
tures:
(c) Never exists
(a) The efficient output level will be product in
(c) None of the above the long run.
(CA CPT Dec. 2011) (b) Firms will be producing at minimum aver-
355. Which market has the concept of ‘group’ equi- age cost.
librium in the long run ? (c) Firms will only earn a normal profit.
(a) Oligopoly (d) Firms realise all economies of scale.
(b) Monopoly 361. Which of the following statement is incorrect?
(c) Monopolistic competition (a) Even a monopolistic firm can have losses.
(d) Perfect competition (b) Firms in perfectly competitive market are
356. Product differentiation is the main features of price takers
which market?

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PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 34 –
(c) It is always beneficial for a firm in a per- 368. When the industry is dominated by one large
fectly competitive market to discriminate firm it is a type of :
prices. (a) Full oligopoly
(d) Kinked demand curve is related to an (b) Syndicated oligopoly
oligopolistic market.
(c) Organized oligopoly
362. Which of the following statement is incorrect?
(d) Partial oligopoly
(a) Under monopoly there is no difference be-
(Dec. 2021)
tween a firm and an industry.
369. There is efficient allocation of resources in case
(b) A monopolist may restrict the output and
of :
raise the price.
(a) Perfect Competition
(c) Commodities offered for sale under a per-
fect competition will be heterogeneous. (b) Monopoly
(c) Monopolistic Competition

L
(d) Product differentiation is peculiar to mo-
nopolistic competition. (d) All of the above

to perfect competition?

H U
363. Which of the following product market is close

Y
370. “Competition among few” is described in :
(a) Monopoly

A A
(a) Mobile phones (b) Monopsony

R HY
(b) Car (c) Oligopoly
(c) Utensils (d) Duopoly
(d) Agricultural products

D
(Nov. 2020)
(June 2022) 371. In which of the following type of competition,

P A
364. Under which market Condition firms make
only normal profits in the long run?
supernormal profits can be earned both in
short run and long run ?

U
(a) Oligopoly (a) Perfect Competition
(b) Monopoly (b) Monopoly
(c) Monopolistic competition (c) Monopolistic Competition
(d) Duopoly (d) All of the above
(CA CPT Dec. 20211) 372. Which of the following statement is correct?
366. Comparing a Monopoly and Competitive firm (a) Price rigidity is an important feature of mo-
the Monopolist will : nopoly
(a) Produce less and sell at a lower price (b) Selling costs are possible under perfect con-
(b) Produce more and sell at a lower price dition.

(c) Produce less and sell at a higher price (c) Under perfect competition factors of produc-
tion do not more legal restrictions.
(d) Produce zero and sell at a lower price
(d) An industry consists of many firms.
(CA CPT June 2016)
367. There is absolutely no consumer exploitation
in case of : Oligopoly
(a) Perfect Competition 373. Oligopolistic industries are characterized by :

(b) Monopoly (a) A few dominant firms and substantial barri-

ers to entry.
(c) Monopolistic Competition
(b) A few large firms and no entry barriers.
(d) All of the above

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 35 –
(c) A large number of small firms and no entry 378. Market which have two firms are known as :
barriers. (a) Oligopoly
(d) One dominant firm and low entry barriers (b) Duopoly
(Jan. 2021) (c) Monopsony
374. The theory of oligopoly is also called a theory (d) Oligopsony
of ___________.
(CA CPT Nov. 2007)
(a) Individual behaviour
379. Firms in oligopoly are likely to :
(b) Mass behaviour
(a) Try to differentiate its products
(c) Group behaviour
(b) Invest heavily in branding
(d) Dynamic behaviour
(c) Act independently of other firms
375. Product differentiation is the essential feature
(d) Try to be a price maker
of ___________.

L
(Dec. 2021)
(a) Perfect competition

U
380. Smart phones market is an example of :
(b) Monopolistic competition
(a) Perfect competition

H Y
(c) Oligopoly competition
(b) Monopoly

A A
(d) Duopoly competition
(c) Monopolistic competition

R HY
(June 2023)
(d) Oligopoly
376. If firms in the toothpaste industry have the
following market shares, which market struc- (Nov. 2020)

D
ture would best describe the industry ? 381. Non-price competition are observed in which

A
Market Share (% of market) type of following market ?

P
Toothpaste 18.7 (a) Monopoly

U
Dentipaste 14.3 (b) Monopolistic competition

Shinebright 11.6 (c) Duopoly

I can’t believe its 9.4 (d) Oligopoly

not toothpaste (June 2022)
Brighter than white 8.8 382. The market structure in which the number of
Pasty stuff 7.4 sellers is small and there is inter dependence
in decision making by the firms is known as:
Others 29.8
(a) Perfect competition
(a) Perfect competition
(b) Oligopoly
(b) Monopolistic competition
(c) Monopoly
(c) Oligopoly
(d) Monopolistic competition
(d) Monopoly
(CA CPT June 2008)
377. When new firm enter into the market and com-
pete with the existing firm is a situation called 383. Who propounded the price rigidity under
as ___________. kinked demand curve model of oligopoly?

(a) Pure oligopoly (a) Adam Smith

(b) Open oligopoly (b) Karl Marx

(c) Collusive oligopoly (c) Keynes

(d) Competitive oligopoly (d) Paul A. Sweezy

(June 2023) (July 2021)

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 36 –
384. A Kinked Demand Curve is also known as : (c) Rigidity of price
(a) Samuelson’s (d) Price leadership
(b) Chamberlin’s model (Nov. 2020)
(c) Stighler model 391. Pure oligopoly occurs when :
(d) Sweezy’s model (a) The product is homogeneous
385. OPEC is an example of : (b) The product is differentiated
(a) Monopolistic competition (c) The industry is dominated by one large firm
(b) Monopoly (d) The absence of price leadership
(c) Oligopoly (June 2022)
(d) Duopoly 392. “Let and live philosophy” concern from which
(CA CPT Dec. 2008) market?

L
386. Aluminium industry is the example of which (a) Perfect competition
type of oligopoly ? (b) Monopoly
(a) Full oligopoly
(b) Open oligopoly

H U Y
(c) Oligopoly
(d) Monopolistic Competition
(c) Pure oligopoly

A
R HY
(d) Syndicated oligopoly
A (Nov. 2020)
(Nov. 2019)
393. Oligopoly having identical products is :
(a) Pure oligopoly

D
387. Price rigidity concept is related to : (b) Imperfect oligopoly

A
(a) Duopoly (c) Price leadership

P
(b) Monopoly (d) Collusion.

U
(c) Oligopoly (CA CPT June 2009)
(d) Monopolistic competition 394. Non-price competition is observed in which
(June 2022) type of the following market ?

388. One characteristic not typical of oligopolistic (a) Monopoly

industry is : (b) Monopolistic Competition
(a) Horizontal demand curve (c) Duopoly
(b) Too much importance to non-price (d) Oligopoly
(c) Price Icadership (July 2021)
(d) A small number of firms in the industry. 395. Price rigidity is a situation found in which of
389. The structure of the cold drink industry in the following market forms?
India is best described as : (a) Perfect competition
(a) Perfectly competitive (b) Monopoly
(b) Monopolistic (c) Monopolistic competition
(c) Monopolistically competitive (d) Oligopoly
(d) Oligopolistic (CA CPT June 2010)
390. Kinked demand hypothesis is designed to ex- 396. Oligopoly having identical products is known
plain the under oligopolistic market: as :
(a) Collusion between firms (a) Pure oligopoly
(b) Price and output determination (b) Collusive oligopoly
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 37 –
(c) Independent oligopoly (c) Monopoly Market
(d) None of these (d) Monopolistic Market
(CA CPT June 2011) 402. Which of these is the best example of oligopoly?
397. When an oligopolistic firm chooses its level of (a) OPEC
production to maximize its profits then it (b) SAARC
charges a price that is :
(c) WTO
(a) More than the price changed by either mo-
(d) GATT
nopoly or a competitive
(CA CPT June 2011, Nov. 2020)
(b) Less than the price charged by either mo-
nopoly or a competition. 403. In oligopoly, when the industry is dominated
by one large firm which is considered as leader
(c) More than the price charged by a monopoly
of the group, Then it is called :
and less than a competitive market firm
(a) Full oligopoly

L
(d) Less than the price charge by a monopoly
and more than a competitive market firm. (b) Collusive oligopoly

teristic of Oligopoly ?

H U
398. Which one of the following its not a charac-

Y
(c) Partial oligopoly
(d) Syndicated oligopoly

A A
(a) Strategic interdependence 404. When the industry is dominated by one large

R HY
(b) Large number of firms selling close substi- firm it is called :
tutes (a) Full oligopoly
(c) Importance of selling cost (b) Partial oligopoly
(d) Group behaviour

AD (July 2021)
(c) Organized oligopoly
(d) Closed oligopoly

P
399. The market for hand tools (such as hammers

U
and screwdrivers) is dominated by Draper,
Stanley, and Craftsman. This market is best
described as :
(Nov. 2020)
405. When the products are sold through a central-
ized body, oligopoly is known as :
(a) Organized oligopoly
(a) Monopolistically competitive
(b) Partial oligopoly
(b) A monopoly
(c) Competitive oligopoly
(c) An oligopoly
(d) Syndicated oligopoly
(d) Perfectly competitive
406. The demand curve of oligopoly is :
400. When the industry is dominated by one large
(a) Horizontal
firm which is considered as the leader of the
(b) Vertical
group, the market is described as :
(c) Kinked
(a) Open oligopoly
(d) Rising left to right
(b) Perfect oligopoly
(CA CPT Dec. 2008)
(c) Partial oligopoly
407. When new firms of the oligoply market come
(d) Organized oligopoly
to a common understanding or act in collu-
(CA CPT June 2017)
sion with each other either in fixing price or
401. Sweezy’s Model explains the concept of price output or both, then it is called as :
rigidity relating to following market form :
(a) Competitive oligopoly
(a) Oligopoly Market
(b) Syndicated oligopoly
(b) Perfect Competition Market
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 38 –
(c) Collusive oligopoly (d) Loss than the price charged by a monopoly
(d) Partial oligopoly and more than the price charged by a com-
petitive market.
408. When the industry is dominated by one large
firm which is considered or looked upon as the 413. Group behaviour from which market belongs:
leader of the group, the oligopoly is regarded (a) Perfect Competition
as : (b) Monopolistic Competition
(a) Competitive oligopoly (c) Monopoly
(b) Syndicated oligopoly (d) Oligopoly
(c) Collusive oligopoly (Nov. 2019)
(d) Partial oligopoly 414. Pure oligopoly is based on the __________
409. OPEC is an example of : products.
(a) Monopolistic competition (a) Differentiated
(b) Monopoly
(c) Oligopoly

U L (b) Homogeneous
(c) Unrelated

H Y
(d) Duopoly (d) None of the above

A A
410. Which of the following is not a feature of oli- (Jan. 2021)

R HY
gopoly market ? 415. What is/are feature(s) of oligopoly?
(a) Interdependence of the firms in decision (a) Kinked Demand curve
making
(b) Cartel

D
(b) Price rigidity
(c) Downward sloping demand curve

A
(c) Group behaviour
(d) Both (a) and (b) are correct

P
(d) Existence of large number of firms.
(CA CPT May 2018)

U
(CA CPT Dec. 2012)
416. Which of these is the best example of oligopoly?
411. _________ is that situation in which a firm
(a) OPEC
bases its market policy, in part on the expected
behaviour of a few close rivals. (b) SAARC

(a) Oligopoly (c) WTO

(b) Monopolistic Competition (d) GATT

(c) Monopoly (CA CPT May 2018)

(d) Perfect Competition 417. Which one of the following is not the feature
of Oligopoly?
(CA CPT Dec. 2015)
(a) Interdependency
412. When an oligopolistic individually chooses its
level of production to maximize its profits, it (b) Selling cost
charges a price that is : (c) Free Entry
(a) More than the price charged by either mo- (d) One of the above group behariour
nopoly or a competitive market. (CA CPT Nov. 2018)
(b) Less than the price charged by either mo- 418. The theory of oligopoly is a theory of :
nopoly or a competitive market.
(a) Group Behaviour
(c) More than the price charged by a monopoly
(b) Mass Behaviour
and less than the price charged by a com-
(c) Individual Behaviour
petitive market.
(d) Single Behaviour
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 39 –
419. Which one of following statement is incorrect (d) Cartel
as regards oligopoly ? (July 2021)
(a) It is dominated by a Small number of large 425. According to Pigou. First degree price dis-
firms. crimination charges price to :
(b) There is importance of advertising & sell- (a) Individual capacity
ing cost.
(b) Quantities sold
(c) The oligopoly is inter dependendent in de-
(c) Location
cision making of the new firms which com-
prise the industry. (d) None of the above

(d) No new firm is allowed to enter in oligopoly (CA CPT Nov. 2018)
market in any case. 426. In case of oligopoly, the price leader sets the
420. Price leadership is the characteristic of : price in such a manner that it allows same prof-
its to the followers also. This type of Price lead-

L
(a) Oligopoly
ership is by _____________.
(b) Monopoly

U
(a) Low Cost Firm
(c) Perfect competition

H Y
(b) Low Share Firm
(d) Discriminating Monopoly

A
(c) High Cost Firm

A
(CA CPT Nov. 2018)

R HY
(d) Dominating Profit Firm
421. The demand curve of an oligopolist is :
427. In the context of oligopoly, the kinked demand
(a) Determinate hypothesis is designed to explain :

D
(b) Indeterminate (a) Price and output determination

A
(c) Circular (b) Price rigidity

P
(d) Vertical (c) Price leadership

U
(CA CPT June 2014) (d) Collusion among rivals
422. An oligopolistic firm has to behave strategi- 428. The elasticity of demand on the upper segment
cally when it makes a __________ about its of a kinked demand curve will be _________.
__________.
(a) Infinite
(a) decision, price
(b) Equal to one
(b) price, output
(c) Greater than one
(c) policy, material
(d) Less than one
(d) None of these
(June 2022)
423. Entering into collusion or forming a cartel is
429. The kinked demand curve model of oligopoly
generally considered __________.
assumes that:
(a) Legal
(a) The response (of consumers) to a price in-
(b) Illegal crease is less than te response to a price de-
(c) Desirable crease.
(d) Mandatory (b) The response (of consumers) to a price in-
424. A group of firm that explicitly agree (collude) crease s more than the response to a price
to coordinate their activities is called a/an. decrease.

(a) Oligopsony (c) The elasticity of demand is constant regard-

less of whether price increase or decreases.
(b) Duopoly
(c) Monopsony

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PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 40 –
(d) The elasticity of demand is perfectly elastic (d) A decrease in the price by the firm is not
if price increases and perfectly inelastic if followed by ohers.
price decrease (Dec. 2021)
430. Collusion is impossible if an industry has : 436. The elasticity of demand on the upper segment
(a) Only few number of firms of a kinked demand curve will be _________.
(b) Only two firms (a) Infinite
(c) Limited number of firms (b) Equal to one
(d) Large number of firms (c) Greater than one
(Nov. 2020) (d) Less than one
431. Kinked demand curve hypothesis is given by : 437. Kinked demand hypothesis is designed to ex-
(a) Alfred Marshal plain _________ in context of oligopoly.

(b) A. C. Pigou (a) Price and output determination

(c) Sweezy
(d) Hicks & Allen

U L (b) Price regidity

(c) Collusion between firm

H Y
(CA CPT Aug. 2007) (d) All of the above

A A
432. Kinked demand curve is observed in : (CA CPT Dec. 2009, Jan. 2021)

R HY
(a) Duopoly market 438. In oligopoly, he kink on the demand curve is
more due to :
(b) Monopoly market
(a) Discontinuity to MR

D
(c) Competitive market
(b) Discontinuity in AR
(d) Oligopoly market

A
(c) Fulfilment of the assumption that a price cut

P
(CA CPT Feb. 2008)
is followed by others and a price increase
433. Which of the following concept is explained

U
by a firm is not followed by others.
by Kinked demand curve hypothesis?
(d) Price war amongst the firms.
(a) Price leadership
(CA CPT June 2011)
(b) Price rigidity
439. Kinked demand curve is observed in :
(c) Group behaviour
(a) Duopoly market
(d) Independent pricing
(b) Monopoly market
(June 2023)
(c) Competitive market
434. The demand curve of oligopoly is :
(d) Oligopoly market
(a) Horizontal
(CA CPT June 2011)
(b) Vertical
440. If firms in the automobile industry have the
(c) Kinked following market shares, which market struc-
(d) Rising left to right ture would best describe the industry?
(CA CPT Dec. 2009) Firms in Auto (%) of market
435. In the kinked demand curve theory, it is as- Sector share
sumed that : Firm-1 316
(a) Firm collude to fix the price. Firm-2 194
(b) An increase in the price by he firm is not Firm-3 5.6
followed by others. Firm-4 3.4
(c) An increase in the price by the firm is fol-
lowed by others
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 41 –
(a) Oligopoly (c) Collusive Oligopoly
(b) Perfect competition (d) Price Rigidity
(c) Monopolistic competition (CA CPT June 2014)
(d) Monopoly 446. In the kinked demand curve theory.
(Dec. 2022) (a) There is a kink in the marginal cost price.
441. In Oligopoly the kink in the demand curve is (b) Firm try to compete on non-price basis
more due to: (c) Demand is price elastic
(a) Discontinuity in MR (d) Demand is price inelastic
(b) Discontinuity in AR (Dec. 2021)
(c) Fulfilment of the assumption that a price fall 447. A firm having kinked demand curve indicates
is followed by other and a price increase by that :
a firm is not followed by the other

L
(i) If the firm reduces the price competitive
(d) Price war among the firms firms also reduce the price

U
(CA CPT Dec. 2011) (ii) If the firm increases the price competitive

H Y
442. In the ‘kinked-demand’ curve model, the up- firms also increases the price

A
per portion of the demand curve is :

A
(iii) If the firm reduces the price, competitive

R HY
(a) Elastic firms do not reduce the price.
(b) Inelastic (iv) If the firm increases the price, competitive
(c) Perfectly Elastic firms do not increase the price.

D
(d) Unitary Elastic (a) Only (i) above

A
(CA CPT June 2013) (b) Both (i) and (iv) above

P
443. Choose the incorrect statement regarding the (c) Both (ii) and (iv)

U
barometric price leadership. (d) Both (ii) and (iii) above
(a) Old and experienced firm acts as a leader (CA CPT Dec. 2014)
(b) Live and let live philosophy is followed 448. Kinked demand curve under oligopoly is de-
(c) Price decided by assessing market condi- signed to show :
tions. (a) Price and otput determination
(d) Price decided by leader is generally accepted (b) Price rigidity
by the rest of all. (c) Price leadership
(Nov. 2020) (d) Collusion among rivals
444. Kinked demand curve is related to which mar- (CA CPT June 2015)
ket structure?
449. Kinked demand curve is the demand curve of:
(a) Oligopoly
(a) Perfect Competition
(b) Monopoly
(b) Monopoly
(c) Monopsony
(c) Monopolistic Competition
(d) Monopolistic competition
(d) None of the above
(CA CPT Dec. 2013)
(CA CPT Dec. 2015)
445. The Kinked demand curve model explains the
450. The reason for the kinked demand curve is
market situation:
that:
(a) Pure Oligopoly
(a) The oligopolist believe that competitors will
(b) Differentiated Oligopoly follow output increases but not output re-
BUSINESS ECONOMICS FOR C.A. FOUNDATION duction
BY : RAHUL UPADHYAY
PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 42 –
(b) The oligopolist believe that competitors will 453. Which of the following is a subset of Oligopoly?
follow price increases but not output reduc- (a) Duopoly
tions.
(b) Monopoly
(c) The oligopolist believe that competitors will
(c) Single Oligopoly
follow price cuts but not price rises.
(d) None of these
(d) The oligopolist believe that competitors will
follow price increases but not output in- 454. __________ is a market situation in which
creases. there are two firms in the market.

(CA CPT June 2016) (a) Oligopoly

451. Kinked demand curve is : (b) Duopoly

(a) Highly elastic at above the prevailing price. (c) Bilateral Oligopoly

(b) Inelastic at below the prevailing price (d) Closed Oligopoly

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(c) Both (a) and (b) 455. What is the type of market structure which is
a combination monopoly market and a monop-

U
(d) None of the above.
sony market ?
(CA CPT May 2019)

H Y
(a) Unilateral Monopoly

A A
(b) Bilateral Monopoly
Other Important Market Forms

R HY
(c) Bi-Monopsony
452. Which term is used for a market characterised (d) None of these
by a single buyer of a product or service ?
456. __________ is a market characterized by a

D
(a) Monopoly small number of larger buyers and is mostly

A
(b) Monopsony relevant to factor markets.

P
(c) Monobuyer (a) Oligopoly

U
(d) Monolateral (b) Duopoly
(c) Oligopsony
(d) Monopsony

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 43 –

ANSWERS
1 (a) 2 (d) 3 (b) 4 (b) 5 (d) 6 (c) 7 (c) 8 (a) 9. (b)

10 (d) 11. (c) 12. (a) 13. (a) 14. (a) 15 (a) 16 (c) 17 (b) 18. (b)

19. (b) 20. (b) 21. (a) 22. (a) 23. (d) 24. (d) 25. (a) 26. (a) 27. (b)

28. (c) 29. (b) 30. (c) 31. (b) 32. (a) 33. (c) 34. (a) 35. (a) 36. (b)

37. (a) 38. (a) 39. (b) 40. (b) 41. (c) 42. (d) 43. (c) 44 (a) 45. (b)

46. (b) 47. (d) 48. (b) 49. (c) 50. (c) 51. (c) 52. (b) 53. (c) 54. (b)

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55. (a) 56. (a) 57. (a) 58. (c) 59. (c) 60. (c) 61. (c) 62. (a) 63. (b)

U
64. (d) 65. (c) 66. (a) 67. (a) 68. (c) 69. (c) 70. (a) 71. (a) 72. (a)

73. (c) 74. (a) 75. (b)

AH 76.

AY (a) 77. (c) 78. (a) 79. (d) 80. (a) 81. (a)

R HY
82. (a) 83. (b) 84. (a) 85. (b) 86. (a) 87. (b) 88. (c) 89. (b) 90. (c)

91. (c) 92. (d) 93. (b) 94. (d) 95. (c) 96. (b) 97. (c) 98. (b) 99. (c)

100. (c) 101. (c) 102. (b)

AD 103. (a) 104. (c) 105. (a) 106. (c) 107. (a) 108. (d)

P
109. (c) 110 (d) 111. (c) 112. (b) 113. (c) 114. (b) 115. (d) 116. (a) 117. (b)

118. (b)

127. (b)

134. (c)
119. (a)

128. (d)

135. (d)
U
120. (a)

129. (c)

136. (d)
121.

130.

137.
(a)

(d)

(a)
122. (a)

131. (c)

138 (b)
123 (b)

132. (c)

139. (d)
124 (d)

133. (d)

140. (c)
125. (b)

141. (d)
126. (c)

142. (a)

143. (b) 144. (a) 145. (d) 146. (b) 147. (d) 148. (d) 149. (d) 150. (b) 151. (c)

152. (a) 153. (c) 154. (c) 155. (b) 156. (d) 157. (a) 158. (d) 159. (c) 160. (c)

161. (d) 162. (c) 163. (b) 164. (d) 165. (d) 166. (b) 167. (d) 168. (d) 169. (a)

170. (c) 171 (b) 172. (c) 173. (b) 174. (d) 175. (d) 176. (a) 177. (c) 178 (d)

179. (b) 180. (b) 181. (d) 182. (a) 183. (d) 184. (b) 185. (c) 186. (a) 187. (d)

188. (d) 189. (d) 190. (a) 191. (d) 192. (b) 193. (a) 194. (d) 195. (b) 196. (b)

197. (a) 198. (c) 199. (b) 200. (a) 201. (d) 202. (b) 203. (b) 204. (b) 205. (c)

206. (b) 207. (b) 208. (b) 209. (c) 210. (b) 211. (d) 212. (b) 213. (a) 214. (c)

BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY

PRICE DETERMINATION OF DIFFERENT MARKETS BUSINESS ECONOMICS FOR C.A. FOUNDATION : – 44 –

215 (d) 216. (a) 217. (d) 218. (b) 219. (b) 220. (a) 221. (d) 222. (d) 223. (a)

224. (a) 225. (c) 226. (a) 227. (b) 228. (b) 229. (c) 230. (b) 231. (d) 232. (b)

233. (a) 234. (a) 235. (c) 236. (c) 237. (d) 238. (c) 239. (c) 240. (b) 241. (d)

242. (a) 243. (d) 244. (a) 245. (a) 246. (d) 247. (a) 248. (d) 249. (d) 250. (a)

251. (d) 252. (a) 253. (a) 254. (c) 255 (a) 256. (a) 257. (d) 258. (a) 259. (c)

260. (a) 261. (a) 262. (d) 263. (a) 264. (c) 265. (c) 266. (c) 267. (c) 268. (a)

269. (c) 270. (c) 271. (d) 272. (b) 273. (d) 274. (a) 275. (c) 276. (b) 277. (a)

278. (b) 279. (c) 280. (c) (d) 282. (c) 283. (a) 284 (d) 285 (a) 286 (c)

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281.

U
287 (b) 288 (d) 289 (c) 290 (a) 291 (d) 292 (c) 293 (d) 294 (b) 295 (b)

296 (d) 297 (c) 298 (b)

AH
299

AY (a) 300 (b) 301 (c) 302 (b) 303 (d) 304. (a)

R HY
305 (d) 306 (c) 307. (d) 308 (a) 309. (b) 310 (b) 311. (c) 312. (a) 313. (c)

314. (a) 315. (c) 316. (c) 317 (a) 318. (b) 319 (c) 320. (c) 321. (a) 322. (b)

D
323. (b) 324. (b) 325. (b) 326. (b) 327. (a) 328. (c) 329. (c) 330. (c) 331. (b)

332. (d) 333. (a) 334. (c)

P A 335. (b) 336. (a) 337. (c) 338. (c) 339. (b) 340. (c)

U
341 (c) 342. (a) 343. (c) 344. (a) 345. (b) 346 (b) 347 (c) 348 (b) 349 (c)

350. (d) 351. (c) 352. (c) 353. (d) 354 (a) 355. (c) 356. (b) 357 (b) 358. (c)

359. (d) 360. (c) 361. (c) 362. (c) 363. (d) 364. (c) 365. (b) 366 (c) 367. (a)

368. (d) 369. (c) 370 (c) 371. (b) 372. (d) 373. (a) 374. (a) 375. (b) 376. (c)

377. (b) 378. (b) 379. (d) 380. (d) 381. (b) 382. (b) 383. (d) 384. (d) 385. (c)

386. (a) 387. (a) 388 (a) 389. (d) 390. (c) 391. (a) 392. (c) 393. (a) 394. (b)

395. (d) 396. (a) 397. (d) 398. (b) 399. (c) 400 (c) 401 (a) 402. (a) 403. (c)

404. (b) 405. (d) 406 (c) 407. (c) 408. (d) 409. (c) 410. (d) 411. (a) 412. (d)

413. (d) 414. (b) 415. (d) 416 (a) 417. (c) 418. (a) 419. (d) 420 (a) 421. (b)

422 (a) 423 (b) 424 (d) 425 (a) 426. (a) 427 (b) 428 (c) 429. (b) 430. (d)

431. (c) 432. (c) 433 (b) 434. (c) 435. (b) 436. (c) 437. (b) 438. (c) 439. (d)

440. (a) 441. (c) 442. (a) 443. (b) 444. (a) 445. (d) 446. (b) 447. (b) 448. (b)

449. (d) 450. (c) 451. (c) 452. (b) 453. (a) 454. (b) 455. (b) 446. (c)
BUSINESS ECONOMICS FOR C.A. FOUNDATION BY : RAHUL UPADHYAY