Oligopoly differs from monopolistic competition in that an oligopoly includes:

• A) Barriers to entry.
• B) All of the given options.
• C) Product differentiation.
• D) No barriers to entry.

Which efficiency is concerned with producing goods in the most cost-efficient manner?

• A) Economic efficiency
• B) Productive efficiency
• C) Technical efficiency
• D) Allocative efficiency

Followings are the disadvantages of monopoly EXCEPT:

• A) Most of the “surplus” (producer + consumer surplus) accrues to monopolists.
• B) Monopolists earn higher profits.
• C) Monopolists do not pay sufficient attention to increase efficiency.
• D) Monopolists produce high quality goods at higher prices.

In classical economics, what is the assumption regarding price and wage flexibility?

• A) These are flexible and adjust to changes in supply and demand.
• B) These are sticky and do not change.
• C) These are rigid and do not adjust easily
• D) These are controlled by the government.

If there is a decline in demand for Pakistani products in international market, then the aggregate demand curve will:

• A) Become steeper.
• B) Become flatter.
• C) Shift to the left.
• D) Shift to the right.

When the wage rate for a particular job increases, what is likely to happen to the quantity of labor supplied, according to the supply curve for labor?

• A) It increases.
• B) A. It depends on the type of job.
• C) It remains constant.
• D) It decreases.

Which of the followings describe agents?

• A) Individual laborer
• B) Individual consumer
• C) Individual firm
• D) All of the given options are true

The Classical economists thought that the economy would quickly overcome any short run instability because:

• A) Prices would get stuck at a low level.
• B) Price level and quantity were flexible.
• C) Prices and wages were flexible.
• D) The long run aggregate supply would shift to the left.

The value of marginal product of labor is:

• A) Marginal physical product of labor - Price of the good
• B) Marginal physical product of labor ÷ Price of the good
• C) Marginal physical product of labor + Price of the good
• D) Marginal physical product of labor × Price of the good

In the Classical model, given an initial aggregate equilibrium at full employment level, what will be the long run effect of an increase in government spending?

• A) An increase in the price level.
• B) An upward shift of the aggregate demand curve.
• C) All of the given options.
• D) A constant level of output.

If one firm increases its price, in the kinked demand curve model then:

• A) Other firms will not increase their price.
• B) Other firms will reduce their price.
• C) Other firms will increase their output level.
• D) Other firms will decrease their output level.

Productive efficiency is achieved when firms produce at the:

• A) Lowest point of average cost curve
• B) Lowest point of marginal cost curve
• C) Highest point of average cost curve
• D) Highest point of marginal cost curve

Which of the following goods is merit good?

• A) All of the following goods are merit goods
• B) Food stamps
• C) Subsidized housing
• D) Health care

A(n) __________ may start a price war in order to get a larger share of the market.

• A) Perfect competitor
• B) Monopolist
• C) Oligopolist
• D) Monopolistic compititor

Royal Leather Industries Ltd Pakistan operates in a monopolistic competition and earns super normal profit in the short run. In the long run, it will make:

• A) Abnormal losses.
• B) Supernormal profits only.
• C) Normal profits only.
• D) Negative profits.

The market structure in which there is interdependence among firms is:

• A) Oligopoly.
• B) Perfect competition.
• C) Monopoly.
• D) Monopolistic competition.

Which of the following is an example of an information product?

• A) A hamburger
• B) A pair of shoes
• C) A bicycle
• D) A music album

Profit is maximized when:

• A) Marginal revenue product is less than marginal input cost.
• B) Marginal revenue product is greater than marginal input cost.
• C) Marginal revenue product equals marginal input cost.
• D) Marginal input cost is zero.

According to classical economists, what was the main reason of fall in investment during great depression?

• A) Large government expenditures
• B) High interest rate
• C) Low interest rate
• D) Fall in consumption expenditures

In case of monopoly at equilibrium point:

• A) Price is less than marginal cost
• B) Price is equal to marginal cost
• C) Price is greater than marginal revenue
• D) Price is less than marginal revenue