Class 12 Economics Chapter 5 Market Competition MCQ Questions with Answers

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Class 12 Market Competition MCQ Questions with Answers

Class 12 Economics MCQ with answers are given here for Chapter 5 Market Competition. These MCQs are based on the latest CBSE board syllabus and relate to the latest Class 12 Economics syllabus. By Solving these Class 12 MCQs, you will be able to analyze all of the concepts quickly in the chapter and get ready for the Class 12 Annual exam.

Learn Class 12 Market Competition MCQ with Answer according to the latest CBSE and NCERT syllabus. Students should prepare for the examination by solving CBSE MCQ on Market Competition Class 12 PDF with answers given below.

Question 1. An increases in the price of mutton provides information which:
(a) Tells consumers to buy more mutton
(b) Tells consumers to buy more chicken
(c) Tells producers to produce more mutton
(d) Provides no information

Question 2. Which of the following correctly describes how price adjustments eliminate a shortage?
(a) As the price falls, the quantity demanded increases while the quantity supplied decreases.
(b) As the price rises, the quantity demanded decreases while the quantity supplied increases.
(c) As the price falls, the quantity demanded decreases while the quantity supplied increases.
(d) As the price rises, the quantity demanded increases while the quantity supplied decreases.

Question 3. Monopolist can determine:
(a) Price
(b) Output
(c) Either price or output
(d) None

Question 4. When price is below equilibrium level, there will be:
(a) Surplus commodity in the market
(b) Shortage of commodity in the market
(c) Supply curve will shift
(d) Demand curve will shift

Question 5. The law of demand states that, other things remaining the same, the higher the price of a good, the
(a) smaller is the demand for the good
(b) smaller is the quantity of the good demanded
(c) larger is the quantity of the good demanded
(d) larger is the demand for the good

Question 6. A surplus occurs when the price is
(a) equal to the equilibrium price.
(b) greater than the equilibrium price.
(c) less than the equilibrium price.
(d) None of the above because the existence of a surplus is independent of the price of the good

Question 7. A rise in supply and demand in equal proportion will result in:
(a) Increase in equilibrium price and decrease in equilibrium quantity
(b) Decrease in equilibrium price and increase in equilibrium quantity
(c) No change in equilibrium price and increase in equilibrium quantity
(d) Increase in equilibrium price and no change in equilibrium quantity

Question 8. If, at the current price, there is a shortage of a good,
(a) the price is below the equilibrium price.
(b) the market can be in equilibrium.
(c) sellers are producing more than buyers wish to buy.
(d) All of the above answers are correct.

Question 9. When we say demand increases, we mean that there is a
(a) movement to the right along a demand curve.
(b) movement to the left along a demand curve.
(c) leftward shift of the demand curve.
(d) rightward shift of the demand curve.

Question 10. The law of demand implies that if nothing else changes, there is
(a) a linear relationship between price of a good and the quantity demanded
(b) a positive relationship between the price of a good and the quantity demanded
(c) a negative relationship between the price of a good and the quantity demanded
(d) an exponential relationship between price of a good and the quantity demanded

Question 11. If the price of a substitute to good X increases, then
(a) the demand for good X will increase.
(b) the market price of good X will decrease.
(c) the demand for good X will decrease.
(d) the demand for good X will not change

Question 12. Wheat is the main input in the production of flour. If the price of wheat increases, all else equal, we would expect
(a) the supply of flour to be unaffected
(b) the supply of flour to decrease.
(c) the supply of flour to increase.
(d) the demand for flour to decrease.

Question 13. Which of the following can lead to an increase in the supply for good X?
(a) a decrease in the number of sellers of good X.
(b) an increase in the price of inputs used to make good X.
(c) an increase in consumers’ income, assuming good X is a normal.
(d) an improvement in technology used in production of good X.

Question 14. The quantity supplied of a good is
(a) equal to the difference between the quantity available and the quantity desired by all consumers and producers.
(b) the same thing as the quantity demanded at each price.
(c) the amount that the producers are planning to sell at a particular price during a given time period
(d) the amount the firm would sell if it faced no resource constraints.

Question 15. Which of the following pairs of goods are most likely substitutes?
(a) compact discs and compact disc players
(b) lettuce and salad dressing
(c) cola and lemon lime soda
(d) peanut butter and gasoline

Question 16. On which type of good the government fixes the price floor?
(a) Industrial goods
(b) Electronic goods
(c) Mechanical goods
(d) Agricultural goods

Question 17. In the case of free entry and exit firms, at which of the market price does the firm earns a normal profit?
(a) New market price
(b) Increased market price
(c) Prevailing market price
(d) Higher market price

Question 18. When are the new firms attracted to enter the market?
(a) Market price less than the average cost
(b) Market price less than the total cost
(c) Market price equal to the minimum average cost
(d) Market price less than the marginal cost

Question 19. The quantity at the equilibrium price where the sellers are willing to sell and consumers are willing to buy
(a) Equilibrium quantity
(b) Equilibrium price
(c) Equilibrium period
(d) Equilibrium place

Question 20. As the opportunity cost of a good decreases, people buy
(a) more of that good but less of its complements.
(b) less of that good and also less of its complements.
(c) less of that good but more of its complements.
(d) more of that good and also more of its complements.

Question 21. What should firm do when Marginal revenue is greater than marginal cost?
(a) Firm should expand output
(b) Effect should be made to make them equal
(c) Prices should be covered down
(d) All of these

Question 22. Which of the following refers to wage rate (w)?
(a) Additional cost of hiring one more unit of technology
(b) Extra cost of hiring one more unit of labour
(c) Marginal cost of hiring one more unit of technology
(d) Average cost of hiring one more unit of labour

Question 23. How does the government overcome the problem of excess supply?
(a) Government create demand for product
(b) Government will remove the price floor
(c) Government enable the traders to buy
(d) Government create buffer stocks

Question 24. Which of the following is not an essential condition of pure competition?
(a) Large number of buyers and sellers
(b) Homogeneous product
(c) Freedom of entry
(d) Absence of transport cost

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Question 25. You observe that the price of a good rises and the quantity decreases. These observations can be the result of
(a) the supply curve shifting leftward
(b) the demand curve shifting rightward
(c) the demand curve shifting leftward
(d) the supply curve shifting rightward

Question 26. What is the impact of a shift in supply curve on the equilibrium price and quantity?
(a) Both the price and quantity changes
(b) Changes in price and quantity are opposite
(c) Only when price increase
(d) Only when quantity increase

Question 27. When demand decreases and supply does not change, the equilibrium price
(a) rises and the equilibrium quantity decreases.
(b) falls and the equilibrium quantity decreases.
(c) falls and the equilibrium quantity increases.
(d) rises and the equilibrium quantity increases.

Question 28. The interaction of supply and demand explains
(a) both the prices and the quantities of goods and services.
(b) the quantities of goods and services but not their prices.
(c) the prices of goods and services but not their quantities.
(d) neither the prices nor the quantities of goods and services.

Question 29. What is the result of adverse consequences on the consumers because of the function of fair price shops?
(a) Surplus production
(b) Creation of shortage
(c) Excess supply
(d) Creation of black market

Question 30. A decrease in the quantity supplied is represented by a
(a) rightward shift in the supply curve.
(b) movement down the supply curve.
(c) leftward shift in the supply curve.
(d) movement up the supply curve.

Question 31. Which of the following refers to market equilibrium?
(a) Demand for good is equal to its supply at a particular price
(b) Demand for good is greater than its supply at a particular price
(c) Demand for good is less than its supply at a particular price
(d) Demand for good is equal to its supply at different prices

Question 32. Wants, as opposed to demands,
(a) depend on the price.
(b) are the goods the consumer plans to acquire.
(c) are the unlimited desires of the consumer
(d) are the goods the consumer has acquired

Question 33. How does the government overcome with a problem of shortage of supply or unequal distribution?
(a) Increased production level
(b) Increased supply of good
(c) Decreased the demand for good
(d) Ensured through fair price shops

Question 34. Holding all else constant, a higher price for ski lift tickets would be expected to
(a) increase the number of skiers.
(b) decrease demand for skis.
(c) decrease the demand for other winter recreational activities.
(d) decrease the supply of ski resorts.

Question 35. When the price of a good or service changes,
(a) there is a movement along a stable demand curve.
(b) demand shifts in the opposite direction.
(c) demand shifts in the same direction.
(d) supply shifts in the opposite direction.

Question 36. The law of demand implies that demand curves
(a) shift leftward whenever the price rises.
(b) shift rightward whenever the price rises.
(c) slope down.
(d) slope up.

Question 37. Inferior goods are those for which demand increases as
(a) income decreases.
(b) income increases.
(c) the price of a substitute rises.
(d) the price of a substitute falls.

Question 38.A change in the price of a good
(a) shifts the good’s demand curve but does not cause a movement along it.
(b) does not shift the good’s demand curve but does cause a movement along it.
(c) shifts the good’s demand curve and also causes a movement along it.
(d) neither shifts the good’s demand curve nor causes a movement along it

Question 39. Normal goods are those for which demand decreases as
(a) the price of a substitute falls.
(b) the price of a complement falls.
(c) the good’s own price rises.
(d) income decreases.

Question 40. What will be the opportunity cost of labour’s leisure hours when the wage rate increases?
(a) Cheaper the leisure hours
(b) Costlier the leisure hours
(c) Labour’s enjoy more of leisure hours
(d) Less cost to hire labour

Question 41. Because of increasing marginal cost, most supply curves
(a) are horizontal.
(b) have a negative slope.
(c) are vertical.
(d) have a positive slope.

Question 42. On which of the following basis, the productivity of labour is calculated?
(a) Number of labourers
(b) Hours of work
(c) Place of work
(d) Quantity of work

Question 43. Which of the following is a determinant of demand?
(a) the price of a substitute good
(b) the price of a complement good
(c) the price of the good next month
(d) all of the above

Question 44. If the price of a good changes but everything else influencing suppliers’ planned sales remains constant, there is a
(a) rotation of the initial supply curve around the initial price.
(b) new supply curve that is to the right of the initial supply curve.
(c) new supply curve that is to the left of the initial supply curve.
(d) movement along the supply curve.

Question 45. An increase in the number of fast-food restaurants
(a) increases the demand for substitutes for fast-food meals.
(b) raises the price of fast-food meals.
(c) increases the supply of fast-food meals.
(d) increases the demand for fast-food meals.

Question 46. If good A is a normal good and income increases, the equilibrium price of A
(a) and the equilibrium quantity will increase.
(b) and the equilibrium quantity will decrease.
(c) will rise and the equilibrium quantity will decrease.
(d) will fall and the equilibrium quantity will increase.

Question 47. An increase in demand combined with no change in supply causes
(a) a decrease in demand because the supply curve does not shift.
(b) the equilibrium price to fall.
(c) a movement rightward along the demand curve.
(d) the equilibrium price to rise.

Question 48. When the price is higher than the equilibrium price,
(a) a shortage will exist.
(b) buyers desire to purchase more than is produced
(c) sellers desire to produce and sell more than buyers wish to purchase.
(d) quantity demanded equals quantity supplied

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