CSS :: Profit Maximization
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1. |
The necessary condition for equilibrium position of a firm is: |
A. |
MC > MR |
B. |
MC > Price |
C. |
MC = MR |
D. |
MC is falling |
E. |
MC = AC |
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Answer: Option E
Explanation:
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2. |
Profit is maximum when: |
A. |
Distance between TR and TC is maximum |
B. |
Distance between AR and AC is maximum |
C. |
Distance between MR and MC is maximum |
D. |
None of these |
Answer: Option A
Explanation:
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3. |
Profit is maximum when: |
A. |
Slope of MC and MR is the same |
B. |
Slope of TC and TR is the same |
C. |
Slope of AC and AR is the same |
D. |
None of these |
Answer: Option B
Explanation:
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4. |
Profit is maximum when: |
A. |
TC and TR curves are parallel |
B. |
MC and MR curves are parallel |
C. |
AC and AR curves are parallel |
D. |
None of these |
Answer: Option A
Explanation:
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5. |
At the point of equilibrium of firm (under perfect competition): |
A. |
MC curve must be rising |
B. |
MC curve must be falling |
C. |
MR curve must be rising |
D. |
None of these |
Answer: Option A
Explanation:
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6. |
Normal profit is: |
A. |
Part of total cost |
B. |
Part of economic profit |
C. |
Total revenue minus total cost |
D. |
Total revenue minus implicit cost |
Answer: Option A
Explanation:
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7. |
Economic profit is: |
A. |
Part of total cost |
B. |
Total revenue minus total cost |
C. |
Total revenue minus explicit cost |
D. |
Total variable cost minus total fixed cost |
Answer: Option B
Explanation:
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8. |
A firm earns economic profit when total profit exceeds: |
A. |
Normal profit |
B. |
Implicit costs |
C. |
Explicit costs |
D. |
Variable costs |
Answer: Option A
Explanation:
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9. |
The basic goal of a firm is to: |
A. |
Maximize revenues |
B. |
Maximize welfare of its employees |
C. |
Maximize profit |
D. |
Maximize output |
Answer: Option C
Explanation:
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10. |
A firm's MR exceeds its MC, maximum profit rule requires that firm to: |
A. |
Increase in output in both perfect and imperfect competition |
B. |
Increase in perfect competition but not necessarily in imperfect competition |
C. |
Increase in output in imperfect but not necessarily in perfect competition |
D. |
Decrease in output in both perfect and imperfect competition |
Answer: Option A
Explanation:
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