Question 21 At least in theory, the more competition there is in the market, the

Question

Question 21

At least in theory, the more competition there is in the market, the greater also is the efficiency in the economy.

True

False

Question 22

Total fixed cost curve shows that fixed costs vis-à-vis production levelsdon't change.

True

False

Question 23

A firm's economic profit is usually higher than its accounting profit.

True

False

Question 24

The short run is a period of time when all factor inputs are fixed.

True

False

Question 25

In general, the product price is higher in an oligopolistic market than thatof monopolistic competition.

True

False

Explanation / Answer

(21) True.

This is because, higher competition drives firms to charge a lower price, and the more competitive the market, the closer price is to the marginal cost & the higher the efficiency. Accordingly, monopolists are said to charge much higher price than competitive firms & so, they generate the highest inefficiency, but perfectly competitive firms who equate price with marginal cost, are the maximum efficient.

(22) False.

Fixed costs are fixed only over a specified range of output, not for the entire production range. As output range changes, fixed costs also change.

(23) False.

This is because, economic cost is arrived at by deducting the economic (implicit) costs from accounting profits, but accounting profit doesn't consider any implicit costs. So, economic profits are generally lower.

(24) False

In the short run, at least one factor of production is fixed and at least one factor of production is variable. Generally it is said that labor is the only variable factor in short run can capital & land are fixed.

(25) False.

Oligopoly is a market structure with presence of only a few firms who compete about price and output. But monopolist is the single seller, so he can charge a price much higher. So oligopolistic prices are lower than monopoly prices.

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