Please solve this mcqs Related to the Microeconomics Questioa 1: Demonstrate wit
ID: 1112398 • Letter: P
Question
Please solve this mcqs Related to the Microeconomics Questioa 1: Demonstrate with reasons, whether the following statements are True, False or Uncertain Scale V 1. Collusion is possible in perfect competition 2 Prices are lower than the marginal costs in case of market power. 3. Profit-tax does not only reduce the profits, it also affect, then the price and output of a firm 4 Ir price is equal to average total cost for a perfectly competitive firm, then down s f the total cost is TC-S0+30+4 then (Tdo)-(arvcsox 6. A monopolist may produce in the inelastic region 7· The shape of the marginal revenue curve depends on the average revenue 8. Excise taxes are always entirely passed on to consumers 9. A monopolist has a similar demand curve like a perfectly competitive firm. I0. Imposition of trade barriers increases inefficiency 11. Fixed costs are constants in the short run 12. When the average is falling, then marginal is falling too. 13. Pure monopoly is the opposite of perfect competition that is created s. Q- L'K' exhibits decreasing returns to scale 16. Ifthe total revenue is equal to the total cost, then the firm must shut down. 17 In the short run, if input prices are increasing then average cost, average variable cost and marginal cost will shift downward 18 All firms in perfect competition break even in the long rnun 19 Price regulation is not a good policy compared to non-price regulation 20. The kinked demand curve is used to rationalize price rigidity nd mareinal equations and values of the revenue nvenue (TR) I v
Explanation / Answer
(1) False
In perfect competition, each firm is too small to have any market power and each accepts the market price as its on price. There being numerous sellers, collusion is not possible.
(2) False
A price taking firm equates Marginal cost (MC) with price, which is its horizontal demand curve. But a firm with market power faces downward sloping demand and marginal revenue (MR) curves and equates MC with MR. Since MR lies below demand curve, price is higher than MC.
(3) True
Since profit tax lowers total profit, the firm sells less output which increases the price of output if demand curve is downward sloping.
(4) False
Firm will shut down if price is less than Average variable cost, even if price equals average total cost (yielding zero profit).
(5) True
dTC / dQ = 10Q + 3
TVC = 5Q2 + 3Q
dTVC / dQ=10Q + 3 = dTC / dQ
NOTE: As per Chegg answering guidelines, first 5 questions are answered.