Which of the following statements is true?
Both 1 and 2
Statement (1):
"The demand curve is a horizontal straight line in perfect competition." ✅
True.
In perfect competition, each firm is a price taker, meaning it accepts the market price.
So, the demand curve faced by an individual firm is perfectly elastic, i.e., a horizontal straight line.
Statement (2):
"Monopoly makes super-normal profits with barriers to entry." ✅
True.
In a monopoly, there are barriers to entry (like legal restrictions, high startup costs, patents, etc.), so no new firms can enter.
As a result, the monopoly can set prices above average cost, leading to super-normal (economic) profits in the long run.
Correct Answer: 2. Both 1 and 2 ✅
Similar Questions
In relation to Production Possibilities Curve (PPC), which of the following statements is INCORRECT?
The laws of _____ describe the technically possible ways of increasing the level of output.
If the proportionate increase in the output is less than proportionate increase in the inputs it is said to be ____ returns.
The Long-Run Analysis of Production is done under which one of the following law of Production?
The ______ is a hypothetical representation of the amount of two different goods that can be obtained by shifting resources from the production of one, to the production of the other.
The curve of production possibility is concave in nature because of ____.
Which of the following is/are true at equilibrium in a perfect competition?
(1) MR = MC
(2) AC = MC = AR = MR
(3) MC is falling
Identify the incorrect statement.
Which of the following is an INCORRECT match in the context of economics?
(i) Study of an individual firm an industry - macro economics
(ii) Want satisfying capacity of a good - utility
(iii) Exchange of apples with eggs - ceteris paribus
Marginal Rate of Transformation is the slope of ______.
Important Questions from Microeconomics
Which of the following statement is correct?
I. Indifference curves are sloping from left to right.
II. Higher indifference curve gives a higher level of utility.
Match List I with List II:
List- I
Shape of revenue curve of the firm
List – II
Market structure
A.
Kinked revenue-curve (I)
Monopolistic competition B.
Infinitely elastic straight line curve (II)
Perfect competition C.
Relatively less elastic curve (III)
Oligopoly D.
Relatively high elastic curve (IV)
Monopoly.
Choose the correct answer from the options given below -Marginal revenue of a firm is constant throughout under _________.
The cost curve which is a rectangular hyperbola is:
Rare of inflation is equal to:
[A = Price Index]
