Question

Question 2 (10) TRUE FALSE QUESTIONS Consider the following list of statements. Each statement is either true or false. You must read each statement carefully and then select the option that you believe is correct as your answer. In your answer book, write down only the question number and next to the number either True or False 2.6. Monopolistic competition is a market structure characterised by the fact that there is often collusion between the sellers. 2.7. Half-price specials are not an example of non-price competition 2.8. Under perfect competition the individual firm is faced by a demand curve for the product of the firm that is perfectly elastic, which means that it is upward sloping. Average variable cost (AVC) is the total variable cost (TVC) divided by total cost (TC). 2.10. Total fixed cost remains unchanged when total product increases and therefore marginal fixed cost is always equal to marginal variable cost. 2.9. Av

Answer 1

2.6. In a monopolistic competition there is neither price competition nor price and output collusion. They do not form trust or cartel. Since the product of one seller somewhat differentiate from the other, the firms use non price competitive methods.

Answer: False.

2.7. Half price specials are example of price competition.

Answer: True

2.8. Each firm under perfect competition face a demand curve which is perfectly elastic. It is straight-line parallel to OX axis. It is not an upward sloping curve.

Answer: False.

2.9. Average variable cost is the total variable cost divided by the number of output produced.

Answer: False

2.10. Total fixed cost remains constant as output expands. The marginal fixed cost diminishes as output increase. But marginal variable cost increases. As output increase the total fixed cost is spread among the large number of output. Thus the marginal fixed cost diminishes. But marginal variable cost increase as more and more variable factors are added.

Answer: False.