Assertion (A) All firms under perfect competition in long run earn only normal profit.<br>Reason (R) All firms under perfect competition in long run operate at the minimum average cost level.

Both (A) and (R) are true

(A) is true, but (R) is not true

(A) is not true, but (R) is true

Both (A) and (R) are false

Correct Answer: Both (A) and (R) are true

Indicate the correct answer from the following types of the long run average cost curves on which the minimum average cost of production in long run can be determined.
1. Long run average cost curve under normal production function
2. Long run average cost curve under linearly homogeneous production function
3. Planning curve
4. Envelope curve

1, 2 and 3

2, 3 and 4

1, 3 and 4

Both 2 and 4

Assertion (A) In long run under perfect competition, all firms invariably get only normal profit.
Reason (R) All firms incur minimum average cost and incur no selling cost due to absence of product differentiation.

(A) and (R) both are true

(A) is true, but (R) is false

(A) is false, but (R) is true

(A) and (R) both are false

The marginal cost is equal is to marginal revenue, the average cost is equal to average revenue, average revenue is equal to marginal revenue, and the average cost is equal to marginal cost. This is the condition of
1. Long-period equilibrium for a firm under monopoly.
2. Short-period equilibrium for a firm under oligopoly.
3. Long-period equilibrium
4. Long-period equilibrium for a firm under perfect competition.

1 and 4

3 and 4

1 and 3

Only 1

Six men can earn as much as eight women ,two women can earn earn as much as three boys and four boys can earn as much as five girls.If a girl can earn Tk. 50 a day , what amount can a man earn in a day?

TK.115

Tk.125

Tk.135

Tk.150

Marginal cost is equal to marginal revenue, average cost is equal to average revenue, average revenue is equal to marginal revenue and average cost is equal to marginal cost. This is the condition of
1. long period equilibrium for a firm under monopoly
2. short period equilibrium for a firm under oligopoly
3. long period equilibrium
4. long period equilibrium for a firm under perfect competitions
Select the correct answer

Both 1 and 4

Both 3 and 4

Both 3 and 1

Only 1

The point on which the average cost is minimum in a firm short-run average cost curve will also be the minimum cost point on the firm's long run average cost curve. This is true

When LAC is falling

Never

Always

Only at that level of output when LAC is at its minimum

Six men can earn as much as eight women, two women can earn as much as three boys and four boys can earn as much as five girls. If a girl can earn Tk. 50 a day, what amount can a man earn in a day?

Tk. 115

Tk 125

Tk. 135

Tk, 150

In perfect competition, when a firm is in short periods, for equilibrium, the following condition does apply
1. Marginal cost must equal marginal revenue.
2. Average cost must equal average revenue.
3. Marginal revenue must equal average revenue.
4. Marginal cost must equal average cost.

1, 2 and 3

1 and 3

2, 3 and 4

Only 3

Which two of the following statements are true?
I. A simple monopoly firm always earns super normal profit
II. Sweezy's kinked demand curve model is the best known model explaining relatively more satisfactory behaviour of oligopoly firm for price rigidity
III. A perfectly competitive firm is price-taker
IV. Firms under monopolistic competition earn only normal profits
Choose the correct option from those below

I and IV

II and IV

II and III

I and III

Short run marginal cost curve cuts the short run average cost curve from _______ at the minimum point of short run average cost.

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