Micro

Forms of Market

Medium

In a perfectly competitive market choose the correct statement from the following.

(A) Equilibrium occurs where market demand equals market supply.

(B) Each firm employs labour upto the point where the marginal revenue of labour equals the wage rate.

(C) Equilibrium price and quantity are determined when there is large number of firms.

(D) Equilibrium price is always equal to minimum average cost of the firms.

Choose the correct answer from the options given below:

(A), (B) and (D) only

(A), (C) and (D) only

(A), (B), (C) and (D)

(B), (C) and (D) only

✅ Correct Option: 1

Option 1 -> Statements A, B, and D are correct. Statement C is incorrect because equilibrium is determined by demand-supply intersection, not merely by the number of firms.

Option 2 -> Statement B is also correct as firms hire labor until marginal revenue product equals wage rate, so this option is incomplete.

Option 3 -> Statement C is problematic. While large number of firms is a characteristic of perfect competition, equilibrium is determined by demand-supply intersection, not by the number of firms itself.

Option 4 -> Statement A is correct and must be included as equilibrium fundamentally occurs where demand equals supply.

Hence, Option 1: (A), (B) and (D) only -> Statement (A) is correct as market equilibrium occurs where demand equals supply. Statement (B) is correct as firms maximize profit by hiring labor until marginal revenue product of labor equals wage rate. Statement (D) is correct as in long-run equilibrium of perfect competition, price equals minimum average cost (zero economic profit condition). Statement (C) is incorrect because while large number of firms is a characteristic of perfect competition, equilibrium price and quantity are determined by the intersection of market demand and supply curves, not by the number of firms per se. -> correct

2025: 29 May Shift 1

Which of the following are features of the perfect competition market?

(A) Price taking behavior of firms.

(B) Restriction on entry and exit of firms.

(D) Asymmetric Information.

Choose the correct answer from the options given below:

2025: 22 May Shift 1

Let us consider the example of a market consisting of identical farms producing the same quality of wheat. Suppose the market demand curve and the market supply curve for wheat are given by: qᵈ = 200 - p and qˢ = 120 + p. What is the equilibrium price?

2025: 16 May Shift 1

Which of the following is not a feature of perfect competition?

2026: 19 May Shift 2

A positive level of output at which a firm's profit is maximised must hold some conditions, Identify those conditions from the following:

A. The price must equal to marginal cost.

B. Marginal cost must be non-decreasing.

C. Price must be greater than or equal to the average variable cost.

D. The price should less than marginal cost.

Select the correct option from the following:

2025: 30 May Shift 1

Which of the following are features of a perfect competitive market?

(A) Free entry and exit of firms.

(B) Huge selling cost.

(D) perfect market knowledge among buyers.

Choose the correct answer from the options given below:

2025: 29 May Shift 1

Arrange the following steps of Market Equilibrium under perfect competition in the correct order.

(A) Excess of market demand over market supply will cause excess demand situation.

(B) Quantity demanded will fall and quantity supplied will rise.

(C) The market will move towards the point where the quantity that the firm wants to sell is equal to the quantity that the consumer wants to buy.

(D) The market price would tend to increase, due to competition among buyers.

Choose the correct answer from the options given below:

Solution

Related questions:

Keyboard Shortcuts

CUET Economics Past Year Questions (Topic-Wise)