Micro

Forms of Market

Medium

Arrange the given statements in chronological order stating the implications of free entry and exit assumptions in a equilibrium market.

(A) Supply curve shifts rightward, however demand remains unchanged.

(B) At the prevailing market price, each firm is earning a supernormal profit and will attract some new firms.

(C) Market prices fall, and supernormal profits are eventually wiped out.

(D) All firms in the market are earning normal profit, no more firms will have incentive to enter.

Choose the correct answer from the options given below:

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

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

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

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

✅ Correct Option: 1

Option 1: (B), (A), (C), (D) -> This represents the correct chronological sequence of market adjustment under free entry and exit conditions. The process begins with (B) supernormal profits attracting new firms, followed by (A) rightward shift in supply curve as new firms enter the market, then (C) falling prices that eliminate supernormal profits due to increased supply, and finally (D) long-run equilibrium where only normal profits exist and no further entry occurs. This sequence demonstrates how perfect competition with free entry and exit leads markets to long-run equilibrium where economic profits are zero. -> correct

2025: 2 June Shift 1

Match List-I with List-II

List-I	List-II
(A) Perfect Competition	(I) A typical characteristic of perfect competition.
(B) Perfectly elastic demand curve	(II) An individual firm is a price taker.
(C) Degree of price control under perfect competition	(III) The firm can sell any amount of its output at the prevailing price.
(D) Freedom of entry and exit	(IV) No control over price.

Choose the correct answer from the options given below:

2025: 16 May Shift 1

Which of the following is NOT a condition for profit maximization of a perfectly competitive firm in the short run?

2025: 22 May Shift 1

Arrange a statement of market equilibrium when the demand curve shifts leftward:

(A). The shift indicates that at any price the quantity demanded is less than before.

(B). Some firms will reduce the price of their commodity so that they can sell their desired quantity.

(C). Excess supply will arise.

(D). At the new equilibrium, quantity and price will be less than before.

Choose the correct answer from the options given below:

2025: 13 May Shift 1

With the shifting demand curve leftward, arrange the following statement in sequential order.

(A) At any given price, demand is less.

(B) Excess supply will be there.

(D) At new equilibrium, quantity and price will be less.

Choose the correct answer from the options given below:

2026: 12 May Shift 1

Choose the correct options from the following in respect of Break-even point(BEP) of a firm-

(A) BEP is a point of minimum AVC where the SMC curve cuts the AVC curve.

(B) BEP is a point on the supply curve at which a firm earns only normal profit.

(D) BEP is the point of minimum average cost at which the supply curve cuts the LRAC curve.

Choose the correct answer from the options given below:

2025: 21 May Shift 1

In perfectly competitive market, the demand curve of a firm is?

Solution

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CUET Economics Past Year Questions (Topic-Wise)