# Free Non-Competitive Markets 02 Practice Test - 11th Grade - Commerce

### Question 1

The demand schedule for a firm is shown below

Price (Rs)Quantity71006200530044003500

What is the maximum revenue for the firm?

700

1200

1500

1600

#### SOLUTION

Solution :D

Let us add the total revenue column using the relation TR=P×Q

Price (Rs)QuantityTR710070062001200530015004400160035001500

We can see that maximum revenue of the firm is Rs 1600.

### Question 2

As a monopolist increases the price of a good, what happens to the total revenue (TR)?

TR increases

TR decreases

TR first increases and then decreases

TR first decreases and then increases

#### SOLUTION

Solution :C

As the price increases, TR first increases due to price effect and then decreases due to quantity effect.

### Question 3

When the total revenue is maximum, the marginal revenue is

#### SOLUTION

Solution :When the total revenue is maximum, the marginal revenue is zero.

### Question 4

Choose the correct option(s).

TR decreases when MR is positive

TR increases when MR is positive

TR is maximum when MR is zero.

TR is minimum when MR is zero.

#### SOLUTION

Solution :B and C

MR curve is the slope of the TR curve. TR increases when MR is positive and decreases when MR is negative.

### Question 5

For a monopoly firm, which of the following is equal to market price?

MR

AR

TR

MC

#### SOLUTION

Solution :B

For a monopoly firm,

TR=P×QAR=TRQ=P×QQ=P

### Question 6

The AR curve of a monopoly firm is the same as the _____.

market demand curve

supply curve

MR curve

TR curve

#### SOLUTION

Solution :A

The AR curve of a monopoly firm is the same as the market demand curve because AR is always equal to the price.

### Question 7

Which of the following is the slope of the TR curve?

MR

AR

MC

Price

#### SOLUTION

Solution :A

The slope of the TR curve is MR or marginal revenue.

### Question 8

Study the following demand schedule and answer the following question.

Price (Rs)Quantity11010100920083007400650056004700

At what price is the MR zero?

Rs 8

Rs 7

Rs 6

Rs 5

#### SOLUTION

Solution :D

Let's add the TR and MR columns to the table where

TR=P×Q;&MR=ΔTRΔqP (Rs)QTR (Rs)MR (Rs)1100−1010010001092001800883002400674002800465003000256003000047002800−2

It can be seen that MR is maximum at a price of Rs 5.

### Question 9

For a monopoly firm, MR = 50 -5q. At what output level is the TR maximum?

5

10

20

50

#### SOLUTION

Solution :B

TR is maximum at the output level where the MR is zero.

50−5q=05q=50q=10

TR is maximized at an output level of 10.

### Question 10

The slope of the MR curve of a monopoly firm is 6. Then the slope of the demand curve is

#### SOLUTION

Solution :The MR curve is twice as steep as the demand curve. Hence, the slope of the demand curve would be half of that of the MR curve i.e 3.