Online Test — Producer's Equilibrium
15 Questions • 15 min • Chapter MCQ
15:00
Question 1 of 15
A producer aims to maximise:
Cost
Profit
Output only
Utility
Explanation: Producers aim to maximise profit.
Question 2 of 15
Profit equals:
TR − TC
TR + TC
TC − TR
TR × TC
Explanation: Profit = Total Revenue − Total Cost.
Question 3 of 15
A producer is in equilibrium when his profit is:
Minimum
Maximum
Zero
Negative
Explanation: Equilibrium is the output of maximum profit.
Question 4 of 15
If TR = ₹600 and TC = ₹450, profit is:
₹150
₹1050
₹450
₹600
Explanation: Profit = 600 − 450 = ₹150.
Question 5 of 15
In the TR–TC approach, the firm chooses the output where (TR − TC) is:
Smallest
Largest
Zero
Negative
Explanation: It picks the output where profit is the greatest.
Question 6 of 15
If MR is greater than MC, the firm should:
Produce more
Produce less
Stop
Do nothing
Explanation: MR > MC means more output raises profit.
Question 7 of 15
If MR is less than MC, the firm should:
Produce more
Produce less
Double output
Ignore it
Explanation: MR < MC means the extra unit lowers profit, so produce less.
Question 8 of 15
Profit is maximised where MR equals:
MC
AR
TC
AFC
Explanation: The first condition is MR = MC.
Question 9 of 15
The first condition for producer's equilibrium is:
MR = MC
AR = AC
TR = 0
MC = 0
Explanation: Condition 1 is MR = MC.
Question 10 of 15
The second condition for producer's equilibrium is that MC must be:
Falling
Rising (cutting MR from below)
Zero
Constant
Explanation: MC must be rising at the equilibrium point.
Question 11 of 15
MR = MC alone is not enough because MR and MC can be equal at:
Two points
No point
Only zero
Infinite price
Explanation: They can meet at two outputs; the second condition picks the profit-maximising one.
Question 12 of 15
Both the TR–TC and MR–MC approaches give the:
Same equilibrium output
Different outputs
No output
Maximum cost
Explanation: Both approaches identify the same profit-maximising output.
Question 13 of 15
The marginal approach is preferred because it shows clearly why the firm:
Stops at a particular output
Has no costs
Sets the price
Ignores revenue
Explanation: It shows the last unit adds exactly as much to revenue as to cost.
Question 14 of 15
At the equilibrium point, the last unit produced adds:
More to revenue than cost
Equal amounts to revenue and cost
More to cost than revenue
Nothing to either
Explanation: At MR = MC, the last unit's revenue and cost additions are equal.
Question 15 of 15
If profits at outputs 2, 3, 4 are ₹5, ₹9, ₹7, the equilibrium output is:
2
3
4
5
Explanation: Profit is highest (₹9) at output 3.