Start learning →

CA Foundation Unit 4: Imperfect Competition & Market Structures — practice questions

Explore 15 free Unit 4: Imperfect Competition & Market Structures questions in CA Foundation Economics. Open each question or exercise to read its content, reference answers and available explanation.

Practise Unit 4: Imperfect Competition & Market Structures with Quill →

Unit 4: Imperfect Competition & Market Structures questions and exercises with answers

Showing questions 1–15 of 15.

In perfect competition, a firm is aRead the answer and worked solution →Under perfect competition, the demand curve faced by an individual firm is best described as:Read the answer and worked solution →A price-taking firm has total cost of ₹ 100 at zero output, ₹ 210 at 10 units, and ₹ 300 at 20 units. What is the marginal cost per unit over the range 10 to 20 units?Read the answer and worked solution →A perfectly competitive firm sells at price ₹ 20, which exactly equals its average total cost of ₹ 20 per unit. The firm is earning:Read the answer and worked solution →Above the minimum of average variable cost, the short-run supply curve of a perfectly competitive firm coincides with its:Read the answer and worked solution →Which equality describes the long-run equilibrium of a firm in a perfectly competitive industry?Read the answer and worked solution →A monopolist's demand schedule shows total revenue of ₹ 18.00 at 2 units and ₹ 25.50 at 3 units. The marginal revenue of the 3rd unit is:Read the answer and worked solution →Which statement about the average revenue and marginal revenue curves of a monopolist is correct?Read the answer and worked solution →A natural monopoly arises mainly because:Read the answer and worked solution →A discriminating monopolist sets a single price of ₹ 30. In market A elasticity of demand is 2. Using MR = AR((e-1)/e), the marginal revenue in market A is:Read the answer and worked solution →Charging a lower per-unit price for a larger family pack of soap than for a small pack is an example of:Read the answer and worked solution →A group of firms that explicitly agree to coordinate price and output to act jointly like a monopoly is called a:Read the answer and worked solution →A market structure in which there is a single buyer of a product or factor service is known as:Read the answer and worked solution →When a dominant low-cost firm sets the price and the smaller fringe firms simply accept and follow it, the market exhibits:Read the answer and worked solution →A firm is currently at an output where MR > MC. To maximise profit, the firm should:Read the answer and worked solution →

Worked practice questions

In perfect competition, a firm is a

  1. monopolist
  2. price maker
  3. price taker
  4. price leader
Show answer and solution

Correct answer: C. price taker

Under perfect competition there are many firms selling identical products, so each firm accepts the market price — a price taker.

Open this question →

Under perfect competition, the demand curve faced by an individual firm is best described as:

  1. An upward sloping straight line
  2. A vertical line at the market output
  3. A downward sloping straight line
  4. A horizontal line at the market price
Show answer and solution

Correct answer: D. A horizontal line at the market price

1. A competitive firm accepts the price set by industry demand and supply. 2. It can sell any quantity at that price but nothing above it without losing all buyers. 3. This makes the firm's demand curve perfectly elastic, i.e. a horizontal line. 4. The horizontal line sits at the level of the market price. _Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit III "Price-Output Determination under Different Market Forms", p.3_

Open this question →

A price-taking firm has total cost of ₹ 100 at zero output, ₹ 210 at 10 units, and ₹ 300 at 20 units. What is the marginal cost per unit over the range 10 to 20 units?

  1. ₹ 9
  2. ₹ 11
  3. ₹ 90
  4. ₹ 15
Show answer and solution

Correct answer: A. ₹ 9

1. Marginal cost is the change in total cost divided by the change in output. 2. TC rises from ₹ 210 to ₹ 300 as output rises from 10 to 20 units. 3. Change in TC = 300 - 210 = ₹ 90 for 10 extra units. 4. MC per unit = 90 / 10 = ₹ 9. _Source: ICAI BoS CA Foundation Paper 4 Business Economics, Ch 4 Unit III "Price-Output Determination under Different Market Forms", p.8_

Open this question →

How to practise

  1. Choose a Unit 4: Imperfect Competition & Market Structures question and try to work out your answer.
  2. Open the question to check the correct answer and read its worked solution.
  3. Continue in the app for bite-sized lessons, explanations and review with Quill. You can start without creating an account.

Put it into practice

Continue with Unit 4: Imperfect Competition & Market Structures practice for CA Foundation. Read explanations as you go. No signup form needed to start.

Practise Unit 4: Imperfect Competition & Market Structures →

More Economics topics

Unit 1A: Scarcity, Choice and Opportunity CostUnit 3: Production, Cost & Perfect CompetitionUnit 2A: Demand, Supply and Market EquilibriumTheory of Consumer Behaviour & DemandUnit 5: Factor Markets & Resource AllocationTheory of Demand & Elasticity