Students of class 12 Economics should refer to MCQ Questions Class 12 Economics The Theory of Firm Under Perfect Competition with answers provided here which is an important chapter in Class 12 Economics NCERT textbook. These MCQ for Class 12 Economics with Answers have been prepared based on the latest CBSE and NCERT syllabus and examination guidelines for Class 12 Economics. The following MCQs can help you to practice and get better marks in the upcoming class 12 Economics examination

Chapter 4 The Theory of Firm Under Perfect Competition MCQ with Answers Class 12 Economics

MCQ Questions Class 12 Economics The Theory of Firm Under Perfect Competition provided below have been prepared by expert teachers of grade 12. These objective questions with solutions are expected to come in the upcoming Standard 12 examinations. Learn the below provided MCQ questions to get better marks in examinations.

Question. Average revenue is defined as:
(a) Revenue per unit of commodity
(b) Addition to revenue when one more unit of the commodity is sold
(c) Proceeds from the sale of the commodity
(d) All of the above

Question. A rightward shift in supply curve shows:
(a) Contraction in supply
(b) Decrease in supply
(c) Expansion in supply
(d) Increase in supply

Question. When less quantity is supplied at a lower price, it shows:
(a) Contraction in supply
(b) Decrease in supply
(c) Expansion in supply
(d) Increase in supply

Question. When MR is zero, TR is _________:
(a) Maximum
(b) Minimum
(c) Zero
(d) Rising

Question. Marginal revenue is defined as:
(a) Revenue per unit of commodity
(b) Addition to revenue when one more unit of the commodity is sold
(c) Proceeds from the sale of the commodity
(d) All of the above

Question. AR is always equal to ___________?
(a) Revenue
(b) Price
(c) Cost
(d) Profit

Question. Average revenue and price are always equal under: (Delhi 2017)
(a) Perfect Competition only
(b) Monopolistic Competition only
(c) Monopoly only
(d) All market forms

Question. When same quantity is supplied at a higher price, it shows:
(a) Contraction in supply
(b) Decrease in supply
(c) Expansion in supply
(d) Increase in supply

Question. Total revenue is defined as:
(a) Revenue per unit of commodity
(b) Addition to revenue when one more unit of the commodity is sold
(c) Proceeds from the sale of the commodity
(d) All of the above

Question. Market supply curve is ________ summation of individual supply curves.
(a) Horizontal
(b) Vertical
(c) Can be both horizontal or vertical
(d) None of the above

Question. Elasticity of supply is given by the formula:
(a) ΔQ/ΔP.P/Q
(b) ΔP/ΔQ.Q/P
(c) ΔQ/ΔP.Q/P
(d) ΔQ/ΔP

Question. Slope of supply curve is given by the formula:
(a) ΔQ/ΔP 
(b) ΔP/ΔQ 
(c) P/Q
(d) Q/P 

Question. Under perfect competition, MR curve is:
(a ) Horizontal
(b) Vertical
(c) Falling
(d) Rising

Question. When AR is above AC, firm earns:
(a) Supernormal profit
(b) Loss
(c) Breakeven point
(d) Minimise losses

Question. When AR = AC, firm is at:
(a) Supernormal profit point
(b) Loss making point
(c) Breakeven point
(d) Minimise losses point

Question. When AC is more than AR, what is the firm doing?
(a) Making supernormal profit
(b) Incurring loss
(c) Having breakeven point
(d) Minimising losses

Question. When AR passes through some point between minimum AVC and AC, it is called:
(a) Supernormal profit
(b) Loss
(c) Breakeven point
(d) Minimising losses

Question. Movement along the supply curve is also called:
(a) Change in supply
(b) Change in quantity supplied
(c) Contraction in supply
(d) Increase in supply

Question. The value of elasticity of supply ranges from:
(a) Zero to infinity
(b) Minus infinity to plus infinity
(c) One to infinity
(d) Zero to minus infinity.

Question. When AR passes through minimum point of AVC, it is called:
(a) Breakeven point
(b) Shutdown point
(c) Normal profit point
(d) Supernormal profit point

Question. Breakeven point means:
(a) AR = AC
(b) TR = TC
(c) No profit, no loss
(d) All of the above

Question. What is constant in the law of supply?
(a) Price of related goods
(b) State of technology
(c) Cost of production
(d) All of the above

Question. When AR is constant AR is equal to _________ :
(a) MR
(b) TR
(c) AC
(d) MC

Question. When MR is positive, TR ________.
(a) Rises
(b) Falls
(c) Remains constant
(d) None of the above

Question. When AR falls, MR ________:
(a) Falls at faster rate
(b) Rises at constant rate
(c) Is falling at the same rate as AR curve
(d) Is constant

Question. Relationship between slope and elasticity of supply is:
(a) Es= 1/Slope.P/Q
(b) Es= Slope.Q/P
(c) Es= 1/Slope.Q/P
(d) Es= Slope

Question. A firm is able to sell more quantity of a good only by lowering the price. The firm’s marginal revenue, as he goes on selling, would be:
(a) Greater than average revenue
(b) Less than average revenue
(c) Equal to average revenue
(d) Zero

Question. When supply curve is upward sloping, its slope is __________.
(a) Positive
(b) Negative
(c) First positive then negative
(d) Zero

Question. When supply curve is vertical, ES = ____________?
(a) Zero
(b) 1
(c) ∞
(d) ES > 1

Question. When supply curve is horizontal, ES = ___________?
(a) Zero
(b) 1
(c) ∞
(d) ES > 1

Question. An upward movement along a supply curve shows:
(a) Contraction in supply
(b) Decrease in supply
(c) Expansion in supply
(d) Increase in supply

Question. Average revenue is defined as:
(a) Revenue per unit of commodity
(b) Addition to revenue when one more unit of the commodity is sold
(c) Proceeds from the sale of the commodity
(d) All of the above

Question. A rightward shift in supply curve shows:
(a) Contraction in supply
(b) Decrease in supply
(c) Expansion in supply
(d) Increase in supply

Question. When less quantity is supplied at a lower price, it shows:
(a) Contraction in supply
(b) Decrease in supply
(c) Expansion in supply
(d) Increase in supply

Question. When MR is zero, TR is _________:
(a) Maximum
(b) Minimum
(c) Zero
(d) Rising

Question. Marginal revenue is defined as:
(a) Revenue per unit of commodity
(b) Addition to revenue when one more unit of the commodity is sold
(c) Proceeds from the sale of the commodity
(d) All of the above

Question. AR is always equal to ___________?
(a) Revenue
(b) Price
(c) Cost
(d) Profit

Question. Average revenue and price are always equal under: (Delhi 2017)
(a) Perfect Competition only
(b) Monopolistic Competition only
(c) Monopoly only
(d) All market forms

Question. When same quantity is supplied at a higher price, it shows:
(a) Contraction in supply
(b) Decrease in supply
(c) Expansion in supply
(d) Increase in supply

Question. Total revenue is defined as:
(a) Revenue per unit of commodity
(b) Addition to revenue when one more unit of the commodity is sold
(c) Proceeds from the sale of the commodity
(d) All of the above

Question. Market supply curve is ________ summation of individual supply curves.
(a) Horizontal
(b) Vertical
(c) Can be both horizontal or vertical
(d) None of the above

Question. Elasticity of supply is given by the formula:
(a) ΔQ/ΔP.P/Q
(b) ΔP/ΔQ.Q/P
(c) ΔQ/ΔP.Q/P
(d) ΔQ/ΔP

Question. Slope of supply curve is given by the formula:
(a) ΔQ/ΔP 
(b) ΔP/ΔQ 
(c) P/Q
(d) Q/P 

Question. Under perfect competition, MR curve is:
(a ) Horizontal
(b) Vertical
(c) Falling
(d) Rising

Question. When AR is above AC, firm earns:
(a) Supernormal profit
(b) Loss
(c) Breakeven point
(d) Minimise losses

Question. When AR = AC, firm is at:
(a) Supernormal profit point
(b) Loss making point
(c) Breakeven point
(d) Minimise losses point

Question. When AC is more than AR, what is the firm doing?
(a) Making supernormal profit
(b) Incurring loss
(c) Having breakeven point
(d) Minimising losses

Question. When AR passes through some point between minimum AVC and AC, it is called:
(a) Supernormal profit
(b) Loss
(c) Breakeven point
(d) Minimising losses

Question. Movement along the supply curve is also called:
(a) Change in supply
(b) Change in quantity supplied
(c) Contraction in supply
(d) Increase in supply

Question. The value of elasticity of supply ranges from:
(a) Zero to infinity
(b) Minus infinity to plus infinity
(c) One to infinity
(d) Zero to minus infinity.

Question. When AR passes through minimum point of AVC, it is called:
(a) Breakeven point
(b) Shutdown point
(c) Normal profit point
(d) Supernormal profit point

Question. Breakeven point means:
(a) AR = AC
(b) TR = TC
(c) No profit, no loss
(d) All of the above

Question. What is constant in the law of supply?
(a) Price of related goods
(b) State of technology
(c) Cost of production
(d) All of the above

Question. When AR is constant AR is equal to _________ :
(a) MR
(b) TR
(c) AC
(d) MC

Question. When MR is positive, TR ________.
(a) Rises
(b) Falls
(c) Remains constant
(d) None of the above

Question. When AR falls, MR ________:
(a) Falls at faster rate
(b) Rises at constant rate
(c) Is falling at the same rate as AR curve
(d) Is constant

Question. Relationship between slope and elasticity of supply is:
(a) Es= 1/Slope.P/Q
(b) Es= Slope.Q/P
(c) Es= 1/Slope.Q/P
(d) Es= Slope

Question. A firm is able to sell more quantity of a good only by lowering the price. The firm’s marginal revenue, as he goes on selling, would be:
(a) Greater than average revenue
(b) Less than average revenue
(c) Equal to average revenue
(d) Zero

Question. When supply curve is upward sloping, its slope is __________.
(a) Positive
(b) Negative
(c) First positive then negative
(d) Zero

Question. When supply curve is vertical, ES = ____________?
(a) Zero
(b) 1
(c) ∞
(d) ES > 1

Question. When supply curve is horizontal, ES = ___________?
(a) Zero
(b) 1
(c) ∞
(d) ES > 1

Question. An upward movement along a supply curve shows:
(a) Contraction in supply
(b) Decrease in supply
(c) Expansion in supply
(d) Increase in supply

We hope the above multiple choice questions for Class 12 Economics for Chapter 4 The Theory of Firm Under Perfect Competition provided above with answers based on the latest syllabus and examination guidelines issued by CBSE, NCERT and KVS are really useful for you. The Theory of Firm Under Perfect Competition is an important chapter in Class 12 as it provides very strong understanding about this topic. Students should go through the answers provided for the MCQs after they have themselves solved the questions. All MCQs have been provided with four options for the students to solve. These questions are really useful for benefit of class 12 students. Please go through these and let us know if you have any feedback in the comments section.