If the firms under perfect competition have different costs, abnormal profits will be earned in the long run only by

Assertion (A) All firms under perfect competition in long run earn only normal profit.
Reason (R) All firms under perfect competition in long run operate at the minimum average cost level.

A

Both (A) and (R) are true

B

(A) is true, but (R) is not true

C

(A) is not true, but (R) is true

D

Both (A) and (R) are false

Assertion (A) In long run under perfect competition, all firms invariably get only normal profit.
Reason (R) All firms incur minimum average cost and incur no selling cost due to absence of product differentiation.

A

(A) and (R) both are true

B

(A) is true, but (R) is false

C

(A) is false, but (R) is true

D

(A) and (R) both are false

Indicate the correct answer from the following types of the long run average cost curves on which the minimum average cost of production in long run can be determined.
1. Long run average cost curve under normal production function
2. Long run average cost curve under linearly homogeneous production function
3. Planning curve
4. Envelope curve

A

1, 2 and 3

B

2, 3 and 4

C

1, 3 and 4

D

Both 2 and 4

Consider the following statements.
1. Cartel is an informal agreement among the firms to avoid competition.
2. There is a free entry of firms in monopoly market.
3. There is a full control over price in perfect competition.
Which of the statement(s) given above is/are correct?

A

Only 1

B

Both 1 and 2

C

Only 2

D

All of the above

Assertion (A): Only the relevant costs should be taken into consideration for decision-making.
Reason (R): All variable costs are relevant costs, and all fixed costs are irrelevant costs.

A

Both (A) and (R) are correct

B

(A) is correct, but (R) is incorrect

C

(R) is correct, but (A) is incorrect

D

Both (A) and (R) are incorrect

Consider the given question and decide which of the following statements is sufficient to answer the question. How much did Mr. X earn in the year 2000? Statements: 1. Mr. X earned ₹ 7.000 in 2003, which is 10% more than what he earned in 2000. 2. Mrs. Y, Mr. X's wife, earned half of the amount Mr. X earned, and they together earned ₹ 9.000 in 2000.

A

Both 1 and 2 are sufficient to answer the question.

B

Either 1 or 2 is sufficient to answer the question.

C

1 alone is sufficient while 2 alone is not sufficient to answer the question.

D

2 alone is sufficient while 1 alone is not sufficient to answer the question.

The 4 costs of quality are external failure costs, internal failure costs, assurance costs and . . . . . . . . costs.

A

Inspection

B

Prevention

C

Performance

D

Insurance

In which of the following cases a partnership does not exist?
(1) Lender of money receiving profits.
(2) Servants or agents receiving profits.
(3) Widow or child of a deceased partner receiving profits.
(4) Seller of goodwill receiving profits.

A

(1), (2) and (3)

B

(1), (2) and (4)

C

(2), (3) and (4)

D

All these

The marginal cost is equal is to marginal revenue, the average cost is equal to average revenue, average revenue is equal to marginal revenue, and the average cost is equal to marginal cost. This is the condition of
1. Long-period equilibrium for a firm under monopoly.
2. Short-period equilibrium for a firm under oligopoly.
3. Long-period equilibrium
4. Long-period equilibrium for a firm under perfect competition.

A

1 and 4

B

3 and 4

C

1 and 3

D

Only 1

The question given below consists of a statement, followed by three arguments I, II and III. You have to decide which of the arguments is/are ‘strong’ arguments is/are ‘weak’ arguments and accordingly choose your answer from the alternatives given below each question. Statement: India's burgeoning shadow finance sector is likely to face a shake-up after defaults at one major lender battered the nation's financial markets in the past week and reinforced worries about credit risk. Industry officials and experts say they expect Indian regulators to cancel the licences of as many as 1,500 smaller non-banking finance companies because they don't have adequate capital, and to also make it more difficult for new applicants to get approval. Which of the following argument(s) stated support(s) the given fact? Arguments: I. Better capitalised and more conservatively run finance firms are likely to swallow up an increasing number of smaller rivals. That could make it difficult for many small borrowers to get loans, especially in the countryside where two-thirds of India's 1.3 billion people live and put the brakes on a surge in private consumption with a knock-on effect on growth. II. The shadow banking sector now comprises more than 11,400 firms with a combined balance-sheet worth 22.1 trillion rupees ($304 billion) and is less strictly regulated than banks. It has been attracting new investors, particularly as the nation's banks have had to slow their lending as they seek to work through $150 billion of stressed assets. III. Nearly 11,000 of India's NBFCs are small and medium-sized businesses with an asset base of less than 5 billion rupees. But the top 400, many of which are backed by banks and finance companies, control about 90 percent of the assets under management.

A

None is strong.

B

Only I is strong

C

Only II and III are strong.

D

Only II is strong.

E

All are strong.

If the firms under perfect competition have different costs, abnormal profits will be earned in the long run only by

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