NCERT Exemplar Class 11 Economics Chapter 4 MCQ

(d) Abnormal profitExplanation:If a firm makes more than normal profit it is called super-normal profit. Super normal profit is also called economic profit, and abnormal profit, and is earned when total revenue is greater than the total costs.$ Total profits = total $ revenue (TR) – total costs ($ TC)Abnormal Profit = MR $ > MC

($ b) MR = MC $Explanation:Producer’s equilibrium refers to a situation where profits are maximised, i.e., the difference between total revenue and total cost is maximised, or in cases of losses, the difference is minimised, so as to minimise losses.

(b) 1.0Explanation:Regardless of the gradient of the linear supply curve or its position on the supply curve, the PES of a linear supply curve that passes through the origin is always equal to 1. Therefore,$ if the supply curve originates with P = 0$ and Q = 0$, the elasticity will always be 1.Formula:% Change in quantity% Change in price.

1.0

Is large

($ a) AC = AR $Explanation:$ AC = AR $ means the firm’s cost and revenue are equal which means the firm does not earn any profit or no loss, which means the firm is earning normal profit.

($ b) MR = MC $Explanation:A firm is in equilibrium when it is satisfied with its existing level of output. The firm wills, in this situation produce the level of output which brings in greatest profit or smallest loss. When this situation is reached, the firm is said to be in equilibrium.Marginal cost should be equal to marginal revenue, then only the firm can be called at equilibrium.

(d) Marginal revenueExplanation:Marginal revenue is the extra revenue generated when a perfectly competitive firm sells one more unit of output. The marginal revenue received by a firm is the change in total revenue divided by the change in quantity.Perfect competition is a market structure with a large number of small firms, each selling identical goods. Perfectly competitive firms have perfect knowledge and perfect mobility into and out of the market. These conditions mean perfectly competitive firms are price takers, they have no market control and receive the going market price For All output sold.Since they are the price takers and have no control over price but just the production, so even if they increase their quantity of production, still the price will remain constant and so does the marginal revenue.

(d) Demand curveExplanation:Average revenue curve is often called the demand curve due to its representation of the product’s demand in the market. Each point on the curve represents the price of the product in the market. Price determines the demand for a product, hence Average revenue curve is also demand curve. Assuming it is a perfect competitive market.