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Class 12 The Theory of the Firm under Perfect Competition worksheet

CBSE Social Science. Total, average and marginal revenue, profit maximisation (p = MC), shut down and break-even points, supply curves and price elasticity of supply. Every sheet has 20 questions in three sections and an answer key, and the numbers change every time.

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Sample questions

Real questions from this chapter, as the app sets them. Tap Answer to see the answer and working.

Section A · multiple choice

1.
In perfect competition, each firm is a:
1. monopolist
2. price leader
3. price maker
4. price taker
Answer
(d) price taker
2.
What is meant by “shut down point”?
1. where price equals minimum AVC
2. horizontal sum of firms’ supply curves
3. % change in quantity supplied ÷ % change in price
4. the least profit that keeps a firm in business
Answer
(a) where price equals minimum AVC
3.
What happens to a competitive firm’s supply curve with a rise in the price of an input?
1. does not change at all
2. shifts right
3. shifts left
4. becomes the demand curve
Answer
(c) shifts left

Section B · short answer

4.
Name three features of a perfectly competitive market.
Answer
Many buyers and sellers, a homogeneous product, free entry and exit (and perfect information).
5.
What does each feature of perfect competition mean? (a) price-taking behaviour (b) many buyers and sellers
Answer
(a) a firm sells any amount at the market price but nothing above it (b) no one can affect the market price

Section C · long answer

6.
Explain why a firm maximises profit where price equals marginal cost.
Answer
If price exceeds MC, an extra unit adds to profit; if MC exceeds price, cutting output adds to profit; so profit is highest where they are equal on the rising MC.

Fresh sheets for your child

In the app, every The Theory of the Firm under Perfect Competition sheet is new: the app remembers the questions your child has already had and leaves them out. Print the sheet as a PDF, or use notebook mode and write the answers in a notebook.

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