SSC CGL Finance – Forms of Market & Price Determination – Level 1 · Warm-up

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SSC CGL Finance – Forms of Market & Price Determination – Level 1 · Warm-up – 12 questions, subject: Finance & Economics (Tier II Paper III). Every question has the correct answer with a one-line explanation; tap "Show Answer". Free practice for TNPSC, UPSC, SSC, Bank and RRB exams – Shanmugam IAS Academy, Coimbatore.

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1.  
A firm under perfect competition is a:

Correct Answer: B [Price taker]

Explanation:

Price is set by industry demand and supply; the firm accepts it.

2.  
The demand (AR) curve facing a perfectly competitive firm is:

Correct Answer: A [Horizontal (perfectly elastic)]

Explanation:

It can sell any amount at the market price.

3.  
Which feature is essential for a monopoly?

Correct Answer: D [No close substitute for the product]

Explanation:

One seller of a product without close substitutes, with barriers to entry.

4.  
Product differentiation with many sellers is the key feature of:

Correct Answer: C [Monopolistic competition]

Explanation:

Many sellers of close but differentiated products (brands).

5.  
The kinked demand curve is associated with:

Correct Answer: C [Oligopoly]

Explanation:

It explains price rigidity among a few interdependent sellers.

6.  
A market with a single buyer is called:

Correct Answer: A [Monopsony]

Explanation:

Mono = one, opsony = purchase.

7.  
Under perfect competition, advertising (selling cost) by an individual firm is:

Correct Answer: D [Not needed – the product is identical and buyers are fully informed]

Explanation:

Homogeneous product + perfect knowledge → no point in advertising.

8.  
Duopoly means a market with:

Correct Answer: B [Two sellers]

Explanation:

Answer: Two sellers. Duo = two sellers.

9.  
In the long run, a perfectly competitive firm earns:

Correct Answer: D [Only normal profit]

Explanation:

Free entry and exit push price to minimum LAC.

10.  
A monopolist is in equilibrium where:

Correct Answer: C [MR = MC (MC cutting MR from below)]

Explanation:

Profit maximisation: MR = MC, with MC cutting MR from below (MC need not be rising).

11.  
Price ₹ 90 and MC ₹ 63. The Lerner index of monopoly power is:

Correct Answer: A [0.3]

Explanation:

Answer: 0.3. (P − MC)/P = 27/90 = 0.3.

12.  
A bus company charges students a lower fare than other passengers for the same seat. This is:

Correct Answer: B [Third-degree price discrimination]

Explanation:

Buyers are divided into groups (markets) with different elasticities.

➤ Full notes, shortcuts and every answer explained – SSC CGL 2026 Finance & Economics (Tier II Paper III) book (₹149): www.shanmugamiasacademy.in/study-materials/ssc-cgl-finance-economics

📘 SSC CGL 2026 – General Studies – Finance & Economics (Tier II Paper III)
Here you get the answer with a one-line explanation. 1,064 original questions with worked answers · Part A Finance & Accounts and Part B Economics & Governance notes · practice sets + 3 mock tests
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