SSC CGL Finance – Forms of Market & Price Determination – Exam-Level Drill

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SSC CGL Finance – Forms of Market & Price Determination – Exam-Level Drill – 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 monopolist sells in two separate markets: Q₁ = 60 − P₁ and Q₂ = 48 − 2P₂; MC = ₹ 6 (constant). The profit-maximising prices are:

Correct Answer: A [₹ 33 in market 1 and ₹ 15 in market 2]

Explanation:

MR₁ = 60 − 2Q₁ = 6 → Q₁ = 27, P₁ = 33; P₂ = 24 − Q₂/2, MR₂ = 24 − Q₂ = 6 → Q₂ = 18, P₂ = 15.

2.  
For the same discriminating monopolist (no fixed cost), total profit is:

Correct Answer: B [₹ 891]

Explanation:

(33 − 6) × 27 + (15 − 6) × 18 = 729 + 162 = 891.

3.  
Two Cournot duopolists face P = 90 − Q with MC = ₹ 18 each. Total industry output is:

Correct Answer: D [48 units]

Explanation:

q each = (a − c)/3b = 24 → 48, which is 2/3 of the competitive 72 (monopoly 36).

4.  
For P = 120 − 3Q and MC = ₹ 30, the Lerner index at the monopoly optimum (Q = 15, P = ₹ 75) is:

Correct Answer: C [3/5]

Explanation:

(75 − 30)/75 = 3/5 (= 1/e with e = 5/3).

5.  
Market shares of five firms: 30%, 25%, 20%, 15% and 10%. The HHI is:

Correct Answer: C [2250]

Explanation:

900 + 625 + 400 + 225 + 100 = 2,250.

6.  
Assertion–Reason
A: A monopolist has no supply curve.
R: Under monopoly, the same output may be offered at different prices depending on the shape of demand, so there is no unique price–quantity relation.

Correct Answer: D [Both A and R are true and R explains A]

Explanation:

Price depends on demand elasticity as well as MC, so no unique supply schedule exists.

7.  
Match the followingMatch the degree of price discrimination with the example:
P. First Q. Second R. Third
1. Lower per-unit price for larger quantity slabs 2. Different fares for students and adults 3. Each buyer charged his full willingness to pay

Correct Answer: B [P-3, Q-1, R-2]

Explanation:

1st = per buyer/unit; 2nd = by quantity blocks; 3rd = by groups of buyers.

8.  
A competitive firm has TC = 100 + q² (MC = 2q, AVC = q). Price falls to ₹ 18. In the short run the firm:

Correct Answer: A [Produces 9 units with a loss of ₹ 19]

Explanation:

q = 9: TR 162 − TC 181 = −19; price 18 > AVC 9, so producing beats shutting (−100).

9.  
For P = 80 − 4Q and MC = ₹ 16, consumer surplus falls by how much when a competitive industry is replaced by a monopoly?

Correct Answer: B [₹ 384]

Explanation:

CS: competition ½ × 16 × 64 = 512; monopoly (Q 8, P 48) ½ × 8 × 32 = 128; fall = 384 (= profit 256 + deadweight loss 128).

10.  
Chronological orderArrange in chronological order:
1. Chamberlin's theory of monopolistic competition
2. Cournot's duopoly model
3. Sweezy's kinked demand curve
4. Marshall's Principles of Economics

Correct Answer: A [2, 4, 1, 3]

Explanation:

1838 (Cournot) → 1890 (Marshall) → 1933 (Chamberlin) → 1939 (Sweezy).

11.  
A monopolist faces P = 90 − Q, has MC = AVC = ₹ 10 and a fixed cost of ₹ 2,000. In the short run it should:

Correct Answer: C [Produce 40 units at ₹ 50 and bear a loss of ₹ 400]

Explanation:

Operating profit (50 − 10) × 40 = 1,600 covers part of the fixed cost: −400 is better than −2,000.

12.  
One-line fact recallAccording to its official website, the Competition Commission of India was established by the Central Government with effect from:

Correct Answer: D [14 October 2003]

Explanation:

cci.gov.in: established with effect from 14th October 2003 under the Competition Act, 2002.

➤ 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)
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