A loss bearing firm will continue to produce in the short run so long as the price at least covers:
Average variable cost
Average fixed cost
Average variable cost + average fixed cost
Marginal costs
Correct Answer :
A. Average variable cost
Related Questions
If the slope of the isoquant is equal to the slope of isocost, then isoquant is:
Concave to the origin
Convex to the origin
Tangent to the origin
None of the above
Kinked Demand Curve is consistent with which one of the following market situations?
Pure competition
Pure monopoly
Oligopoly
Monopolistic competition
The production possibility curve (PPC) is concerned with:
Resources of the economy
Interests of the economy
Limitations of the economy
Qualities of the economy
The long-run average cost is based on the fact that:
None of the factors are variable in the long-run
All factors are perfectly divisible in the long-run
None of the factors is divisible
Management factor is indivisible while all other factors are divisible and can be varied in long-run
The cost of one thing in terms of the alternative given up is known as:
Production cost
Physical cost
Real cost
Opportunity cost
In the long-run competitive equilibrium:
There is tendency for firms to enter but not leave the industry
Firms have no tendency either to enter or to leave the industry
Some firms may enter while the others may leave the market even after the equilibrium of the industry
Entry or exit of the firms cannot be predicted
A firm in a position of equilibrium is supposed to be maximizing:
Output
Sales
Profits
None of the above
Total fixed costs are:
All of the following curves are U-Shaped except:
The AVC curve
The AFC curve
The AC curve
The MC curve
Under monopolistic competition, in long-run there is:
Ban on exit
Ban on entry
Free entry
Free entry and exit
In economics, Externality means:
An externality is a cost or benefit which is not transmitted through prices
An externality is a cost or benefit which is transmitted through prices
An externality is a production received through external resources
None of the above
The normal long-run average cost curve is influenced by the:
Principle of diminishing returns
Economies and diseconomies of large scale production
Principle of constant return to scale
All of the above
The utility function u = f(x) is based upon :
Two goods
Few goods
One good
Zero goods
In market sharing cartel model, cartel determines the shares of:
the individuals
industry
firms
associations
An indifference curve normally slopes downward from:
Left to right
Right to left
Both of them
None of them
When the demand curve is rectangular hyperbola, it represents:
Unitary elastic demand
Perfectly elastic demand
Perfectly inelastic demand
Relatively elastic demand
An individual consumers demand is not determined by:
Price of the commodity
Price of the substitutes
His household income
Size of countrys population
Ordinal approach includes arranging:
The different combinations of X and Y in any way the consumer wants
The different combinations of X and Y higher and lower and measuring the difference of utility between them
The different combinations of X and Y higher and lower and not measuring the difference of utility between them
None of above
Perfect competition assumes:
All buyers and sellers have perfect knowledge of the market
Freedom of entry of firms into the industry
Homogeneous product
All of the above
The Law of Proportionality is another name of:
The law of diminishing marginal utility
The law of demand
The Law of Diminishing Returns
The law of supply
The low cost price leader will charge:
higher prices
zero prices
lower prices
specific prices
Price is measured in:
Physical units
Monetary units
Constant units
Current units
To calculate the elasticity of demand, which of the following formula is used?:
Percentage change in demand Original demand
Proportionate change in demand Proportionate change in price
Change in demand Change in price
None of the above
In case of monopoly, both AR and MR fall, but MR falls:
Double to that of AR
1/2 to that of AR
2/3 to that of AR
Four times to that of AR
If the price of a product falls which of the following would occur?
Indifference curves shift down
Budget line shifts down
Indifference curve shift up
Budget line pivots
In sweezy model (kinked demand curve model), the role of MC curve:
Can be ignored
Cannot be ignored
Partially be ignored
None of the above
In monopolistic competition, the real differentiation in products is due to difference in:
Style
Consumer
Cost
Material
The kink demand curve faced by an oligopolist is based on the assumption that:
Competitors will follow a price increase but not a price cut
Competitors will follow a price increase as well as a price cut
Competitors will ignore both a price increase and a price cut
Competitors will ignore a price increase but will follow a price cut
In the long run average costs curve, a firm can change:
Labour
Capital
Both of them
None of them
In the long run:
All factors can be used in different proportions
Management can be re-organized
A firm can experience returns to scale
All of the above