If a firm produces zero output in the short period then which statement is true?
Its total cost will be zero
Its variable cost will be positive
Its fixed cost will be positive
Its average cost will be zero
Correct Answer :
C. Its fixed cost will be positive
Related Questions
Extension (expansion) of demand means:
More quantity demanded at a lower price
More quantity demanded at a higher price
More quantity demanded at the same price
None of the above
The slope of the iso-cost line (budget line) is determined by:
Pricing of two factors
Productivity of the two factors
Degree of substitutability of two factors
None of the above
The water diamond paradox was firstly resolved with the help of:
Labor theory of value
Individual theory of value
Producer theory of value
Consumer theory of value
Extension (expansion) and contraction of demand are result of:
Change in consumers income
Change in consumers tastes
Change in price
None of the above
The Hicksian indirect utility function in the form of equation is:
x =f(P)
x =a-bp
General equilibrium is concerned with simultaneous equilibrium of:
Few economic agents
All the economic agents
Two economic agents
Many economic agents
At the point where a straight line demand curve meets the quantity axis (x-axis), elasticity of demand is:
Equal to zero
Equal to one
Equal to infinite
More than one
Social costs equal private costs when:
Marginal cost is zero
Total cost is zero
External costs are zero
Average costs are zero
Technological efficiency:
Is the same as economic efficiency
Is achieved when the output produced is maximum for the given level of inputs
Means that there is only one way to produce a given quantity of output
None of the above
Indifference curves are downward sloping and are drawn bowed toward the origin (convex to the origin) implying:
Consumers prefer to have less satisfaction than more of both commodities
As more and more of one commodity is obtained, less and less of the other must be given up to keep satisfaction constant
The total satisfaction obtained along an indifference curve decreases at an increasing rate
None of the above
With the expansion of output, the short run average cost curve, beyond a point, starts rising because:
Average fixed cost increases sharply
More production yields lower per unit price
The law of variable proportions applies to short run production
Sales expenses become much larger
Which of the following goods is most likely to be exchanged in a market of local rather than national scope?
University professors
Computer components
Building materials
Jet airplanes
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
AR curve under perfect competition:
Slopes downwards to the right
Slopes upward to the right
Is vertical to the x-axis
Is horizontal to the x-axis
An economic theory is :
An axiom
A proposition
A hypothesis
A tested hypothesis
The total revenue curve for monopolist is the shape of:
Circle
Rectangle
Parabola
None of the above
Cardinal approach includes arranging:
The different combinations of X and Y higher and lower without actually measuring the difference of utility between them
The different combinations of X and Y higher and lower and measuring the difference of utility between them
Different combination of X, Y and Z
None of above
Identify the author of The Principles of political Economy and Taxation:
Alfred Marshal
J.S.Mill
David Ricardo
A.C.Pigou
The demand curve of a firm in monopolistic competition is:
Negatively sloped
Vertical
Horizontal
Positively sloped
The advertisement and other selling activities:
Lessen the differentiation
Widen the differentiation
Does not effect the differentiation
All of the above
A market demand curve presumes that:
All consumers are alike
Incomes of all consumers is the same
Tastes of all consumers are the same
Consumers differ in taste, incomes and other matters
If the production function is homogeneous, the expansion path will be a straight line through the origin whose slope determines the optimal:
L/K ratio
K/L ratio
P/L ratio
P/K ratio
Marginal utility (MU) always:
Increases
Decreases
Remains constant
None of above
The price under perfect competition is settled by:
Producers
Sellers
Buyers
Sellers and buyers
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
If as a result of a decrease in price, total outlay (expenditures) on a commodity increases, its price-elasticity of demand is:
Perfectly elastic (infinitely elastic)
Relatively elastic (greater than one elasticity)
Unit elastic
Relatively inelastic (less than one elasticity)
When at a given price, the quantity demanded of a commodity is more than the quantity supplied, there will be:
An upward pressure on price
A downward pressure on price
Price will remain unaffected
All of the above
In market sharing cartel model, cartel determines the shares of:
the individuals
industry
firms
associations
In modern cost theory, AVC= b1 and MC= b1 in the range of:
Excess capacity
Reserve capacity
Limited capacity
None of the above
In short run, a firm would remain in business as long as which one of the following of cost is covered?
Total costs
Fixed costs
Variable costs
Constant costs