In the short-run, in which one of the following situations would a competitive seller close down (shut-down)?
When he cannot produce at an economic profit
When price falls short of average variable cost at every level of output
When price falls short of average fixed cost at every level of output
When price falls short of average total cost at every level of output
Correct Answer :
B. When price falls short of average variable cost at every level of output
Related Questions
The demand curve of ostentation goods (Veblen goods) will be:
Negatively sloped
Positively sloped
Parallel to X-axis
None of the above
If a straight line supply curve makes an intercept on the Y-axis, elasticity of supply is:
Equal to unity
Less than unity
More than unity
Zero
If in the long run all factor inputs are increased three times and the resulting output is four times as before, it is a case of:
Decreasing returns to scale
Variable returns to scale
Constant returns to scale
Increasing returns to scale
The proportionality rule in production requires that the ratios of MP and factor prices are:
Doubled
Equalized
Not equalized
None of the above
If the factors have to be employed in a fixed ratio, then the elasticity of substitution under Leontief technology is:
One
Zero
Two
Five
Who formulated the Post-Keynsian Theory of Distribution and Growth?
J.M.Keynes
N.Kaldor
C.P.Kindleberger
Irving Fisher
The main contribution of Alfred Marshal is in the field of:
Research in mathematical economics
Economics of labor
Theory of production
Theory of demand
The law of variable proportions comes into being when:
All factors are variable
There is a fixed factor and variable factor
All factors are non-variable
None of the above
Extension (expansion) and contraction of demand are result of:
Change in consumers income
Change in consumers tastes
Change in price
None of the above
Increase in demand occurs when:
The price falls and the demand also falls down
The price increases but demand falls down
The price increases the demand remains constant and when the price remains constant the demand goes up
The price remains constant but demand falls
Of the following commodities, which has the lowest price-elasticity of demand?
Car
Salt
Tea
House
In case of budget line, we get pairs of two goods where consumers income is:
Fully spent
Half spent
Partially spent
Correctly spent
A producer attains the least cost combination when the relation between Marginal Rate of Technical Substitution (MRTS) and price (P) of the factors x and y is:
The cost of production is faced by a:
Producer
Consumer
Seller
Firm
Which is the first-order condition for the profit of a firm to be maximum?
AC=MR
MC=MR
MR=AR
AC=AR
With which of the following concepts is the name of J.M.Keynes particularly associated?
Marginal propensity to consume
Marginal propensity to save
Liquidity preference
All of the above
Under perfect competition, at equilibrium, marginal cost is:
Less than marginal revenue
Equal to marginal revenue
More than marginal revenue
None of the above
According to Marshal, the Law of Diminishing Returns is applicable to:
Industry
All fields of production
Agriculture
None of the above
Excess capacity is not found under:
Monopoly
Monopolistic competition
Perfect competition
Oligopoly
Who stated explicitly for the first time the Law of Camparative Costs?
David Ricardo
Adam Smith
James Mill
A.C.Pigou
A monopoly producer usually earns:
Abnormal profits
Only normal profits
Neither profits nor losses
Profits and losses which are uncertain
Marshallian demand function is also known as:
Utility demand function
Compensated demand function
Collective demand function
Relative demand function
If two households have identical preferences but different incomes then:
They must consume the same amounts of all goods
The wealthier one will have lower marginal utility for most goods
The wealthier one will have higher marginal utility for most goods
They will enjoy the same level of utility
If the demand curve remains unchanged and supply increases, the price will:
Rise
Fall
Remain the same
None of the above
Perfect competition implies:
Differentiated goods
Homogeneous goods
Advertised goods
Distress sale of goods
According to critics, the assumption of costless production is:
true
not true
reliable
deniable
Under monopolistic competition, the products sold by the firms are:
Economic substitutes
Technical substitutes
Both a and b
None of the above
Price leadership is associated with:
Collusive oligopoly
Non-collusive oligopoly
Cartel
Perfect competition
When marginal costs curve cuts average costs curve, average costs are:
Maximum
Zero
Minimum
Equal to one
The monopolist firm is price setter. The price setter firm is one which:
Can influence the market price
Cannot influence the market price
Can sell at zero price
None of the above