The largest possible loss that a firm will make in the short run is:
Zero
Its total fixed cost
Its total variable cost
Equal to one
Correct Answer :
B. Its total fixed cost
{At the shut-down point, the total maximum loss of the firm is equal to its total fixed cost (TFC). At this point firms revenues are equal to total variable cost (TR=TVC) and price is equal to average variable cost (P=AVC).}
Related Questions
In a socialist (communist) economy the invisible hand:
Guides most resource allocation decisions
Operates effectively only in the labor market
Operates effectively only in the market for capital
Is prevented from operating effectively
If as a result of an increase in prices, total outlay (expenditures) on a commodity decreases, its price-elasticity of demand is:
Perfect elastic (infinitely elastic)
Relatively elastic (greater than one elasticity)
Unit elastic
Relatively inelastic (less than one elasticity)
If there are many producers, each of whom has an individual production possibility curve, then the lowest marginal cost producer of good X is the producer:
Who must sacrifice fewer units of every other goods than any other producer
Who can produce more X per hour than any other producer
Who must sacrifice more units of every other goods than any other producer
None of the above
Along an isoquant, output remains same, and capital labor ratio:
Is also same
Is different
Is constant
Is zero
Indifference curve represents:
Only two commodities
Only three commodities
More than three commodities
Any number of commodities
Who wrote Mathematical Analysis for Economists?
J.P.Lewis
R.G.D.Allen
Paul A.Samuelson
E.D.Domar
The low cost price leader will charge:
higher prices
zero prices
lower prices
specific prices
The equilibrium of a firm is determined by the equality of MC and MR in only:
Under perfect competition
Under monopoly
Under imperfect competition
Under all the above market forms
When AC curve falls, MC curve falls:
More than AC curve
Less than AC curve
Equal to AC curve
None of the above
If the commodity is normal then Income Effect (I.E) is:
Negative
Positive
Zero
Infinite
The total utility (TU) curve is:
Concave to X-axis
Convex to X-axis
Concave to Y-axis
Convex to Y-axis
Microeconomics deals with the:
Allocation of resources of the economy as between production of different goods and services
Determination of prices of goods and services
Behavior of industrial decision makers
All of the above
The reaction curve of a firm is attained by joining the:
Isoprofit curve
Super profit curve
Normal profit curve
Indoprofit curve
If a commodity sold under monopoly is got free of cost, then MC will be:
Zero
Identical with the MR
A horizontal straight line
Infinite
The Latin term citeris paribus means:
Other things being equal
Because of this
Due to this
All the factors changes at the same rate
Identify the coefficient of price-elasticity of demand when the percentage increase in the quantity of a commodity demanded is smaller than the percentage fall in its price:
Equal to one
Greater than one
Smaller than one
Zero
In Edgeworth model, prices oscillate between:
Firms and industry price
Monopoly and duopoly price
Competitive and monopoly price
None of the above
In a perfectly competitive market, suppliers must know:
The incomes of consumers
The price of the good
What other commodities households could substitute for the good
Consumers expectations of the future
The long run average cost curve is the envelope of:
SACs
LACs
SMCs
LMCs
In context of oligopoly, the kinky demand curve (kinked demand curve) hypothesis is designed to explain:
Price and output determination
Price rigidity (price stickness)
Price leadership
Collusion among rivals
The difference between average total cost and average fixed cost shows:
Normal profits
Implicit costs
Variable costs
Opportunity costs
The average cost curve is a geometrical illustration of:
Hydraulic function
Cubic function
Pentagonic function
Quadratic function
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
The law of Diminishing Marginal Utility implies that the marginal utility of a good decreases as:
It gets more expensive
A household consumes more of it
Preference changes
A households income goes up
A firm under perfect competition has:
An AR curve which is a horizontal straight line
An AR curve which slopes downward
An AR curve which has a kink
An AR curve shape of which cannot be predicted
MC curve is:
L-shaped
U-shaped
V-shaped
Both a and b depending on situation
Under conditions of perfect competition, price in the long-run is equal to:
Minimum of average variable cost
Minimum of marginal cost
Minimum of average fixed cost
Minimum of average cost
In perfectly competitive markets, the profit maximization rule can be represented by:
MR=ATC
P=ATC
P=MC
P=AC
Which of the following conditions is met in the long-run equilibrium in monopolistic competition, where the firm is earning only normal profits?
MC =AC and P
MC = AC and P=MR
P =MC and P
MC=MR and P =AR= ATC
According to Marshal, the Law of Diminishing Returns is applicable to:
Industry
All fields of production
Agriculture
None of the above