A firm faces the shut down situation when (a) Price is less than average variable cost ; (b) Price is more than the average variable cost (c) Price is equal to fixed cost ; (d) Price is more than the average fixed cost

A firm faces the shut down situation when (a) Price is less than average variable cost ; (b) Price is more than the average variable cost (c) Price is equal to fixed cost ; (d) Price is more than the average fixed cost 
by

1 Answer

Answer :

(a) Price is less than average variable cost ; 
by

Related questions

If a firm shut down at a level when AVC > Price, the firm restricts its losses to (a) Total fixed cost ; (b) Average fixed cost ; (c) Variable cost ; (d) Average variable cost

Description : If a firm shut down at a level when AVC > Price, the firm restricts its losses to (a) Total fixed cost ; (b) Average fixed cost ; (c) Variable cost ; (d) Average variable cost

Last Answer : (a) Total fixed cost ;

When the price is less than the average variable cost, the firm should …………. (a) Continue to operate till the market recover ; (b) Shut down its operation for the time being (c) Retrench workers and pay them compensation; (d) Clear the existing stock at a price less than the prevailing price to beat the competitors

Description : When the price is less than the average variable cost, the firm should . (a) Continue to operate till the market recover ; (b) Shut down its operation for the time being (c) Retrench ... compensation; (d) Clear the existing stock at a price less than the prevailing price to beat the competitors

Last Answer :  (b) Shut down its operation for the time being

Breakeven point refers to the situation when (a) Total revenue is equal to total cost ; (b) Total revenue is more than total cost (c) Total revenue is less than total cost ; (d) Total revenue is equal to total variable cost

Description : Breakeven point refers to the situation when (a) Total revenue is equal to total cost ; (b) Total revenue is more than total cost (c) Total revenue is less than total cost ; (d) Total revenue is equal to total variable cost

Last Answer : (a) Total revenue is equal to total cost ;

Which of the following statement is true (a) Monopolist are price takers ; (b) Monopoly firm earn abnormal profits; (c) A Monopoly firm faces straight demand line ; (d) Supply curve of a monopoly firm is positive sloped

Description : Which of the following statement is true (a) Monopolist are price takers ; (b) Monopoly firm earn abnormal profits; (c) A Monopoly firm faces straight demand line ; (d) Supply curve of a monopoly firm is positive sloped

Last Answer : (a) Monopolist are price takers ;

A competitive firm maximizes its total profit when ……………… (a) Average cost equal average realization ; (b) Marginal cost equals Price; (d) Total revenue is the maximum ; (d) MR = AR

Description : A competitive firm maximizes its total profit when ……………… (a) Average cost equal average realization ; (b) Marginal cost equals Price; (d) Total revenue is the maximum ; (d) MR = AR

Last Answer : (d) Total revenue is the maximum ;

The ideal level of operation for a pure monopoly firm is the level where (a) TR and STC curve are parallel to each other ; (b) TR = TC ; (c) TR = Total variable cost; (d) TR is less than STC

Description : The ideal level of operation for a pure monopoly firm is the level where (a) TR and STC curve are parallel to each other ; (b) TR = TC ; (c) TR = Total variable cost; (d) TR is less than STC 

Last Answer : (a) TR and STC curve are parallel to each other ; 

Total profit of a firm in a perfect competitive market is – (a) Total revenue less total cost ; (b) Marginal revenue less marginal cost; (c) Total revenue less marginal cost ; (d) Total revenue less variable cost

Description : Total profit of a firm in a perfect competitive market is – (a) Total revenue less total cost ; (b) Marginal revenue less marginal cost; (c) Total revenue less marginal cost ; (d) Total revenue less variable cost

Last Answer : (a) Total revenue less total cost ;

Average Revenue of a monopolist firm is (a) Always more than the Marginal revenue ; (b) Always less than the Marginal revenue; (c) Equal to marginal revenue ; (d) Any of the above three possible

Description : Average Revenue of a monopolist firm is (a) Always more than the Marginal revenue ; (b) Always less than the Marginal revenue; (c) Equal to marginal revenue ; (d) Any of the above three possible

Last Answer : (a) Always more than the Marginal revenue ;

A firm should cease production in the short(a) Price is less than average fixed cost (b) Price is less than average cost (c) Profits are negative (d) Price is less than average variable cost run if

Description : A firm should cease production in the short run if(a) Price is less than average fixed cost (b) Price is less than average cost (c) Profits are negative (d) Price is less than average variable cost

Last Answer : (d) Price is less than average variable cost

Which of the following statement is true (a) In perfect competition Average and Marginal revenue are identical (b) In perfect competition Average and Marginal cost are identical (c) In perfect competition Average price and Marginal cost are identical (d) In perfect competition only normal profit can be earned by a firm

Description : Which of the following statement is true (a) In perfect competition Average and Marginal revenue are identical (b) In perfect competition Average and Marginal cost are identical (c) In perfect competition ... cost are identical (d) In perfect competition only normal profit can be earned by a firm

Last Answer : (a) In perfect competition Average and Marginal revenue are identical

In the short run if the price is above the average total cost in a monopolistic competitive market, the firm makes (a) Profits and new firms join the market ; (b) Profit and bar entry to new firms; (c) Makes losses and exit the market ; (d) Quick profit and disappears

Description : In the short run if the price is above the average total cost in a monopolistic competitive market, the firm makes (a) Profits and new firms join the market ; (b) Profit and bar entry to new firms; (c) Makes losses and exit the market ; (d) Quick profit and disappears

Last Answer : (a) Profits and new firms join the market ;

Which of the following faces a downward sloping demand curve (a) Firm in a competitive market ; (b) Firm in a monopoly market ; (c) Both ; (d) None

Description : Which of the following faces a downward sloping demand curve (a) Firm in a competitive market ; (b) Firm in a monopoly market ; (c) Both ; (d) None

Last Answer : (b) Firm in a monopoly market ;

Under perfect market conditions a firm is said to be in equilibrium where (a) Total output is equal to total demand ; (b) Profit is the maximum; (c) Where the total revenue is maximum ; (d) Where total average cost is the minimum

Description : Under perfect market conditions a firm is said to be in equilibrium where (a) Total output is equal to total demand ; (b) Profit is the maximum; (c) Where the total revenue is maximum ; (d) Where total average cost is the minimum

Last Answer : (b) Profit is the maximum; 

If a firm is operating at loss in the shortperiod in perfect combination, it should : (1) decrease the production and the price. (2) increase the production and the price (3) continue to operate as long as it covers even the variable costs. (4) shut-down and leave the industry

Description : If a firm is operating at loss in the shortperiod in perfect combination, it should : (1) decrease the production and the price. (2) increase the production and the price (3) continue to operate as long as it covers even the variable costs. (4) shut-down and leave the industry

Last Answer : (3) continue to operate as long as it covers even the variable costs. Explanation: The demand for labour is "derived- from the production and demand for the product being demanded. If the demand ... price and production numbers are met. Labour is "derived" from the market demand for the product.

If a firm is operating at loss in the short-period in perfect combination, it should : (1) decrease the production and the price. (2) increase the production and the price (3) continue to operate as long as it covers even the variable costs. (4) shut-down and leave the industry

Description : If a firm is operating at loss in the short-period in perfect combination, it should : (1) decrease the production and the price. (2) increase the production and the price (3) continue to operate as long as it covers even the variable costs. (4) shut-down and leave the industry

Last Answer : continue to operate as long as it covers even the variable costs.

Marginal cost can be equal to Average variable cost when (a) Average variable cost is falling ; (b) Average variable cost is increasing; (c) Average variable cost is constant ; (d) Under any of the above situations

Description : Marginal cost can be equal to Average variable cost when (a) Average variable cost is falling ; (b) Average variable cost is increasing; (c) Average variable cost is constant ; (d) Under any of the above situations

Last Answer : (c) Average variable cost is constant ;

In economic theory, in the short run all the cost are…………… (a) Fixed ; (b) Variable ; (c) Controllable ; (d) Semi variable

Description : In economic theory, in the short run all the cost are…………… (a) Fixed ; (b) Variable ; (c) Controllable ; (d) Semi variable

Last Answer : (a) Fixed ;

In economics, in the long run all the cost…………. (a) Are fixed ; (b) Are variable ; (c) Except labour are variable ; (d) Are non controllable

Description : In economics, in the long run all the cost…………. (a) Are fixed ; (b) Are variable ; (c) Except labour are variable ; (d) Are non controllable

Last Answer :  (b) Are variable ;

Total cost is the arithmetic sum of (a) AFC and AVC ; (b) FC and Variable cost ; (c) Marginal cost and variable cost; (d) Sunk cost and fixed cost

Description : Total cost is the arithmetic sum of (a) AFC and AVC ; (b) FC and Variable cost ; (c) Marginal cost and variable cost; (d) Sunk cost and fixed cost

Last Answer : (b) FC and Variable cost ;

If total production increases in the short run, the total cost will also…….. (a) Increase due to increase in fixed cost ; (b) Increase due to increase in variable cost (c) Increase due to increase in total cost ; (d) Remain constant

Description : If total production increases in the short run, the total cost will also…….. (a) Increase due to increase in fixed cost ; (b) Increase due to increase in variable cost (c) Increase due to increase in total cost ; (d) Remain constant

Last Answer : (b) Increase due to increase in variable cost

Law of returns to scale applies when……… (a) All inputs cost are variable ; (b) All input cost are fixed; (c) All cost are partly fixed and partly variable ; (d) None

Description : Law of returns to scale applies when……… (a) All inputs cost are variable ; (b) All input cost are fixed; (c) All cost are partly fixed and partly variable ; (d) None

Last Answer : (a) All inputs cost are variable ;

Marginal product is…………. (a) Rate at which total production changes with change in variable input; (b) Rate at which total production changes with change in total cost; (c) Rate at which total production changes with change in fixed cost ; (d) None

Description : Marginal product is…………. (a) Rate at which total production changes with change in variable input; (b) Rate at which total production changes with change in total cost; (c) Rate at which total production changes with change in fixed cost ; (d) None

Last Answer : (a) Rate at which total production changes with change in variable input; 

What will happen if a firm in perfect competitive market, increase its output by 50% (a)Total sales revenue will also increase by 50% ; (b) (b)Selling price will come down by 50%; (c)Total sales revenue will decrease by 50% ; (d)Profit will increase by 25%

Description : What will happen if a firm in perfect competitive market, increase its output by 50% (a)Total sales revenue will also increase by 50% ; (b) (b)Selling price will come down by 50%; (c)Total sales revenue will decrease by 50% ; (d)Profit will increase by 25%

Last Answer : (a)Total sales revenue will also increase by 50% ;

In a pure monopoly firm a firm can make abnormal profit at the long run equilibrium level due to (a) Price discrimination;(b)Cost effectiveness ; (c) Banned entry of new firms ; (d) Sales promotion

Description : In a pure monopoly firm a firm can make abnormal profit at the long run equilibrium level due to (a) Price discrimination;(b)Cost effectiveness ; (c) Banned entry of new firms ; (d) Sales promotion

Last Answer : (c) Banned entry of new firms ;

For a monopoly firm market demand curve is (a) Marginal revenue curve itself ; (b) Average Revenue curve itself ; (c) Marginal cost curve (d) None

Description : For a monopoly firm market demand curve is (a) Marginal revenue curve itself ; (b) Average Revenue curve itself ; (c) Marginal cost curve (d) None

Last Answer :  (b) Average Revenue curve itself ;

Long run supply curve of a constant cost industry is (a) Horizontal line at a price that is equal to the long run minimum average cost of production; (b) Horizontal line overlapping X axis ; (c) Vertical line at mid of X axis ; (d) Vertical line overlapping Y axis

Description : Long run supply curve of a constant cost industry is (a) Horizontal line at a price that is equal to the long run minimum average cost of production; (b) Horizontal line overlapping X axis ; (c) Vertical line at mid of X axis ; (d) Vertical line overlapping Y axis 

Last Answer : (a) Horizontal line at a price that is equal to the long run minimum average cost of production; 

Disguised unemployment refers to the situation when (a) Marginal Productivity of the surplus workers is zero (b) Marginal productivity of the surplus workers is less than average productivity (c) Marginal productivity of the surplus workers is falling sharply (d) Marginal productivity of the surplus workers is falling sharply

Description : Disguised unemployment refers to the situation when (a) Marginal Productivity of the surplus workers is zero (b) Marginal productivity of the surplus workers is less than average productivity ( ... surplus workers is falling sharply (d) Marginal productivity of the surplus workers is falling sharply

Last Answer : (a) Marginal Productivity of the surplus workers is zero

Total variable cost curve is explained by (a) Law of the diminishing marginal returns ; (b) The price of the variable inputs; (c) Production function ; (d) All the three

Description : Total variable cost curve is explained by (a) Law of the diminishing marginal returns ; (b) The price of the variable inputs; (c) Production function ; (d) All the three 

Last Answer : ; (d) All the three

Law of variable proportion applies……………. (a) When all inputs are variable ; (b) When all input are fixed ; (c) Some inputs are fixed and some are variable ; (d) All the three

Description : Law of variable proportion applies……………. (a) When all inputs are variable ; (b) When all input are fixed ; (c) Some inputs are fixed and some are variable ; (d) All the three

Last Answer : (c) Some inputs are fixed and some are variable ; 

GDP at factor cost exceeds GDP at market price (a) When the factor income from abroad is negative ; (b) When depreciation on fixed capital exceeds income in investment; (c) When direct tax exceeds indirect tax ; (d) When subsidies exceeds indirect taxes.

Description : GDP at factor cost exceeds GDP at market price (a) When the factor income from abroad is negative ; (b) When depreciation on fixed capital exceeds income in investment; (c) When direct tax exceeds indirect tax ; (d) When subsidies exceeds indirect taxes.

Last Answer : (d) When subsidies exceeds indirect taxes. 

A monopoly firm makes more profit because (a) It has ability to choose among price and output combination ; (b) It can discriminate price; (c) It leave the consumer with no consumer surplus ; (d) it acts as a market leader

Description : A monopoly firm makes more profit because (a) It has ability to choose among price and output combination ; (b) It can discriminate price; (c) It leave the consumer with no consumer surplus ; (d) it acts as a market leader

Last Answer : (a) It has ability to choose among price and output combination ;

In short run a monopolistic competition firm will be in equilibrium where (a) MR = curve intersect SMC curve from above (b) MR curve intersect SMC curve from below (c) MC = AR ; (d) MR curve intersect SMC from below and P is equal to or more than AVC

Description : In short run a monopolistic competition firm will be in equilibrium where (a) MR = curve intersect SMC curve from above (b) MR curve intersect SMC curve from below (c) MC = AR ; (d) MR curve intersect SMC from below and P is equal to or more than AVC

Last Answer : ; (d) MR curve intersect SMC from below and P is equal to or more than AVC

Demand curve of an Oligopoly firm is characterized by (a) Horizontal to X axis ; (b) Kink at the price ; (c) U shaped curve ; (d) A liner line

Description : Demand curve of an Oligopoly firm is characterized by (a) Horizontal to X axis ; (b) Kink at the price ; (c) U shaped curve ; (d) A liner line

Last Answer : (b) Kink at the price ;

In a competitive market ……………….. is the price taker (a) Firm ; (b) Industry ; (c) Consumer ; (d) Trade association

Description : In a competitive market ……………….. is the price taker (a) Firm ; (b) Industry ; (c) Consumer ; (d) Trade association

Last Answer : (a) Firm ; 

In a competitive market ………. is the price maker (a) Firm ; (b) Industry ; (c) Consumer ; (d) Trade association

Description : In a competitive market ………. is the price maker (a) Firm ; (b) Industry ; (c) Consumer ; (d) Trade association

Last Answer : (b) Industry ;

In the long run a firm in perfect competition earns (a) Normal profit only ; (b) Abnormal profit ; (c) Average profit of past five years; (d) 12.33% profit on capital employed

Description : In the long run a firm in perfect competition earns (a) Normal profit only ; (b) Abnormal profit ; (c) Average profit of past five years; (d) 12.33% profit on capital employed

Last Answer : (a) Normal profit only ;

An increase in price will result in no change in total revenue if (a) Percentage change in price equal the percentage change in price (b) Percentage change in demanded is more than the percentage change in price (c) Percentage change in price is less than percentage change in demand (d) Change in price is more than change in demand in absolute terms

Description : An increase in price will result in no change in total revenue if (a) Percentage change in price equal the percentage change in price (b) Percentage change in demanded is more than the percentage ... percentage change in demand (d) Change in price is more than change in demand in absolute terms

Last Answer : (a) Percentage change in price equal the percentage change in price 

)If the average total cost is Rs.54, total fixed cost is Rs.45000 and quantity produced is 2500 units, find the average variable costs (in Rs.) of the firm - (1) 24 (2) 18 (3) 36 (4) 60

Description : )If the average total cost is Rs.54, total fixed cost is Rs.45000 and quantity produced is 2500 units, find the average variable costs (in Rs.) of the firm - (1) 24 (2) 18 (3) 36 (4) 60

Last Answer : (3) 36 Explanation: The standard method of calculating average variable cost is to divide total variable cost by the quantity, illustrated by this equation : Average Variable Cost = Total Variable Cost/ Quantity of ... , Average Total Cost = 45000/2500 = 18 So Average Variable Cost = 54 - 18= 36

If the average total cost is Rs. 54, total fixed cost is Rs. 45000 and quantity produced is 2500 units, find the average variable costs (in Rs.) of the firm : (1) 24 (2) 18 (3) 36 (4) 60

Description : If the average total cost is Rs. 54, total fixed cost is Rs. 45000 and quantity produced is 2500 units, find the average variable costs (in Rs.) of the firm : (1) 24 (2) 18 (3) 36 (4) 60

Last Answer : 36

An increase in price will result in an increase in total revenue if (a) Percentage change in quantity demanded in greater than the percentage change in price (b) Percentage change in quantity demanded is less than the percentage change in price (c) Percentage change in quantity demanded is equal to the percentage change in price (d) None

Description : An increase in price will result in an increase in total revenue if (a) Percentage change in quantity demanded in greater than the percentage change in price (b) Percentage change in quantity demanded ... (c) Percentage change in quantity demanded is equal to the percentage change in price (d) None

Last Answer : (b) Percentage change in quantity demanded is less than the percentage change in price  

A decrease in price will result in an increase in total revenue if (a) Percentage change in quantity demanded in greater than the percentage change in price (b) Percentage change in quantity demanded is less than the percentage change in price (c) Percentage change in quantity demanded is equal to the percentage change in price (d) None

Description : A decrease in price will result in an increase in total revenue if (a) Percentage change in quantity demanded in greater than the percentage change in price (b) Percentage change in quantity demanded ... (c) Percentage change in quantity demanded is equal to the percentage change in price (d) None

Last Answer : (a) Percentage change in quantity demanded in greater than the percentage change in price 

Super normal profits occurs when (a) Average revenue is more than average cost ; (b) Total revenue is maximum; (c) Total cost is minimum ; (d) MC is equal to MR

Description : Super normal profits occurs when (a) Average revenue is more than average cost ; (b) Total revenue is maximum; (c) Total cost is minimum ; (d) MC is equal to MR 

Last Answer : (a) Average revenue is more than average cost ;

Goods which are not perfect substitute of each other but have to be consumed in a fixed ratio will have rate of substitution (a) Unity ; (b) Less than 1 ; (c) More than 1 ; (d) Zero

Description : Goods which are not perfect substitute of each other but have to be consumed in a fixed ratio will have rate of substitution (a) Unity ; (b) Less than 1 ; (c) More than 1 ; (d) Zero

Last Answer :  (d) Zero

Higher PPC curve indicates (a) More production of both the things with increase in technology or factor inputs supply; (b) More production of one at the expense of other; (c) More production of one items at the expense of other with increase in technology or factor input supply ; (d) Less than full employment situation

Description : Higher PPC curve indicates (a) More production of both the things with increase in technology or factor inputs supply; (b) More production of one at the expense of other; (c) More production of ... of other with increase in technology or factor input supply ; (d) Less than full employment situation

Last Answer : (a) More production of both the things with increase in technology or factor inputs supply; 

If a firms cost of raw material decreases then (a) Marginal cost curve will shift downward ; (b) Marginal cost curve will shift upward (c) Market price will go down ; (d) Market price will go up

Description : If a firms cost of raw material decreases then (a) Marginal cost curve will shift downward ; (b) Marginal cost curve will shift upward (c) Market price will go down ; (d) Market price will go up 

Last Answer : (a) Marginal cost curve will shift downward ;

The negatively sloped part of long run cost curve of a firm is due to (a) Increase in production due to specialization and division of labour; (b) Diseconomies of scale ; (c) Diminishing returns to scale ; (d) Marginal utility theory

Description : The negatively sloped part of long run cost curve of a firm is due to (a) Increase in production due to specialization and division of labour; (b) Diseconomies of scale ; (c) Diminishing returns to scale ; (d) Marginal utility theory

Last Answer : (a) Increase in production due to specialization and division of labour;

The positively sloped part of long run cost curve of a firm is due to (a) Economies of scale ; (b) Diseconomies of scale; (c) Diminishing returns to scale ; (d) Marginal utility theory

Description : The positively sloped part of long run cost curve of a firm is due to (a) Economies of scale ; (b) Diseconomies of scale; (c) Diminishing returns to scale ; (d) Marginal utility theory

Last Answer : (b) Diseconomies of scale;

Implicit cost refers to ……………… (a) Value of inputs owned by the firm and used in its own manufacturing process (b) Value of input or services purchased from outside and used in its own manufacturing process ; (c) Value of inputs owned by the firm and sold to others ; (d) Value of inputs or services for which no payments were made to outside

Description : Implicit cost refers to (a) Value of inputs owned by the firm and used in its own manufacturing process (b) Value of input or services purchased from outside and used in its own manufacturing ... and sold to others ; (d) Value of inputs or services for which no payments were made to outside 

Last Answer : (d) Value of inputs or services for which no payments were made to outside 

Explicit cost refers to (a) Actual expenses of the firm to purchase or hire input it needed (b) Actual and notional expenses of the firm to purchase or hire input it needed (c) Notional expenses of the firm to purchase or hire input it needed ; (d) All the three

Description : Explicit cost refers to (a) Actual expenses of the firm to purchase or hire input it needed (b) Actual and notional expenses of the firm to purchase or hire input it needed (c) Notional expenses of the firm to purchase or hire input it needed ; (d) All the three

Last Answer : (a) Actual expenses of the firm to purchase or hire input it needed 

The net factor income earned within the domestic territory of a country must be equal to (a) Net Domestic Product at factor cost ; (b) Net Domestic Product at market price; (c) Net National Product at market price ; (d) Personal income.

Description : The net factor income earned within the domestic territory of a country must be equal to (a) Net Domestic Product at factor cost ; (b) Net Domestic Product at market price; (c) Net National Product at market price ; (d) Personal income.

Last Answer : (a) Net Domestic Product at factor cost ;