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

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
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Answer :

(a) Total fixed cost ;
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Related questions

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

Description : 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 

Last Answer : (a) Price is less than average variable 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

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 ;

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 ;

The slope of total variable cost curve equals…………….. (a) AVC ; (b) MC ; (c) AC ; (d) MPP

Description : The slope of total variable cost curve equals…………….. (a) AVC ; (b) MC ; (c) AC ; (d) MPP 

Last Answer : (b) MC ; 

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

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 ; 

Which of the following statement is true about average cost function (a) ATC= AFC-AVC ; (b) AVC = AFC + ATC ;(c) AFC = ATC+AVC ;(d) ATC = AFC + AVC

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Last Answer : ;(d) ATC = AFC + AVC

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

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

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

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

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

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

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

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

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

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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

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Which of the following cannot be U shaped curve (a) AFC curve ; (b) AC curve ; (c) AVC curve ; (d) AMC curve

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Which of these curve never touch X axis (a) AVC ; (b) AFC ; (c) TC ; (d) MC

Description : Which of these curve never touch X axis (a) AVC ; (b) AFC ; (c) TC ; (d) MC

Last Answer :  (b) AFC ;

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.

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Last Answer : ; (d) All the three

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Last Answer : (a) Fixed ;

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Last Answer :  (b) Are variable ;

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

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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

)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

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

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Last Answer :  (b) Average Revenue curve itself ;

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

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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

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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 ;

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In short run, if a competitive firm incurs losses, it will - (1) stop production. (2) continue to produce as long as it can cover its variable costs. (3) raise price of its product. (4) go far advertising campaign.

Description : In short run, if a competitive firm incurs losses, it will - (1) stop production. (2) continue to produce as long as it can cover its variable costs. (3) raise price of its product. (4) go far advertising campaign.

Last Answer : (1) stop production. Explanation: In the short run, a firm that is operating at a loss (where the revenue is less that the total cost or the price is less than the unit cost) must ... will shutdown if the sale of the goods or services produced cannot even cover the variable costs of production.

In short run, if a competitive firm incurs losses, it will (1) stop production. (2) continue to produce as long as it can cover its variable costs. (3) raise price of its product. (4) go far advertising campaign.

Description : In short run, if a competitive firm incurs losses, it will (1) stop production. (2) continue to produce as long as it can cover its variable costs. (3) raise price of its product. (4) go far advertising campaign.

Last Answer : stop production.

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 ;

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 ;

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 ;

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 ;

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 ;

The demand curve of a Monopoly firm is – (a) Same that of a firm in a perfect competition ; (b) Same as that of the total market demand; (c) Non-exist ; (d) Perfectly elastic

Description : The demand curve of a Monopoly firm is – (a) Same that of a firm in a perfect competition ; (b) Same as that of the total market demand; (c) Non-exist ; (d) Perfectly elastic

Last Answer : (b) Same as that of the total market demand;

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; 

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 

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;

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