QUIZ LAB 5

Firm’s decision to operate or shut down in the short run depends on...

• Total variable costs

• Total fixed costs

• Total costs

• Average fixed costs

• Average costs

When firms decide to shut down in the short run, it will bear losses equal to

• Total variable costs

• Total fixed costs

• Total costs

• Average fixed costs

• Average costs

Economies of scale happen when a firm's expansion leads to...

• Higher fixed costs

• Lower fixed costs

• Higher variable costs

• Lower variable costs

• Lower average costs

Firms are having ….. when an increase in input results in the same amount increase of output

• Economies of scale

• Decreasing return to scale

• Increasing return to scale

• Constant return to scale

• Diseconomies of scale

Long run competitive equilibrium happens when...

• P = SRMC = SRAC = LRAC, positive profits

• P = SRMC = SRAC = LRAC, zero profits

• SRAC = LRAC, positive profits

• SRAC = LRAC, zero profits

• P = SRAC = LRAC, zero profits

Pareto optimality is related to specific criteria used by economists to judge the performance of economic systems, that is..

• Efficiency

• Equity

• Growth

• Stability

• Optimality

If the price of X exceeds its marginal costs, then society should…

• Do nothing

• Produce more X

• Produce less X

• Increase price of X

• Decrease price of X

The choices below are assumptions of a perfect competition market, except…

• Firms are price taker

• Homogenous products

• There’s barrier to entry

• Perfect information

• Large number of buyer and seller

General equilibrium is reached when equilibrium is established in ….. markets

• Input market

• Output market

• Perfect competition market

• Input and output market

• Efficient market

Perfectly competitive firms will produce as long as ...

• Price is greater than marginal costs

• Explicit costs is greater than implicit costs

• Long run costs is greater than short run costs

• Explicit costs is lower than implicit costs

• Earns accounting profits