Firm behaviour Quiz

In the short run, a firm continues to produce even at a loss as long as:

• Price < ATC

• Price > AVC

• Price = MC

• Revenue < TC

A perfectly competitive firm is a:

• Price maker

• Price taker

• Market controller

• Government regulated firm

• Profit maximizer only in the long run

Which cost changes as output changes in the short run?

• Fixed cost

• Sunk cost

• Variable cost

• Opportunity cost

• Average cost

If marginal cost is below average total cost, then:

• ATC is constant

• ATC is decreasing

• ATC is increasing

• Profit is maximized

• Revenue is constant

The shutdown point occurs when:

• P = ATC

• P = MC

• P = AVC

• P = MR

• P = 0

The long-run decision of a firm includes:

• Changing variable inputs only

• Closing temporarily

• Adjusting plant size

• Avoiding marginal cost

• Setting output at zero

When economies of scale are exhausted, the firm faces:

• Constant returns to scale

• Increasing returns

• Diseconomies of scale

• Perfect efficiency

• Marginal cost fall

Diseconomies of scale occur when:

• ATC decreases as output increases

• ATC is minimized

• ATC increases as output increases

• MC = 0

• TR = TC

A firm facing a horizontal demand curve is operating in:

• Monopoly

• Oligopoly

• Perfect competition

• Monopolistic competition

• Natural monopoly

Which of the following affects a firm's cost structure the most in the long run?

• Variable cost

• Fixed labor cost

• Scale of production

• Tax policy

• Shutdown cost