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Firm A and Firm B produce the same goods but with different inputs If the inputs used by firm A are more easily available than the inputs used

Firm A and Firm B produce the same goods but with different inputs. If the inputs used by firm A are more easily available than the inputs used by firm B, then which of the following statements is true?

A) The elasticity of supply of firm A and firm B will be equal.

B) The elasticity of supply of firm A will be higher than the elasticity of supply of firm B.

C) The elasticity of supply of firm A will be lower than the elasticity of supply of firm B.

D) The elasticity of supply of firm A and firm B cannot be compared without information on price change.

12) A short-run decision by a firm to not produce anything during a specific period is referred to as a(n):

A) lockout.

B) shut down.

C) buyout.

D) exit.

13) A firm should shut down in the short run if the price is:

A) less than average fixed cost.

B) less than average total cost.

C) less than average variable cost.

D) less than marginal cost.

14) A firm with a fixed cost of $300 every month, and variable cost of $200 every month decides to shut down. In such a situation it would lose:

A) $200 every month.

B) $300 every month.

C) $500 every month.

D) $0 every month.

15) Exit of a firm refers to:

A) a short-run decision by a firm to not produce anything.

B) a long-run decision by a firm to leave the market.

C) a refusal to work organized by a group of employees at the firm.

D) an exclusion of employees of a firm from their place of work until certain terms are agreed upon by them.

16) ________ are costs that, once committed, can never be recovered and should not affect current and future production costs.

A) Opportunity costs

B) Marginal costs

C) Sunk costs

D) Variable costs

17) Which of the following is an example of a sunk cost?

A) The cost incurred in painting a new office space

B) The wage paid to workers in a mill

C) The cost of raw materials used in a factory

D) The cost of electricity used in the office

18) Which of the following is an example of a variable cost?

A) The cost incurred on the installation of new software in all office computers

B) The cost of electricity used in the office

C) The cost incurred on the purchase of land for a new office space

D) The annual rent paid for an office space

19) The short-run supply curve of a competitive firm is the portion of:

A) its average cost curve which lies above its marginal cost curve.

B) its average cost curve which lies below its marginal cost curve.

C) its marginal cost curve which lies above its average variable cost curve.

D) its marginal cost curve which lies below its average cost curve.

Mar 14 2020 View more View Less

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