In the short run, output can be varied by changing the size of factories. can be
ID: 1199529 • Letter: I
Question
In the short run, output
can be varied by changing the size of factories.
can be varied by changing the amount of equipment in factories.
can be varied by using the factories and equipment in the industry with more or less of other inputs.
cannot be varied because inputs are fixed
As output rises, average fixed cost
rises
falls
remains the same
rises, then falls
The ATC curve is __________ and the AVC curve is __________.
U-shaped; U-shaped
not U-shaped; not U-shaped
U-shaped; not U-shaped
not U-shaped; U-shaped
If a firm cannot cover its variable costs, it will
operate in the short run and stay in business in the long run.
operate in the short run and go out of business in the long run.
shut down in the short run and stay in business in the long run.
shut down in the short run and go out of business in the long run.
If price is between the break-even point and the shutdown point, in the short run the firm will
operate
shut down
stay in business
go out of business
Explanation / Answer
Answer:- 1. In the short run the output can be varied by using factories and equipment in the industry with more or less of other inputs. As in short run fixed cost is fixed as per prescribed inputs, as total product is vary as increase in labour, will increase total product.
Answer:- 2. when the output rises the average fixed cost fall, because the ATC = Fixed cost / Q(quantity or ouput). so its according when the output rises, fixed remain sames and ATC start Falling.
Answer:- 3 ATC curve is U-shaped and AVC curve is U shaped, as when the production increase the variable cost is also increase, as the ATC curve is more upper than AVC because of FIxed cost.
ATC = AVC + AFC
answer:- 4 If a firm cannot cover its variable cost, it will shut down in the short run and stay in business in the long run. As when the variable cost is high then total production is also high, in this the business receive money from market and invest in the long run project and exit from short run market.
Answer:- 5 If the price is between the break even point and the shut down point, in the short run the firm will shut down its business, because as the price comes between them, then the company shut down its business, it its cost rises then business have to incurr more loss, so its better to shut down business.