Problem 1: Which level indicates the point of maximum economic efficiency?
- Lowest point on AC curve
- Lowest point on AVC curve
- Lowest point on MC curve
- None of the above
Problem 2: A monopoly will usually produce
- where its demand curve is inelastic
- where its demand curve is elastic
- where its demand curve is either elastic or inelastic
- only when its demand curve is perfectly inelastic
Problem 3: If a perfectly competitive firm incurs an economic loss, it should
- shut down immediately
- try to raise its price
- shut down in the long run
- shut down if this loss exceeds fixed costs
Problem 4: A high degree of operating leverage will
- cause a company's profit to fluctuate more widely as sales revenue changes.
- cause a company's profit to fluctuate less widely as sales revenue changes.
- cause profits to be high.
- cause profits to be low.
Problem 5: Economies of scale is indicated by
- declining long run AVC
- declining long run AFC
- declining long run AC
- None of the above