True, false, or uncertain? Any firm that is not covering fixed costs should shut down in the short run
Indicate whether the statement is true or false
False. Fixed costs are sunk and should have no effect on short-run decisions. If a firm is not covering variable costs, it should shut down, because those costs are avoidable.
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If the quantity demanded changes proportionately the same as price, demand is said to be
A) vertical. B) elastic. C) unit elastic D) inelastic.
A minimum wage in the formal sector will likely
a. reduce the number of formal-sector workers b. increase labor supply and lower wages in the informal sector c. encourage rural-urban migration d. lead to increased mechanization in the formal sector e. all of the above
Refer to Figure 14.1. Other things equal, if the U.S. dollar increases in value relative to other currencies, this is best represented as a movement from
A) point X to point Y. B) point X to point Z. C) point Y to point Z. D) point Y to point X.
An increase in the MPC
a. increases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. b. increases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand. c. decreases the multiplier, so that changes in government expenditures have a larger effect on aggregate demand. d. decreases the multiplier, so that changes in government expenditures have a smaller effect on aggregate demand.