Even though fixed costs do not affect the output decision, an increase in fixed costs results in a wider range of prices for which the firm operates at a loss
What will be an ideal response?
True. An increase in fixed costs will shift AC upward but leave AVC unchanged. The gap between AVC and AC represents prices at which the firm will operate at a loss.
You might also like to view...
If a firm is practicing third-degree price discrimination and is charging a price of $15 per unit to consumers in Group A and a price of $10 to consumers in Group B, which of the following is true?
A) Group B consumers have a greater price elasticity than Group A consumers. B) Group B consumers are less responsive to price changes than Group A consumers. C) Group A consumers have a greater price elasticity than Group B consumers. D) Group B consumers have a lower price elasticity than Group A consumers.
If an increase in the growth rate of AD leads to an increase in real GDP in the short run: a. the increase in AD was correctly anticipated
b. the increase in AD was greater than anticipated. c. the increase in AD was less than anticipated. d. the increase in AD could have been any of the above.
Within the United States, every city has:
A. a fixed exchange rate with every other city. B. their own currency board. C. an independent monetary policy. D. a floating exchange rate with every other city.
Refer to the data. The gross domestic product is:
A. $328.
B. $301.
C. $382.
D. $333.