In the short run, in a perfectly competitive market, a firm will shut down if
A) P < AVC for all levels of output.
B) P < ATC for all levels of output.
C) ATC > P > AVC for all levels of output.
D) P > AFC for all levels of output.
Answer: A
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Refer to Figure 23-1. According to the figure above, at what point is aggregate expenditure less than GDP?
A) J B) K C) L D) none of the above
You manage a new product development team for an electronics manufacturer, and your firm's policy is that all new projects must pay for themselves in the first five years
Your team has projected that the first year of the project requires an initial investment of $2 million with no revenue, the second year loss is $500,000, the net revenue for year 3 is zero, and you earn $1.8 million in both year 4 and year 5. If the opportunity cost of capital for your firm is 8%, should you go ahead with this project? A) No, the expected NPV is negative B) Yes, the expected NPV is roughly $290,000 C) Yes, the expected NPV is $1.1 million D) We do not have enough information to answer this question.
For a perfectly competitive firm that should continue to operate in the short run, loss is minimized where
a. MR is maximized b. MR = MC c. P < MC d. MR < MC e. MR > ATC
When one country can produce a given amount of a good using fewer inputs than any other country,
A. Specialization will definitely increase worldwide consumption possibilities. B. It always has a comparative advantage in producing the good. C. Specialization will definitely increase worldwide production possibilities. D. It has an absolute advantage in producing the good.