A firm bought a pizza oven for $13,500 and if it shut down now, could sell the oven for $9,500. Which of the following statements is TRUE?
A) The relevant cost of the oven when considering shutting down is $13,500.
B) The relevant cost of the oven when considering shutting down is $9,500.
C) The relevant cost of the oven when considering shutting down is $4,000.
D) The cost of the oven does not matter when deciding whether or not to shut down.
C
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Suppose the marginal value curve for a monopsonist is MV = 70 - Q, and the marginal expenditure curve is ME = 10 + 2Q. What is the optimal price paid by the monopsonist?
A) P = 20 B) P = 50 C) P = 60 D) We need to know the AE curve in order to determine the optimal price
Which of the following is not true in the long run under perfect competition? a. There is no incentive for firms to enter or exit the industry. b. Economic profit is zero
c. Long-run marginal cost is minimized. d. Long-run average total cost is minimized.
Several countries in the world have failed to "converge" with industrialized countries. What does this mean about their economic growth rates? Explain why poorer countries have failed to "catch up", in terms of the pillars of economic growth. Are there any special problems facing these countries?
Which of the following is NOT a condition of a perfect competition:
A. each firm has complete knowledge about production and prices B. industry sales are small C. unrestricted entry and exit D. a single firm cannot affect market supply E. products produced by rival firms are perfect substitutes