Which of the following conditions would definitely cause a perfectly competitive company to shut down in the short run?
Select one:
a. P < MC
b. P = MC < AC
c. P < AVC
d. P = MR
e. None of the above
Question 22
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Mars InC. produces 100,000 boxes of Snickers bars which sell for $4 a box. If variable costs are $3 per box, and it has $150,000 fixed operating costs, in the short run, it should:
Select one:
a. shut down as fixed costs are not being covered.
b. keep producing as profits are $50,000.
c. keep producing as variable costs are being met.
d. keep producing as total costs are being recovered
e. More information is needed in order to determine the firms actions.
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Assume a profit maximizing firm's short-run cost is TC = 700 + 60Q. If its demand curve is P = 300 - 15Q, what should it do in the short run?
Select one:
a. shut down
b. continue operating in the short run even though it is losing money
c. continue operating because it is earning an economic profit
d. Cannot be determined from the above information.
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Which of the following is true about a monopoly?
Select one:
a. Its demand curve is generally less elastic than in more competitive markets.
b. It will always earn economic profit.
c. It will always produce the same as a perfectly competitive firm.
d. It will always be subject to government regulation.
e. None of the above is true.
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Firms in monopolistic competition would:
Select one:
a. persistently realize economic profits in both the short and long run
b. may realize economic profits in the long run and normal profits in the short run
c. tend to incur persistent losses in both the short and long run
d. tend to realize economic profits in the short run and normal profits in the long run
e. none of the above
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In the long run, the most helpful action that a monopolistically competitive firm can take to maintain its economic profit is to:
Select one:
a. continue its efforts to differentiate its product.
b. raise its price.
c. lower its price.
d. do nothing, because it will inevitably experience a decline in profits.
e. none of the above.
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The main difference between perfect competition and monopolistic competition is:
Select one:
a. the number of sellers in the market.
b. the ease of exit from the market.
c. the difference in the firms profits in the long run.
d. the degree of product differentiation.
e. none of the above.
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Which of the following represent ways in which multinational corporations can protect themselves from exchange rate risks?
Select one:
a. forward markets
b. futures markets
c. currency options
d. All of the above.
e. None of the above.
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Which of the following would be an example of FDI?
Select one:
a. A Brazilian investor buys German government bond
b. An American buys a new Swedish car
c. An Italian firm builds a plant in Nebraska
d. A Canadian investor buys a French equity
e. None of the above.
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Transfer pricing is a method used to:
Select one:
a. determine whether a firm should make or buy a component product.
b. determine the correct value of a product as it moves from one stage of production to another.
c. minimize a multinational firm's tax liabilities.
d. all of the above.
e. none of the above.