Question

QUESTION 16

Competitive firm’s short-run supply curve is _____________

	A.	Its MC curve
	B.	The portion of its MC curve that lies above its AVC
	C.	The portion of its MC curve that lies above its ATC
	D.	None of the above is true

0.4 points   

QUESTION 17

Which of the following statements is true about sunk costs of a competitive firm?

	A.	They are part of the variable costs
	B.	Rational people ignore them when making long-run decisions
	C.	They are the portion of costs that have already been committed and cannot be recovered
	D.	In the short run, marginal cost is sunk cost

0.4 points   

QUESTION 18

For a competitive firm, if the price is higher than its AVC but lower than the bottom of its ATC, then ______________

	A.	it will shut down immediately
	B.	it will stay in the market in the long run
	C.	it stays in the market in the short run, but may exit the market in the long run
	D.	the firm can adjust the market price to make it higher

0.4 points   

QUESTION 19

For a competitive firm, which pair of curves never intersect each other when Q>0?

	A.	ATC and MC
	B.	ATC and AFC
	C.	AR and MC
	D.	MR and MC

0.4 points   

QUESTION 20

Competitive firm’s long-run supply curve is ______________

	A.	The portion of its MC curve that lies above ATC
	B.	Part of its MC curve
	C.	Part of its short-run supply curve
	D.	All above are true

Answer 1

Answer.)

Q16.) The portion of its MC curve that lies above its AVC

The firm's short?run supply curve is the portion of its marginal cost curve that lies above its average variable cost curve. As the market price rises, the firm will supply more of its product, in accordance with the law of supply.

Q17.) They are the portion of costs that have already been committed and cannot be recovered

Sunk costs are costs that were paid. Since economic decisions are based on the marginal cost and the marginal benefit of a proposed action, the primary characteristic of sunk costs is that their marginal cost is zero, regardless of the initial cost.

Q18.) it stays in the market in the short run, but may exit the market in the long run

If price is higher than AVC then the firm stays in the market in the short run.

Q19.) ATC and AFC

while AFC decrease continuously as output increases, ATC is normally of U-shaped and both can never meet.

Q20.) All above are true