11. Discuss the shutdown rule and the implications to a firm. 12. Contrast varia

Question

11. Discuss the shutdown rule and the implications to a firm.

12. Contrast variable costs and fixed costs.

13. Explain the importance of the short run Average Total Cost curve.

14. Why do economists believe the market structure of perfect competition to be efficient?

15. Choose either: perfect competition, monopolistic competition, oligopoly, or monopoly and discuss the driving characteristics of that market structure.

16. Give an example and discuss the importance of a specific Anti-trust policy.

17. Define the concept of derived demand in relation to the labor market.

18. What is the difference between a craft union and a collective union.

19. Explain the Lorenz curve.

20. Would you consider wealth to be a flow variable or a stock variable and state the difference between them.

Explanation / Answer

11. Accoding to the shutdonw rule, a firm should continue operations so long as it is able to cover its variable costs. Fixed costs in the short run do not play a role in determination whether the firm should shut down or not because it will be incurred anyways. So a firm should produce if the Price is greater than equal to Average Variable Cost.

12. Variable costs are the costs of resources or inputs which vary with the output whereas the fixed costs remain the same irrespective of the production quantity.

13. The average total cost curve is instrumental in determining the total costs which the firms incur at various production quantities. This helps firms in calculating the profit and find the profit maximising quantity.

14. Perfect competition is believed to be efficient because the total welfare in the market is maximum because the firms produce the highest quantity of the goods at the lowest prices and there is no power with the firms to alter the increase the price.

Please like my answer

Related Questions

Navigate

• Browse (All)
• Browse 1
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.