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Practice Questions
Test your understanding with targeted questions related to the topic.
Question 1
Easy
Define the shut down point in economic terms.
💡 Hint: Think about what it means for costs and production levels.
Question 2
Easy
What cost structure indicates a short run shut down point?
💡 Hint: Focus on short run production costs.
Practice 4 more questions and get performance evaluation
Interactive Quizzes
Engage in quick quizzes to reinforce what you've learned and check your comprehension.
Question 1
What signifies the short run shut down point for a firm?
- Market Price < AVC
- Market Price = LRAC
- Market Price > AVC
💡 Hint: Think about the relationship between market prices and variable costs.
Question 2
In the context of perfect competition, when should firms consider shutting down in the long run?
- True
- False
💡 Hint: Consider what long term sustainability requires.
Solve and get performance evaluation
Challenge Problems
Push your limits with challenges.
Question 1
A firm has fixed costs of Rs 500 and average variable costs of Rs 40. What is the shut down price when it faces a market price of Rs 30? Determine the effects of this situation.
💡 Hint: Compare the market price to AVC.
Question 2
Analyze how a sustained price below the long run average cost could impact a firm's long-term market strategy.
💡 Hint: Consider the implications of continuous losses.
Challenge and get performance evaluation