. Which statement must be false? a) A firm with constant returns to scale in production will not have fixed costs. b) When a firm has increasing returns to scale, the upward sloping marginal cost curve lies above the average cost curve. c) All firms face diminishing returns to scale when they have a high output. d) When a firm produces the output which minimises average cost, marginal cost and average cost will be equal.
1. Which statement must be false?
a) A firm with constant returns to scale in production will not have fixed costs.
b) When a firm has increasing returns to scale, the upward sloping marginal cost curve lies above the average cost curve.
c) All firms face diminishing returns to scale when they have a high output.
d) When a firm produces the output which minimises average cost, marginal cost and average cost will be equal.
2. Which of the following statements about the relationship between marginal revenue, price, and the price elasticity of demand, is true?
a) A perfectly elastic demand curve will be vertical, showing that the firm sells a fixed output at all prices.
b) The more
c) If the price elasticity of demand
d) When a
3. Roots Wholefoods sells fruit and vegetables in a
a) Roots will have many competitors, who are able to produce identical goods.
b) Customers are fully informed about the prices which all shops set, and so will buy from the shops setting the lowest price.
c) In the short run, Roots can make either
d) If Roots were to make losses (in the long run), it would not be possible for it simply to shut down and leave the market.
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