True, false, or uncertain? Any firm that is not covering fixed costs should shut down in the short run
Indicate whether the statement is true or false
False. Fixed costs are sunk and should have no effect on short-run decisions. If a firm is not covering variable costs, it should shut down, because those costs are avoidable.
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Natural oligopoly is a situation where
A) the level of demand can support only a few firms. B) there is only one firm. C) there are only two firms. D) there are legal barriers to entry.
When inflation causes relative-price variability,
a. consumer decisions are distorted and the ability of markets to efficiently allocate factors of production is impaired. b. consumer decisions are distorted, but markets are still able to efficiently allocate factors of production. c. consumer decisions are not distorted, but the ability of markets to efficiently allocate factors of production is impaired. d. consumer decisions are not distorted and markets are still able to efficiently allocate factors of production.