What are the typical types of risk faced by a firm?
What will be an ideal response?
Changes in supply and demand conditions, changes in technology, increased competition, changes in interest rates and inflation rates, exchange rate changes, and political risk are typical types of risk faced by firms.
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With increasing returns (falling average costs), as the remaining firms expand, their demand curves become _______________ due to foreign competition, and firms must _______________.
a. steeper; raise prices b. flatter; lower prices c. flatter; raise prices d. steeper; lower prices
If average product is falling, what is happening to short-run average variable cost?
A. If average productivity is falling, short-run average variable cost is also falling; to say that productivity falls is equivalent to saying that cost falls. B. If average productivity is falling, short-run average variable cost could be rising or falling; it depends on what is happening with marginal productivity. C. Short-run average variable costs are always falling. They are not related to average product. D. If average productivity is falling, short-run average variable cost is rising; to say that productivity falls is equivalent to saying that cost rises.