5. Topic 5(COLON) Theory of the Firm(COLON) Production, Costs and Revenue
Lesson 5.5: Profit Maximisation And The Short-run Shut-down Decision — Quiz
Test your understanding of lesson 5.5: profit maximisation and the short-run shut-down decision with 5 practice questions.
Practice Questions
Question 1
What is the condition for profit maximization in the short run for a firm?
Question 2
Which of the following describes supernormal profit?
Question 3
What does a firm face if the price it receives for its product falls below its average variable cost (AVC)?
Question 4
What is the area between average revenue (AR) and average total cost (ATC) on a cost-and-revenue diagram?
Question 5
In the long run, why might a loss-making firm choose to exit the market?