Respuesta :
Answer:
All : 1st, 2nd, 3rd are False
Explanation:
1. Average total cost is always greater than average variable cost by a constant amount : False.
Average Total Cost (ATC) is the total cost per unit of output. ATC = Average Variable cost (AVC) + Average fixed cost (AFC). Total fixed cost (TFC) is the cost which stays same at all levels, AFC = TFC / Q falls with increasing output. So, ATC is greater by AVC, by AFC (decreasing) amount.
2. In the short run, a perfectly competitive firm always maximises profit when average total cost is at minimum : False
A perfectly competitive firm maximises profit in short run when difference between its Total Revenue & Total cost is maximum, Marginal Revenue = Marginal Cost & MC > MR after the point.
3. If a firm shuts down in the short run, its profits will equal zero : False
A firm shuts down in short run, when its price < average variable cost, or firm's average revenue < average variable cost. This implies that firm must be incurring losses, if it shuts down.
1. Statement one is Uncertain. It is true that the average total cost is always greater than the average variable cost but, it cannot be greater by a constant amount because the fixed cost element is not fixed outside the short run. The fixed cost remains fixed within the short-run or relevant range of production. But in the long-run, it varies.
2. Statement two is False. A perfectly competitive firm does not maximize its profit when the average total cost is at a minimum but when the marginal revenue is equal to its marginal cost. For the firm to maximize profits, it must choose the output where its marginal cost and marginal revenue are equal.
3. Statement three is False. When the firm shuts down in the short run, its profit cannot be zero. Instead, it will be negative and result in a loss because fixed costs are already incurred. The firm may incur zero variable cost in the short-run when it shuts down. But in the short-run, the firm's fixed costs cannot be zero. So, if it shuts down, it will lose the fixed costs since it will not be able to recover them from sales.
Thus, statement one is uncertain because of the constant amount by which the average total cost is said to be greater than the average variable cost while statements two and three are false.
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