CA Foundation Exam > CA Foundation Questions > A firm encounters “shut down” poi...
Start Learning for Free
A firm encounters “shut down” point when ________.
- a)Marginal cost equals the price of the profit maximizing level of out put
- b)Average fixed cost equals the price at the profit maximizing level of output
- c)Average Variable cost equals the price at the profit maximizing level of output
- d)Average Total cost equals the price at the profit maximizing level of out put
Correct answer is option 'C'. Can you explain this answer?
| FREE This question is part of | Download PDF Attempt this Test |
Verified Answer
A firm encounters “shut down” point when ________.a)Margin...
A shutdown point is a level of operations at which a company experiences no benefit for continuing operations, and therefore decides to shut down temporarily (or in some cases permanently). It results from the combination of output and price where the company earns just enough revenue to cover its total variable costs. Conventionally stated the shutdown rule is: "in the short run a firm should continue to operate if price exceeds average variable costs." Restated, the rule is that to produce in the short run a firm must earn sufficient revenue to cover its variable costs.
View all questions of this test
Most Upvoted Answer
A firm encounters “shut down” point when ________.a)Margin...
A firm may encounter several challenges, such as:
1. Competition: The firm may face stiff competition from other businesses operating in the same industry. This can lead to a decrease in market share, lower profits, and the need for continuous innovation and improvement.
2. Changing consumer preferences: Consumer preferences and trends can change rapidly, making it challenging for the firm to meet these changing demands. The firm may need to adapt its products or services to stay relevant in the market.
3. Economic conditions: Economic fluctuations can impact the firm's performance. During a recession, for example, consumers may reduce their spending, leading to a decline in sales. The firm may need to implement cost-cutting measures or find new markets to sustain its operations.
4. Technological advancements: Rapid technological advancements can disrupt traditional business models. The firm may need to invest in new technologies or adapt existing ones to remain competitive.
5. Regulatory changes: Changes in government regulations and policies can have a significant impact on the firm's operations. The firm may need to comply with new regulations, which can increase costs or require operational changes.
6. Supply chain disruptions: Disruptions in the supply chain, such as natural disasters, political instability, or trade disputes, can disrupt the firm's production and distribution processes. This can lead to delays, increased costs, or shortages of raw materials or finished products.
7. Talent retention and recruitment: Finding and retaining skilled employees can be a challenge for firms. The firm may need to offer competitive salaries and benefits, provide ongoing training and development opportunities, and create a positive work environment to attract and retain talented individuals.
8. Financial management: Managing finances, including cash flow, budgeting, and securing funding, can be a challenge for firms. Poor financial management can lead to liquidity issues, inability to invest in growth opportunities, or even bankruptcy.
9. Reputation management: A firm's reputation is crucial for its success. Negative publicity, customer complaints, or product recalls can damage the firm's reputation and lead to a loss of trust from customers and stakeholders.
10. Globalization: Expanding into international markets can present challenges, such as cultural differences, language barriers, and legal complexities. The firm may need to adapt its products, marketing strategies, and operations to suit the local market conditions.
1. Competition: The firm may face stiff competition from other businesses operating in the same industry. This can lead to a decrease in market share, lower profits, and the need for continuous innovation and improvement.
2. Changing consumer preferences: Consumer preferences and trends can change rapidly, making it challenging for the firm to meet these changing demands. The firm may need to adapt its products or services to stay relevant in the market.
3. Economic conditions: Economic fluctuations can impact the firm's performance. During a recession, for example, consumers may reduce their spending, leading to a decline in sales. The firm may need to implement cost-cutting measures or find new markets to sustain its operations.
4. Technological advancements: Rapid technological advancements can disrupt traditional business models. The firm may need to invest in new technologies or adapt existing ones to remain competitive.
5. Regulatory changes: Changes in government regulations and policies can have a significant impact on the firm's operations. The firm may need to comply with new regulations, which can increase costs or require operational changes.
6. Supply chain disruptions: Disruptions in the supply chain, such as natural disasters, political instability, or trade disputes, can disrupt the firm's production and distribution processes. This can lead to delays, increased costs, or shortages of raw materials or finished products.
7. Talent retention and recruitment: Finding and retaining skilled employees can be a challenge for firms. The firm may need to offer competitive salaries and benefits, provide ongoing training and development opportunities, and create a positive work environment to attract and retain talented individuals.
8. Financial management: Managing finances, including cash flow, budgeting, and securing funding, can be a challenge for firms. Poor financial management can lead to liquidity issues, inability to invest in growth opportunities, or even bankruptcy.
9. Reputation management: A firm's reputation is crucial for its success. Negative publicity, customer complaints, or product recalls can damage the firm's reputation and lead to a loss of trust from customers and stakeholders.
10. Globalization: Expanding into international markets can present challenges, such as cultural differences, language barriers, and legal complexities. The firm may need to adapt its products, marketing strategies, and operations to suit the local market conditions.
Attention CA Foundation Students!
To make sure you are not studying endlessly, EduRev has designed CA Foundation study material, with Structured Courses, Videos, & Test Series. Plus get personalized analysis, doubt solving and improvement plans to achieve a great score in CA Foundation.
|
Explore Courses for CA Foundation exam
|
|
Similar CA Foundation Doubts
Top Courses for CA FoundationView all
A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer?
Question Description
A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer?.
A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer? for CA Foundation 2024 is part of CA Foundation preparation. The Question and answers have been prepared according to the CA Foundation exam syllabus. Information about A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer? covers all topics & solutions for CA Foundation 2024 Exam. Find important definitions, questions, meanings, examples, exercises and tests below for A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer?.
Solutions for A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer? in English & in Hindi are available as part of our courses for CA Foundation.
Download more important topics, notes, lectures and mock test series for CA Foundation Exam by signing up for free.
Here you can find the meaning of A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer? defined & explained in the simplest way possible. Besides giving the explanation of
A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer?, a detailed solution for A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer? has been provided alongside types of A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer? theory, EduRev gives you an
ample number of questions to practice A firm encounters “shut down” point when ________.a)Marginal cost equals the price of the profit maximizing level of out putb)Average fixed cost equals the price at the profit maximizing level of outputc)Average Variable cost equals the price at the profit maximizing level of outputd)Average Total cost equals the price at the profit maximizing level of out putCorrect answer is option 'C'. Can you explain this answer? tests, examples and also practice CA Foundation tests.
|
|
Explore Courses for CA Foundation exam
|
|
Suggested Free Tests
Signup for Free!
Signup to see your scores go up within 7 days! Learn & Practice with 1000+ FREE Notes, Videos & Tests.
|
© EduRev
|
Education Revolution
|
Follow Us
|
Signup to see your scores
go up within 7 days!
Access 1000+ FREE Docs, Videos and Tests
Takes less than 10 seconds to signup