Govermment in most cases influences the location of firms to
Discourage private investors
Ensure equitable distribution
Reduce the cost of production
Make the firms enjoy economies of scale
Correct answer is B
Governments influence the location of industry, by giving tax incentives, cheap rent, and other benefits to companies locating in certain areas of the country. These are often done in places which the government wants to develop economically.
Which of the following means of funding a business is very reliable and cheap?
Bank loans
Loans from friends
Plough back profits
Debentures
Correct answer is C
Plough back profits also known as retained earnings are profits earned by a business, and reinvested in the business. What this means is that the business doesn't spend its profits, but put it back in the business. It is considered one of the cheapest sources of business financing as it does not require interest to be paid.
In perfect competition, the average revenue curve of a firm is
Below the marginal revenue curve
Downward sloping
The marginal revenue curve
Convex to the origin
Correct answer is C
For a perfectly competitive firm, the average revenue curve is a horizontal, or perfectly elastic, line. It is the same as a marginal revenue curve which is also a horizontal line at the market price, implying perfectly elastic demand.
A cost of production that is positively related to output is the
Total fixed cost
Average fixed cost
Variable cost
Social cost
Correct answer is C
Variable cost has a positive relationship with output in such a way that if a firm produces more output, the variable cost will be greater, and if a firm produces no output, then the variable cost will be zero. The variable cost depends on the level of output.
The short-run in production is the time period when
Techniques of production can easily be changed
All factors of production are vaiable
At least a factor is fixed while others are variable
Variable factors cannot be changed
Correct answer is C
The short-run production phase refers to a production cycle in which at least one factor of production is fixed.