The Dude (Specialist- Finance) (303 Points)
22 February 2009I find the following questions in the Self Evaluation software a bit confusing. Plz help friends...
1. If there is no production in the long run, TC will be ___?
According to me the answer is positive due to the presence of Fixed Costs. But the answer given is zero.
2. If Price elasticity is zero, slope of demand curve is ___?
I am not getting the question right. But the answer acc. to me is zero itself. But the answer is infinte.
Please explain to me these.....
CA Gaurav Gupta
(Practice)
(307 Points)
Replied 22 February 2009
do not base your evalutaion on cd supplied along with material that is too confusing.
refer shuchita sccaners for evaluation
CA Gandharv Sharma
(Financial and Taxation consultant)
(514 Points)
Replied 22 February 2009
answers.
1. the period is long run.... in short run, if production is zero then presence of fixed cost is there, since after shortrun production will start or may not start depends, longrun is made up of varous shortruns and if in long run there is no production then firm will not exist and total cost will be zero.
2. price elasticity means variability of price due to change in output. when price elasticity is zero, if u draw up the graph, stright line will appear parallel to x axis which represents output and y axis represents price. since there is no change in the price of commodity, then the situation of perfect market competetion will emerge and demand for goods will become infinite, means at same price if u can purchase any quantity of goods then u will purchase more, thats why demand curve will be infinite.
CA Gandharv Sharma
(Financial and Taxation consultant)
(514 Points)
Replied 22 February 2009
my pleasure...
rakesh khandelwal
(JOB)
(258 Points)
Replied 23 February 2009
all cost in long run are variable......so no production no cost
nikhita
(STUDENT)
(102 Points)
Replied 26 February 2009
| Originally posted by :Gargesh VN | ||
| " | I find the following questions in the Self Evaluation software a bit confusing. Plz help friends... 1. If there is no production in the long run, TC will be ___? According to me the answer is positive due to the presence of Fixed Costs. But the answer given is zero. 2. If Price elasticity is zero, slope of demand curve is ___? I am not getting the question right. But the answer acc. to me is zero itself. But the answer is infinte. Please explain to me these..... |
" |
i m totally agree with gandharv the ans. must be that only
Abhijeet Ahuja
(Accountant)
(36 Points)
Replied 24 April 2009
slope of demand curve in zero is vertical
Vibhor Jain
(student)
(390 Points)
Replied 25 April 2009
the second answer is correct but sir i wud like to ask sumthng
as if long runs are made up of many short runs...the optimum point is lake to form a long run curve..so long run curve does includes all the fixed cost beared by the firmm in the short run..!
the long run total cost is zero only when the production stops...der should be this condition na??
Vibhor Jain
(student)
(390 Points)
Replied 25 April 2009
the second answer is correct but sir i wud like to ask sumthng
as if long runs are made up of many short runs...the optimum point is lake to form a long run curve..so long run curve does includes all the fixed cost beared by the firmm in the short run..!
the long run total cost is zero only when the production stops...der should be this condition na??
CAclubindia
