- CFA Exams
- CFA Level I Exam
- Topic 2. Economics
- Learning Module 1. The Firm and Market Structures
- Subject 3. Marginal Revenue, Marginal Cost and Profit Maximization
CFA Practice Question
Which of the following will shift cost curves downward?
II. Deregulation
III. Lower resource prices
I. Technological improvements
II. Deregulation
III. Lower resource prices
Correct Answer: I, II and III
Technological improvements, deregulation, and lower resource prices lead to lower costs and shift the cost curves downward.
User Contributed Comments 5
| User | Comment |
|---|---|
| Rotigga | Deregulation means less regulatory compliance costs. |
| jpducros | I tought technological improvement would at least shift TFC upward....maybe TCF is not amongst the cost curves we look at...AFC would be the one then...can someone confirm ? |
| cleopatraliao | Hi jpducros just think about it when there is technological improvement there is of course decreases in costs--u can employ less people (less variable costs) and thus TC will shift down.TFC might go up but it might not and even if it does go up the decrease in TVC could offset the increase in TFC as more output is produced:) hope it helps |
| yesandy11 | Except deregulation of the energy market (Enron). |
| NikolaZ | deregulation will not necessarily lower costs - it may have no effect on them - or it may allow larger firms to capitalize on this and increase monopolistic power, thus creating further barriers to entry (irony) in Perfect competition however, this may hold and under the assumption that the firm is affected by the proposed regulations |