CFA Practice Question

There are 539 practice questions for this study session.

CFA Practice Question

Which of the following will shift cost curves downward?

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
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