Amin Runs a Café and a Competitor Opened Across the Street

question 32

Multiple Choice

Amin runs a café and a competitor opened across the street from his location. An employee left Amin to work for the competitor. Amin was not too unhappy since the employee was his weakest worker with a poor attitude. What kind of turnover is this an example of?

• A) Informal
• B) Dysfunctional
• C) Formal
• D) Functional
• E) Involuntary

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Definitions:

Inelastic Demand

Demand that responds somewhat, but not a great deal, to changes in price. Inelastic demand always has a numerical value between zero and 1.

Zero Profits

A situation where a firm’s total revenues are exactly equal to its total costs, leading to no net profit or loss.

MC = ATC

This is the point where Marginal Cost equals Average Total Cost, typically illustrating the most efficient scale of production in the short run.

Perfectly Competitive

A market structure characterized by a large number of small firms, identical products, and free entry and exit, which leads to firms being price takers.