If a firm shuts down in the short run, then its:
A)total revenue and total cost will fall to zero.
B)profit will equal zero.
C)economic loss will equal its fixed costs.
D)economic loss will equal its variable costs.

Question

Quizplus · Accepted Answer

When a firm shuts down, its total variable costs and its total revenue shrink to zero, but the firm still must pay fixed costs whether it operates or not. So, if a firm shuts down, its economic loss is equal to its fixed cost.

If a Firm Shuts Down in the Short Run, Then