-The figure above shows Mollie's Mugs' costs of producing mugs. The mug market is perfectly competitive. If the market price of a mug falls to $5 and Mollie's shuts down temporarily, its total variable cost is ________ an hour and it incurs an economic loss of ________ an hour.

Question

Quizplus · Accepted Answer

When a firm shuts down temporarily, its total variable cost is $0 because it is not producing any output. The economic loss incurred is equal to the total fixed cost, which is $120 an hour.

-The Figure Above Shows Mollie's Mugs' Costs of Producing Mugs