If a firm shuts down in the short run, it will:

Question

Quizplus · Accepted Answer

If a firm shuts down in the short run, it will still incur fixed costs, resulting in losses equal to its fixed costs. The firm would not have any revenue to offset these costs, as it has ceased operations. Therefore, option A is correct. Option B cannot be true as the firm is shutting down due to losses, indicating that revenue is less than total costs. Option C cannot be true as the firm incurs fixed costs regardless of whether it operates or shuts down. Option D does not provide substantial information to explain the scenario.

If a Firm Shuts Down in the Short Run, It