A firm's decision to shut down in the short run is based on its ability to cover _____ costs.

Name: A firm's decision to shut down in the short run is based on its ability to cover _____ costs.
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Question

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In the short run, a firm will decide to shut down if it cannot cover its variable costs from the revenue it generates. Fixed costs are not considered in this decision because they must be paid regardless of the firm's level of production.

A Firm's Decision to Shut Down in the Short Run