A firm with a fixed cost of $300 per month and variable cost of $200 per month decides to shut down.In such a situation,it would lose ________.

Question

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When a firm decides to shut down, it cannot avoid its fixed costs. Therefore, it would lose $300 per month, which are its fixed costs. Variable costs are avoided since they are not incurred if production is stopped.

A Firm with a Fixed Cost of $300 Per Month