The higher the variable cost/total cost ratio, the less likely a firm will cease production.

Name: The higher the variable cost/total cost ratio, the less likely a firm will cease production.
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Question

Quizplus · Accepted Answer

A higher variable cost/total cost ratio indicates that a larger portion of the costs are variable, meaning they change with production levels. If sales decrease, these costs can be reduced by lowering production, making it more likely for a firm to cease production to minimize losses.

The Higher the Variable Cost/total Cost Ratio, the Less Likely