If a firm stops production,then its:
A) variable costs decrease to zero.
B) fixed costs stay the same.
C) total costs decrease.
D) All of these are true.

Question

Quizplus · Accepted Answer

When a firm stops production, its variable costs decrease to zero as no products are being produced. However, fixed costs such as rent, insurance, and salaries of employees still exist and do not change. As a result, the total costs decrease as the variable costs decrease to zero, but fixed costs remain the same. Therefore, all of the choices are true.

If a Firm Stops Production,then Its