If a purely competitive firm shuts down in the short run,
A) its loss will be zero.
B) it will realize a loss equal to its total variable costs.
C) it will realize a loss equal to its total fixed costs.
D) it will realize a loss equal to its explicit costs.

Question

Quizplus · Accepted Answer

In the short run, if a purely competitive firm shuts down, it still incurs its total fixed costs, as these costs do not depend on the level of output.

If a Purely Competitive Firm Shuts Down in the Short