(Last Word) Temporary shutdowns of firms are most widespread when
A) total fixed costs are rising across the economy.
B) the economy experiences recession.
C) firms have the ability to set prices for their output.
D) wage levels are falling.

Question

Quizplus · Accepted Answer

Temporary shutdowns of firms are most widespread when the economy experiences a recession. This is because during a recession, demand for goods and services decreases, leading to reduced sales and revenue for firms. As a result, firms may be unable to cover their variable costs, such as wages and materials, and may choose to shut down temporarily rather than continue operating at a loss.

(Last Word) Temporary Shutdowns of Firms Are Most Widespread When