If a firm shuts down in the short run and produces no output,its total cost will be _____
A)equal to zero.
B)equal to the variable cost.
C)equal to the fixed cost.
D)equal to only explicit costs.
E)equal to the sum of implicit and explicit costs.

Question

Quizplus · Accepted Answer

The firm's fixed costs, such as rent and salaries, will still need to be paid even if it produces no output in the short run. Therefore, the total cost will be equal to the fixed cost. The variable costs, such as materials and labor, will be zero since no output is being produced.

If a Firm Shuts Down in the Short Run and Produces