Statement I: Shutting down and going out of business mean exactly the same thing.
Statement II: A firm will shut down if variable cost is greater than total revenue.
A)Statement I is true and statement II is false.
B)Statement II is true and statement I is false.
C)Both statements are true.
D)Both statements are false.

Question

Quizplus · Accepted Answer

Statement I is false because while "shutting down" may result in going out of business, the two phrases do not have the exact same meaning. "Shutting down" can also refer to a temporary closure or suspension of operations. Statement II is true because a firm will shut down if it cannot cover its variable costs with its total revenue, as continuing to operate would mean losing money for every unit produced.

Statement I: Shutting Down and Going Out of Business Mean