Figure 12-9 Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm.
-If a firm shuts down in the short run,
A) its loss equals zero.
B) its loss equals its fixed cost.
C) it makes zero economic profit.
D) its total revenue is not large enough to cover its fixed cost.

Question

Figure 12-9  Figure 12-9 shows cost and demand curves facing a profit-maximizing, perfectly competitive firm.
-If a firm shuts down in the short run,
A) its loss equals zero. 
B) its loss equals its fixed cost. 
C) it makes zero economic profit. 
D) its total revenue is not large enough to cover its fixed cost.

Quizplus · Accepted Answer

In the short run, if a firm shuts down, it still incurs fixed costs, so its loss equals its fixed cost.

Figure 12-9 Figure 12-9 Shows Cost and Demand Curves