If a firm shuts down in the short run

Name: If a firm shuts down in the short run
Brand: Quizplus
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Question

Quizplus · Accepted Answer

A firm will incur its fixed costs if it shuts down in the short run. This is because fixed costs are inevitable regardless of whether the firm is producing or not. A firm can avoid its variable costs by shutting down, but it cannot avoid its fixed costs. Therefore, the firm will still incur these costs even if it shuts down.

If a Firm Shuts Down in the Short Run