The Shutdown Decision Can Be Restated in Terms of Producer

question 51

Multiple Choice

The shutdown decision can be restated in terms of producer surplus by saying that a firm should produce in the short run as long as:

• A) revenue exceeds producer surplus.
• B) producer surplus is positive.
• C) producer surplus exceeds fixed cost.
• D) producer surplus exceeds variable cost.
• E) profit and producer surplus are equal.

---

Definitions:

Liquid Assets

Assets that can be quickly converted into cash with little to no loss in value.

Credit Available

The amount of credit that a financial institution extends to a client, which the client has not yet used.

Autonomous Consumption

The level of consumption spending that occurs when income is zero, reflecting expenditures that consumers must make even when they have no income.

Permanent Income Hypothesis

Formulated by Milton Friedman, it states that the strongest influence on consumption is one’s estimated lifetime income.