Whether the Firm Produces or Shuts Down in the Short

question 14

Multiple Choice

Whether the firm produces or shuts down in the short run, fixed cost is equal to

• A)average variable cost
• B)total cost
• C)sunk cost
• D)price
• E)marginal cost

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Definitions:

Net Working Capital

The difference between a company's current assets and its current liabilities, indicating the short-term financial health of the business.

Accounts Receivable

Money owed to a company by its debtors for goods or services that have been delivered or used but not yet paid for.

Accounts Payable

The amount of money owed by a company to its creditors for goods and services purchased on credit, typically due within a short period of time.

Equivalent Annual Cost

A cost calculation method that is used to compare the cost effectiveness of different investments or projects with different lifespans.