A Perfectly Competitive Firm Is More Likely to Shut Down

question 351

Multiple Choice

A perfectly competitive firm is more likely to shut down during a recession, when the demand for its product declines, than during an economic expansion, because during the recession it might be unable to cover its

• A) fixed costs.
• B) variable costs.
• C) external costs.
• D) depreciation due to machinery becoming obsolete.

---

Definitions:

Sound Waves

Fluctuations of air pressure that allow the transmission of sound to the human ear.

Right Hemisphere

The half of the brain responsible for spatial abilities, face recognition, visual imagery, and music perception, complementing the left hemisphere.

Recognize Faces

The ability of humans or animals to identify or verify a person by viewing their facial features.

Perception

The process of interpreting and understanding sensory information.