A Firm Will Shut Down in the Short Run If

question 351

Multiple Choice

A firm will shut down in the short run if, for all positive levels of output,

• A)its losses exceed its fixed costs.
• B)its total revenue is less than its variable costs.
• C)the price of its product is less than its average variable cost.
• D)All of the above are correct.

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Definitions:

Liabilities

Future sacrifices of economic benefits that an entity is obliged to make to other entities due to past transactions or other past events.

Store Equipment

Store equipment encompasses all the fixed assets used in a retail store for display, storage, and operations, including shelving units, cash registers, and refrigeration systems.

Loss on Realization

Occurs when the proceeds from the sale of an asset are less than its carrying value.

Post-closing Account Balances

The balances in accounts that remain after all closing entries have been made at the end of the accounting period.