If a Purely Competitive Firm Shuts Down in the Short

question 69

Multiple Choice

If a purely competitive firm shuts down in the short run,

• A) its loss will be zero.
• B) it will realize a loss equal to its total variable costs.
• C) it will realize a loss equal to its total fixed costs.
• D) it will realize a loss equal to its explicit costs.

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Definitions:

Personal Guarantee

A legal commitment by an individual to assume responsibility for another's debt or obligations if that party fails to fulfill them.

Significance

The importance, influence, or meaning of something within a specific context or overall.

Incorporation

The process of legally declaring a corporate entity as separate from its owners, providing benefits like limited liability and perpetual existence.

Main Disadvantages

The primary or most significant negative aspects or drawbacks associated with a situation, decision, or action.