If a Firm Shuts Down in the Short Run

question 146

Multiple Choice

If a firm shuts down in the short run,

• A)its loss equals zero.
• B)its loss equals its fixed cost.
• C)is makes zero economic profit.
• D)its total revenue is not large enough to cover its fixed cost.

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Definitions:

Technical Efficiency

The ability of a firm to get the maximum output from a given set of inputs, minimizing waste.

Marginal Product

The additional output obtained by employing one more unit of a variable factor of production, holding all other inputs constant.

Total Product

The sum of all products or services generated by a company or economic system within a defined timeframe.

Average Product

The output per unit of input, calculated by dividing the total product (output) by the total quantity of input used.