A Firm Should Always Shut Down If Its Revenue Is

question 4

Multiple Choice

A firm should always shut down if its revenue is

• A) declining.
• B) less than its average fixed costs.
• C) less than its total costs.
• D) less than its avoidable costs.

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Definitions:

Purchase Order

A commercial document and first official offer issued by a buyer to a seller, indicating types, quantities, and agreed prices for products or services.

Legal Fees

Costs incurred for legal services provided by lawyers or law firms to individuals or corporations.

Unearned Rent Revenue

Income received by a landlord for rent that has not yet been earned because the rental period has not yet occurred.

Income Statement

A financial report that gives a summary of a company's revenues, expenses, and profits/losses over a specific period, highlighting operational performance.