If a Firm Shuts Down in the Short Run, Then

question 6

Multiple Choice

If a firm shuts down in the short run, then its:

• A)total revenue and total cost will fall to zero.
• B)profit will equal zero.
• C)economic loss will equal its fixed costs.
• D)economic loss will equal its variable costs.

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Definitions:

Cost of Capital

The expected returns an investor requires to make an investment worthwhile, often used as a benchmark to evaluate the viability of investment projects.

Basic Assumption

A fundamental premise or underlying principle that is taken for granted in the context of a particular model, theory, or methodology.

Capital Structure

The composition of a company's funding through a mix of debt, equity, and other securities to finance its operations and growth.

Market Values

The current market value at which one can buy or sell a service or asset.