A Perfectly Competitive Firm Is More Likely to Shut Down

question 351

Multiple Choice

A perfectly competitive firm is more likely to shut down during a recession, when the demand for its product declines, than during an economic expansion, because during the recession it might be unable to cover its

• A) fixed costs.
• B) variable costs.
• C) external costs.
• D) depreciation due to machinery becoming obsolete.

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Definitions:

Ventral Root

A component of a spinal nerve that emerges from the anterior part of the spinal cord and contains motor (efferent) fibers.

Dorsal Ramus

A branch of a spinal nerve that innervates muscles and skin of the back.

Peripheral Nerves

Nerves located outside the brain and spinal cord, responsible for relaying information between the central nervous system and the rest of the body.

Stretch Reflex

An involuntary muscle contraction response to the stretching within the muscle, protecting the muscle from over-stretching and maintaining muscle tone.