If a Firm Shuts Down in the Short Run

question 75

Multiple Choice

If a firm shuts down in the short run

• A) it will lose its operating costs.
• B) its losses will be equal to zero.
• C) it will incur its fixed costs.
• D) it will incur only its explicit costs.

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Definitions:

LLC

An abbreviation for Limited Liability Company, a legal structure for businesses offering the liability protection of a corporation with the tax benefits of a partnership.

Profits and Losses

Financial gains or losses that result from the execution of business activities, typically measured over a specific period.

Tax Returns

A formal statement of income over a specific period, filed with the government or tax authority, used to calculate taxes owed or refunds due to the taxpayer.

Double Taxation

Refers to the taxation of the same income or financial transaction at two different levels, such as corporate profits taxed both at the corporate and individual shareholder level.