When Determining Whether to Shut Down in the Short Run

question 523

Multiple Choice

When determining whether to shut down in the short run, a competitive firm should ignore
(i) fixed costs.
(ii) variable costs.
(iii) sunk costs.

• A)(iii) only
• B)(i) and (iii) only
• C)(ii) only
• D)(i), (ii), and (iii)

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Definitions:

Uncertainty

The state of being unsure or not having all the information, which makes outcomes unpredictable.

Specific Result

A distinct outcome or effect that is the aim of an action or plan.

Large Number

A numeric value that is significantly larger than those found in everyday experiences, often requiring special mathematical concepts to understand and manipulate.

Gathering Information

The process of collecting data, facts, and insights from various sources to inform decisions, understand contexts, or solve problems.