A Competitive Firm Faces Fixed Costs Even If It Produces

question 145

Multiple Choice

A competitive firm faces fixed costs even if it produces zero output. If it starts producing and selling some output, which of the following would happen?

• A) The firm's total costs would increase, and its losses may become larger.
• B) The firm would earn revenues and will therefore earn positive profits.
• C) The firm's total costs would decrease, allowing it to possibly earn profits.
• D) The firm would earn revenues that are greater than its costs.

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Definitions:

Conversations

The interactive communication between two or more people, where ideas, information, and feelings are exchanged.

Isn't

Contraction of "is not," primarily used in English to denote negation.

Squirts

Small, quick streams or jets of liquid ejected from something.

Conditioned

A state or behavior that results from a process of training or habituation.