If a Purely Competitive Firm Shuts Down in the Short

question 69

Multiple Choice

If a purely competitive firm shuts down in the short run,

• A) its loss will be zero.
• B) it will realize a loss equal to its total variable costs.
• C) it will realize a loss equal to its total fixed costs.
• D) it will realize a loss equal to its explicit costs.

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Definitions:

End of the First Year

The completion of the first 12-month period of an event or operation, typically used in financial contexts.

Risk Premium

The additional return expected by an investor for holding a risky asset over a risk-free one, compensating for the higher risk.

Equity Investing

The act of purchasing shares of stock in companies with the expectation of earning dividends or selling the shares at a higher price in the future.

Returns

Refers to the profit or loss generated by an investment over a specified period.