When a Firm Chooses to Shutdown, It Is

question 33

Multiple Choice

When a firm chooses to shutdown, it is

• A)making a poor decision because it should always produce where marginal cost equals marginal revenue.
• B)making a poor decision because it should always produce where average costs exceed average revenue.
• C)making a good decision as long as the price it is getting is less than its average total costs.
• D)making a good decision as long as the price it is getting is less than its average variable costs.

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Definitions:

Price Hike

A general increase in the cost of goods and services, often due to inflation or increased production costs.

Unit Sales

The total units of a product that a company sells in a particular period.

Traceable Fixed Expense

A fixed cost that can be directly linked to a specific cost object, such as a product, department, or project.

Unit Sales

The total quantity of units of a product sold in a specific period.