If a Firm Shuts Down, It

question 166

Multiple Choice

If a firm shuts down, it

• A)will suffer a loss equal to its fixed costs.
• B)will produce nothing but must pay its variable costs.
• C)will produce nothing but must pay its fixed and variable costs.
• D)will earn enough revenue to cover its variable costs but not all of its fixed costs.

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Definitions:

Accounting Equation

The foundational equation in accounting, Assets = Liabilities + Owner's Equity, showing the relationship between a company's assets, liabilities, and equity.

Liabilities

Financial obligations of a business that represent debts or amounts owed to others, due to past transactions or events.

Assets

Economic resources owned by a business that are expected to benefit future operations.