"I'm Losing Money, but Since My Fixed Costs Are So

question 28

Multiple Choice

"I'm losing money, but since my fixed costs are so high, I simply cannot afford to shut down." If the firm were attempting to maximize profit, this decision may be:

• A)correct if price is less than average variable cost.
• B)incorrect because a firm experiencing economic losses should never continue to operate.
• C)correct if the firm is covering all of its variable costs and expects the price of its product to rise in the near future.
• D)incorrect since a firm should shut down whenever price falls below average total cost in the short run.

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Definitions:

Yes Or No

A type of question or decision that requires a simple affirmative or negative response.

Misdiagnosis

The incorrect identification of a disease or condition, leading to inappropriate treatment or management.

Pertinent Information

denotes relevant or applicable data and facts directly related to a specific matter or situation.

Responsible

Being accountable or liable for something within one's power, control, or management.