Which of the Following Does Not Characterize a Perfectly Competitive

question 69

Multiple Choice

Which of the following does not characterize a perfectly competitive firm that has shut down in the short run?

• A)total revenue equals zero
• B)variable costs equal zero
• C)the firm suffers a loss
• D)fixed cost is positive
• E)fixed cost is zero

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Definitions:

Unit Variable Costs

Costs that vary directly with the production volume, such as materials and labor, on a per-unit basis.

Contribution Margin Ratio

A financial metric that shows how much of a company's revenue is available after variable costs to cover fixed costs and generate profit.

Unit Contribution Margin

The difference between the selling price per unit and the variable cost per unit, showing how much each unit contributes to covering fixed costs and generating profit.

Fixed Costs

Costs that do not vary with the level of production or sales, such as rent, salaries, and insurance premiums.