Question
upstudy study bank question image url

\begin{tabular}{l} If a firm shuts down in the short run and produces no \\ output, its total cost will be \\ \hline zero \\ \hline equal to total variable cost \\ \hline equal to total fixed cost \\ \hline equal to explicit costs only \\ \hline impossible to calculate \end{tabular}

Ask by Ellis Wade. in the United States
Mar 14,2025

Upstudy AI Solution

Tutor-Verified Answer

Answer

When a firm shuts down in the short run and produces no output, its total cost is equal to its total fixed cost.

Solution

Sign in to Unlock Answers for Free!

A Learning Platform Trusted by Millions of Real Students and Teachers.

star-icon Unlock

Answered by UpStudy AI and reviewed by a Professional Tutor

The Deep Dive

When a firm shuts down in the short run, it may stop producing output but still incurs fixed costs like rent, salaries, and other contractual obligations. Therefore, its total cost in this scenario will be equal to total fixed cost, which remains constant regardless of the production level. So, the firm will continue to pay these costs even when it isn't generating revenue. In practice, businesses often face tough decisions about shutting down operations temporarily due to economic downturns or off-seasons. Understanding the difference between fixed and variable costs can help leaders make informed choices, allowing them to balance financial obligations while exploring ways to remain viable until circumstances improve again.

Related Questions

Latest Economics Questions

Try Premium now!
Try Premium and ask Thoth AI unlimited math questions now!
Maybe later Go Premium
Study can be a real struggle
Why not UpStudy it?
Select your plan below
Premium

You can enjoy

Start now
  • Step-by-step explanations
  • 24/7 expert live tutors
  • Unlimited number of questions
  • No interruptions
  • Full access to Answer and Solution
  • Full Access to PDF Chat, UpStudy Chat, Browsing Chat
Basic

Totally free but limited

  • Limited Solution
Welcome to UpStudy!
Please sign in to continue the Thoth AI Chat journey
Continue with Email
Or continue with
By clicking “Sign in”, you agree to our Terms of Use & Privacy Policy