Asked by VALERIA BARDALES on Jun 16, 2024
Verified
When fixed costs are high relative to variable costs, producers will tend to
A) continue producing in the short run even if they incur some losses.
B) quickly shut down in the short run whenever they see losses.
C) only produce in the short run as long as the product price is lower than their average variable costs.
D) produce in the short run even if the product price is lower than their average fixed costs.
Variable Costs
Costs that change in proportion to the level of goods or services a company produces, such as materials and labor.
Fixed Costs
Fixed costs are business expenses that remain constant regardless of the level of production or sales.
Producers
Individuals or entities that create or supply goods and services for consumption by consumers, contributing to the economy.
- Understand the relationship between fixed and variable costs and decision-making in the short run.
Verified Answer
Learning Objectives
- Understand the relationship between fixed and variable costs and decision-making in the short run.
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