Fixed costs are irrelevant in the decision about whether to shut down production in the short run because fixed costs:

A. do not affect, and are not affected by, the quantity the firm produces

B. only charge when production changes

C. only change in the short run

D. affect, and are affected by, the quantity the firm produces

Question

Maci Browning

Business

31 July, 19:35

Fixed costs are irrelevant in the decision about whether to shut down production in the short run because fixed costs:

A. do not affect, and are not affected by, the quantity the firm produces

B. only charge when production changes

C. only change in the short run

D. affect, and are affected by, the quantity the firm produces

+4

Answers (1)

Know the Answer?

Lilah Cowan · Answer 1

A. do not affect, and are not affected by, the quantity the firm produces

Explanation:

In a short run shutdown, regardless of the production of volume or if there is any production at all, fixed costs still have to be paid in full and therefore are irrelevant in the decision about whether to shut down production in the short run.

Thus, the answer is A. do not affect, and are not affected by, the quantity the firm produces.