The table given below shows the total cost of producing different units of the output by a competitive firm. Table 7.4

- Which of the following is correct if the firm described in Table 7.4 decides to produce nothing?
A)Total cost will be zero.
B)Total fixed cost will be zero.
C)Total variable cost will be zero.
D)Average cost will be zero.
E)It is impossible for the firm to produce nothing in the short run.

Question

The table given below shows the total cost of producing different units of the output by a competitive firm. Table 7.4

- Which of the following is correct if the firm described in Table 7.4 decides to produce nothing?
A)Total cost will be zero. 
B)Total fixed cost will be zero. 
C)Total variable cost will be zero. 
D)Average cost will be zero. 
E)It is impossible for the firm to produce nothing in the short run.

Quizplus · Accepted Answer

If the firm produces nothing, the total variable cost will be zero because variable costs are associated with production levels. However, fixed costs will still be incurred even if production is zero.

The Table Given Below Shows the Total Cost of Producing