If a paper mill shuts down its operations for three months so that it produces nothing, its __________________ will be reduced to zero?
A) variable costs
B) fixed costs
C) opportunity costs
D) total cost

Question

Quizplus · Accepted Answer

Variable costs are directly tied to production levels, so if production stops, these costs (like raw materials and labor) drop to zero. Fixed costs, such as rent and salaries, continue regardless of production levels.

If a Paper Mill Shuts Down Its Operations for Three