If a firm stops production,then its:
A) fixed costs rise.
B) total costs may increase or decrease.
C) variable costs drop to zero.
D) All of these are true.

Question

Quizplus · Accepted Answer

When a firm stops production, variable costs drop to zero as there are no costs associated with producing goods or services. The fixed costs may remain the same, but there will be no additional cost incurred due to production. Total costs, therefore, decrease as variable costs drop to zero.

If a Firm Stops Production,then Its