The table given below shows the total cost of producing different units of the output by a competitive firm.Table 8.4

-Which of the following is correct if the firm described in Table 8.4 decides to produce nothing?
A)The total cost of production will be zero.
B)The total fixed cost of production will be zero.
C)The total variable cost of production will be zero.
D)The average cost of production 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 8.4
 
-Which of the following is correct if the firm described in Table 8.4 decides to produce nothing?
A)The total cost of production will be zero. 
B)The total fixed cost of production will be zero. 
C)The total variable cost of production will be zero. 
D)The average cost of production will be zero. 
E)It is impossible for the firm to produce nothing in the short run.

Quizplus · Accepted Answer

When a firm decides to produce nothing, its total variable cost becomes zero because variable costs are those costs that change with the level of output. Since there is no output, there are no variable costs. Fixed costs, however, remain regardless of the level of production.

The Table Given Below Shows the Total Cost of Producing