A firm that shuts down and produces no output incurs a loss equal to its ........

A firm that shuts down and produces no output incurs a loss equal to its

marginal costs.

total fixed costs.

total variable costs.

marginal revenue.

- Option 1: Marginal costs

- Marginal cost is the cost of producing one additional unit.

- If no output is produced, no marginal costs occur.

- Option 2: Total fixed costs

- Total fixed costs are incurred irrespective of the level of output.

- Includes costs like rent, salaries, and equipment that don't change with output.

- Correct Answer

- Option 3: Total variable costs

- Variable costs depend on the level of output.

- If the output is zero, variable costs are also zero.

- Option 4: Marginal revenue

- Marginal revenue is the addition to total revenue from selling one more unit.

- Not a cost the firm incurs when shut down.

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