What is the difference between shutting down temporarily and ...

[magmichele12]

What is the difference between shutting down temporarily and exiting the industry?
 
  What will be an ideal response?

Question 2

Yield management and price discrimination have enabled firms to increase profits and, at the same time
 
  A) reduce transactions costs. B) capture some consumer surplus.
  C) reduce the cost of production. D) transfer some producer surplus to consumers.

[Laurenleakan]

Answer to Question 1

The difference between the two has to do with fixed costs. In the short run a firm cannot avoid its fixed costs. When price falls so low that the firm can no longer cover its variable costs of production with the revenue it earns from selling its product it should shut down temporarily and wait for economic conditions to improve. In the long run, all costs are variable. If total revenue cannot cover all costs the firm will exit the industry.

Answer to Question 2

B