equal to variable cost
equal to fixed cost
zero
equal to average cost
Answer is Right!
Answer is Wrong!
The correct answer is: A. equal to variable cost.
In the short run, a firm cannot change its fixed costs, but it can change its variable costs. If a firm produces no output, it will still have to pay its fixed costs. However, if it produces some output, it will only have to pay its variable costs. Therefore, the maximum loss a firm can make in the short run is equal to its variable costs.
Option B is incorrect because fixed costs are not avoidable in the short run. Option C is incorrect because a firm can make a loss even if it produces some output. Option D is incorrect because average cost is not the same as variable cost.