(Last Word) Oil wells and seasonal resorts will often shut down temporarily because:

A) prices for their output temporarily fall below their average variable costs of production.
B) fixed costs temporarily rise,making production unprofitable.
C) variable costs for pumping oil and operating resorts fluctuate significantly.
D) government regulations require seasonal shutdowns for maintenance purposes.

Question

Parker Nudell · Accepted Answer

Final Answer : A, Explanation :  Oil wells and seasonal resorts will often shut down temporarily because the prices for their output temporarily fall below their average variable costs of production. This means that producing and selling at that time would result in losing money, so shutting down temporarily would be the more economical decision.

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