Oil wells and seasonal resorts will often shut down temporarily because Multiple Choice variable costs for pumping oil and operating resorts fluctuate significantly. fixed costs temporarily rise, making production unprofitable. prices for their output temporarily fall below their average variable costs of production. government regulations require seasonal shutdowns for maintenance purposes.

Oil wells and seasonal resorts will often shut down temporarily because prices for their output temporarily fall below their average variable costs of production.

Explanation: If the price is below the minimum average variable cost, the firm would lose less money by shutting down. In contrast, in scenario 3 the revenue that the center can earn is high enough that the losses diminish when it remains open, so the center should remain open in the short run.

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