True or False: Shutting down a firm's operating is equivalent to exiting the industry

False.

Shutting down a firm's operating is not equivalent to exiting the industry. Shutting down is temporary and it happens when the firm is unable to make enough revenues to cover its variable costs. The firm therefore opts to shut down temporarily to avoid incurring the variable costs. However, the firm continues to incur its fixed costs.

Exiting the market occurs in the long run when the firm is unable to make enough revenue to cover its total costs of production. The firm will opt to exit the market in the long run to avoid making losses. When the firm exits from the industry, it will incur no production costs and it will earn zero economic profits.