If a competitive firm is losing money in the short run, then it should
A)never shut down in the short run.
B)shut down only if P is less than ATC.
C)shut down only if its losses are greater than its fixed costs.
D)shut down.
E)shut down only if TR is greater than TVC.

Question

Quizplus · Accepted Answer

A firm should shut down in the short run if its losses are greater than its fixed costs, meaning that the total revenue (TR) is less than the total variable costs (TVC). This is because, in such a case, the firm cannot cover its variable costs, and continuing operations would increase its losses beyond the fixed costs.

If a Competitive Firm Is Losing Money in the Short