A firm experiencing economic losses will still continue to produce output in the short run as long as
A)Revenues are greater than total fixed cost.
B)MR = MC.
C)Price is above average variable cost.
D)Price is above average fixed cost.

Question

Quizplus · Accepted Answer

In the short run, a firm will continue to produce as long as the price covers the average variable costs, even if it's not covering total costs (including fixed costs), because by doing so, it can minimize its losses. Fixed costs are sunk in the short run, so the firm focuses on covering variable costs.

A Firm Experiencing Economic Losses Will Still Continue to Produce