A firm will ________ in the short run if variable costs exceed revenues.
A) earn a profit
B) produce at a loss
C) break even
D) shut down

Question

Quizplus · Accepted Answer

In the short run, if a firm's variable costs exceed its revenues, it cannot cover its variable costs, so it would choose to shut down to minimize losses. This is because continuing to operate would lead to greater losses than the fixed costs it must pay regardless of production level.

A Firm Will ________ in the Short Run If Variable