A firm stands to lose by operating instead of shutting down if ________ does not sufficiently cover ________.
A) price; average variable cost
B) price; average fixed cost
C) total revenue; total costs
D) operating profit; economic profit

Question

Quizplus · Accepted Answer

If the price does not sufficiently cover the average variable cost, the firm will incur losses greater than its fixed costs, making it better to shut down.

A Firm Stands to Lose by Operating Instead of Shutting