If ________, a firm would operate in the short run and exit the industry in the long run. A) TR TVC and TR TC B) TR TVC but TR

Question

If ________, a firm would operate in the short run and exit the industry in the long run. A) TR > TVC and TR > TC B) TR > TVC but TR < TC C) TR < TC and TR < TVC D) TR = TVC but TR > TC

Quizplus · Accepted Answer

In the short run, a firm will continue to operate as long as it can cover its total variable costs (TVC) with its total revenue (TR), even if it's not covering its total costs (TC), which include fixed costs. However, if it cannot cover its total costs in the long run, it will exit the industry. Option B (TR > TVC but TR < TC) reflects this scenario.

If ________, a Firm Would Operate in the Short Run