Which of the following represents the firm's short-run condition for shutting down?

Question

Quizplus · Accepted Answer

In the short run, a firm should shut down if the total revenue (TR) it generates is less than its variable costs (VC). This is because, in the short run, fixed costs (FC) are sunk costs and cannot be recovered. Therefore, the decision to shut down is based on whether the firm can cover its variable costs with its revenue. If it cannot, it minimizes its losses by not operating.

Which of the Following Represents the Firm's Short-Run Condition for Shutting