If a firm is confronted with economic losses in the short run, it will decide whether or not to produce by comparing
A) marginal revenue and marginal cost.
B) price and average variable cost.
C) total revenue and total cost.
D) total revenue and total fixed cost.

Question

Quizplus · Accepted Answer

In the short run, a firm will continue to produce if the price is greater than or equal to the average variable cost, as this allows the firm to cover its variable costs and contribute to fixed costs. If the price is below average variable cost, the firm will minimize losses by shutting down.

If a Firm Is Confronted with Economic Losses in the Short