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 as long as the price (or marginal revenue) covers the average variable cost, even if it's not covering total costs. This is because, in the short run, fixed costs are sunk and unavoidable, so the firm aims to cover its variable costs to minimize losses.

If a Firm Is Confronted with Economic Losses in the Short