A firm should shut down in the short run if it cannot cover _____, and it should exit the industry in the long run if it cannot cover:

Question

Quizplus · Accepted Answer

In the short run, a firm should shut down if it cannot cover its variable costs because it would lose more by continuing to operate than by stopping production. In the long run, a firm should exit the industry if it cannot cover all of its costs, including both fixed and variable costs, because it is not profitable to continue operating.

A Firm Should Shut Down in the Short Run If