If a firm is earning revenues that cover all of its variable costs and some, but not all, of its total cost, then it:

Question

Quizplus · Accepted Answer

When a firm covers all its variable costs and some of its total costs, it means it's covering its variable costs plus contributing to its fixed costs. This situation suggests it's better to continue operating in the short run to minimize losses, even though it's not making a profit. Shutting down would mean not covering any fixed costs, leading to higher losses.

If a Firm Is Earning Revenues That Cover All of Its