A company should continue to operate in the short run as long as total revenue generated is large enough to cover total variable costs.

Question

Quizplus · Accepted Answer

A company should continue to operate in the short run if it can cover its total variable costs with its total revenue, even if it's not covering total fixed costs, because shutting down would mean a loss equal to the total fixed costs, whereas continuing operations can contribute to covering a portion of the fixed costs.

A Company Should Continue to Operate in the Short Run