If total revenue exceeds total variable cost, a firm should continue to produce in the short run because all of its variable costs and some or all of its fixed costs can be paid out of revenue.

Question

Quizplus · Accepted Answer

When total revenue exceeds total variable costs, it means the firm is covering all its variable costs and has some revenue left over to contribute towards its fixed costs, making it financially sensible to continue production in the short run.

If Total Revenue Exceeds Total Variable Cost, a Firm Should