A firm will continue to produce if total revenue is greater than total variable cost even if total revenue is less than fixed cost.

Question

Quizplus · Accepted Answer

This is because if total revenue is greater than total variable cost, the firm is still able to cover its variable costs and some of its fixed costs. If the firm stops production when total revenue is less than fixed cost, it would not be covering any of its fixed costs, which could lead to even greater losses in the long run.

A Firm Will Continue to Produce If Total Revenue Is