If a firm is not making economic profit it should leave the industry.

Name: If a firm is not making economic profit it should leave the industry.
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Question

Quizplus · Accepted Answer

A firm can still cover its variable costs and some or all of its fixed costs even if it's not making an economic profit. This means it can be better for the firm to continue operating in the short run as long as it covers its variable costs, with the hope of future improvements in the market or its cost structure.

If a Firm Is Not Making Economic Profit It Should