-If this firm were to produce at its profit-maximizing or loss-minimizing output it would:
A) earn a profit.
B) lose an amount equal to its total variable costs.
C) lose an amount equal to part of its total fixed costs.
D) lose an amount equal to its total variable costs plus part of its total fixed costs.

Question

-If this firm were to produce at its profit-maximizing or loss-minimizing output it would:
A) earn a profit. 
B) lose an amount equal to its total variable costs. 
C) lose an amount equal to part of its total fixed costs. 
D) lose an amount equal to its total variable costs plus part of its total fixed costs.

Quizplus · Accepted Answer

A firm minimizes its losses by producing at a level where its total revenue covers all of its variable costs plus part of its fixed costs. The loss incurred is thus equal to a portion of its fixed costs, since fixed costs are incurred regardless of the level of output.

-If This Firm Were to Produce at Its Profit-Maximizing or Loss-Minimizing