If a firm is operating at a loss in the short run:
A) it will shut down if it is only covering variable costs.
B) it will shut down.
C) it will shut down if it is only covering fixed costs.
D) it will increase the price of the product.

Question

Quizplus · Accepted Answer

In the short run, a firm will continue to operate if it can cover its variable costs, even if it is making a loss, because it can still contribute to fixed costs. If it cannot cover variable costs, it will shut down.

If a Firm Is Operating at a Loss in the Short