If a firm in perfect competition finds that total revenue is less than the total costs of production, it should:
A) raise the price in order to increase total revenue.
B) shut down.
C) remain in business as long as the price exceeds average variable cost.
D) decrease the price in order to increase sales and increase total revenue.

Question

Quizplus · Accepted Answer

In perfect competition, a firm should continue operating in the short run if the price covers the average variable cost, even if total revenue is less than total costs, to minimize losses.

If a Firm in Perfect Competition Finds That Total Revenue