A firm could continue to operate for years without ever earning a profit as long as it is producing an output where

Question

Quizplus · Accepted Answer

A firm can continue operating in the short run as long as it covers its variable costs, meaning the price (or marginal revenue, MR) is greater than average variable costs (AVC). This is because, in the short run, the firm can cover its variable costs and contribute to fixed costs, even if it's not covering the full average total cost (ATC).

A Firm Could Continue to Operate for Years Without Ever