A perfectly competitive firm finds that its total revenue is $74,000 and its total costs are $80,000. If its total variable costs are $75,000, what should the firm do?

Question

Quizplus · Accepted Answer

The firm should shut down immediately because its total revenue ($74,000) is less than its total variable costs ($75,000), meaning it cannot cover its variable costs and is incurring a loss on each unit produced.

A Perfectly Competitive Firm Finds That Its Total Revenue Is