If a firm is indifferent between operating and shutting down in the short run,then it must be true that

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Quizplus · Accepted Answer

In the short run, a firm can only vary its variable costs, but not its fixed costs. Therefore, if a firm is indifferent between operating and shutting down, it means that its total revenue is just enough to cover its total variable costs. If total revenue were equal to total cost or fixed cost, the firm would not be indifferent between operating and shutting down. If fixed cost were zero, the firm would always operate, since it would have no costs to cover.

If a Firm Is Indifferent Between Operating and Shutting Down