If the firm is incurring losses in the short run, then which of the following is TRUE?

Name: If the firm is incurring losses in the short run, then which of the following is TRUE?
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Question

Quizplus · Accepted Answer

If the firm is incurring losses in the short run, it means that its total revenue (TR) is less than total cost (TC). In other words, P x Q < ATC x Q. Dividing both sides by Q yields P < ATC, meaning that the price is less than average total cost.

If the Firm Is Incurring Losses in the Short Run