Firms earning negative profits in the short run should always shut down.

Name: Firms earning negative profits in the short run should always shut down.
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Question

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Firms should only shut down if their total revenue is not enough to cover their variable costs. If a firm continues producing even though it is earning negative profits in the short run, it may be able to recover in the long run once market conditions improve.

Firms Earning Negative Profits in the Short Run Should Always