When a firm's total cost exceeds its total revenue:

Question

Quizplus · Accepted Answer

When a firm's total cost exceeds its total revenue, it means the firm is experiencing losses. This happens when the total cost of producing goods or services exceeds the total revenue earned from selling those goods or services. Total cost rises with increases in output as the firm spends more on production. Therefore, option D is the correct answer. Option A is incorrect because it suggests that the firm is making a profit. Option B is incorrect because net revenue is negative in this scenario. Option C is incorrect because marginal cost may still be positive even when total cost is greater than total revenue.

When a Firm's Total Cost Exceeds Its Total Revenue