If a competitive firm can make enough revenue to cover its variable costs,the firm will
A) always earn a profit.
B) always earn a loss.
C) earn a profit in the long run.
D) choose to remain open.
E) shut down.

Question

Quizplus · Accepted Answer

If a competitive firm can make enough revenue to cover its variable costs, it can choose to remain open and continue producing in the short run, even if it is not earning a profit. This is because shutting down would incur additional costs, such as severance pay for workers and rental fees for space. Therefore, the best choice is D, to choose to remain open.

If a Competitive Firm Can Make Enough Revenue to Cover