Assume that a firm's costs are split between variable costs and fixed costs.Once variable costs are covered
A) any extra money is profit.
B) any extra money goes toward paying the fixed costs.
C) the firm will shut down.
D) the firm will make an economic profit.
E) the firm will break even.

Question

Quizplus · Accepted Answer

Once a firm covers its variable costs, any additional revenue goes towards paying off its fixed costs. Profit is only generated after both variable and fixed costs are covered.

Assume That a Firm's Costs Are Split Between Variable Costs