In the long run,if a firm is making a loss,it will
A) continue to operate no matter what.
B) continue to operate if it covers its fixed costs.
C) increase production in order to increase profits.
D) decrease production in order to increase profits.
E) stop producing and exit the market.

Question

Quizplus · Accepted Answer

If a firm is making a loss in the long run, it cannot sustain its operations indefinitely. It must either change its strategy to become profitable or exit the market. Continuing to operate will only result in further losses, and increasing production will likely worsen the situation if the firm is already experiencing a loss. Decreasing production may be a short-term solution, but it is unlikely to be sustainable in the long run. Therefore, the best choice is to stop producing and exit the market.

In the Long Run,if a Firm Is Making a Loss,it