If a firm cannot cover its variable costs,it will
A)operate in the short run and stay in business in the long run.
B)operate in the short run and go out of business in the long run.
C)shut down in the short run and stay in business in the long run.
D)shut down in the short run and go out of business in the long run.

Question

Quizplus · Accepted Answer

If a firm cannot cover its variable costs, it will shut down in the short run because it will continue to incur variable costs even if it produces no output. In the long run, it will go out of business because it cannot sustain losses indefinitely.

If a Firm Cannot Cover Its Variable Costs,it Will