The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.5
MC: Marginal cost curve
MR: Marginal revenue curve.ATC: Average-total-cost curve
AVC: Average-variable-cost curve
-When revenue is less than total cost but more than variable cost it implies that:

Question

The figure given below shows the revenue and cost curves of a perfectly competitive firm.Figure 10.5
  MC: Marginal cost curve
MR: Marginal revenue curve.ATC: Average-total-cost curve
AVC: Average-variable-cost curve
-When revenue is less than total cost but more than variable cost it implies that:

Quizplus · Accepted Answer

When revenue is less than total cost but more than variable cost, the firm is not able to cover all of its costs, but it can cover its variable costs and at least a portion of its fixed costs. Therefore, the firm should continue operating in the short run to minimize losses. This level of output is known as the shutdown point, and it occurs where the firm's price intersects the minimum point of its average variable cost curve. Therefore, option C is the correct answer.

The Figure Given Below Shows the Revenue and Cost Curves