Ben's Peanut Shoppe suffers a short-run loss.Ben will not choose to shut down if
A)his Shoppe's total revenue exceeds his fixed cost.
B)his Shoppe's total revenue exceeds his variable cost.
C)his Shoppe's total revenue exceeds his implicit costs.
D)his Shoppe's total revenue exceeds his capital costs.

Question

Quizplus · Accepted Answer

In the short-run, a firm like Ben's Peanut Shoppe will continue to operate as long as its total revenue exceeds its variable costs. This is because, in the short-run, fixed costs are sunk and cannot be recovered, so shutting down the Shoppe would not recover any of these costs. By continuing to operate, Ben can at least cover his variable costs and potentially minimize his losses.

Ben's Peanut Shoppe Suffers a Short-Run Loss