In the short run, a firm that incurs losses might choose to produce rather than shut down if the amount of its revenue is less than its fixed cost.

Question

Quizplus · Accepted Answer

In the short run, a firm might choose to produce if its revenue covers its variable costs, even if it incurs losses, because it can still contribute to fixed costs. If revenue is less than variable costs, it should shut down.

In the Short Run, a Firm That Incurs Losses Might