In the short run, a profit-maximising firm will shut down if its total revenue is greater than its variable costs.

Question

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A profit-maximising firm will shut down if its total revenue is less than its total variable costs. This is because the firm will not be able to cover its variable costs and will incur losses. If the firm's total revenue is greater than its total variable costs, it is still covering some of its fixed costs and may continue to operate in the short run.

In the Short Run, a Profit-Maximising Firm Will Shut Down