If a firm's total variable cost exceeds its total revenue, the firm should stop production by shutting down temporarily.

Name: If a firm's total variable cost exceeds its total revenue, the firm should stop production by shutting down temporarily.
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Question

Quizplus · Accepted Answer

If total variable costs exceed total revenue, the firm is not covering its variable costs, leading to losses. Shutting down temporarily can minimize losses to fixed costs only.

If a Firm's Total Variable Cost Exceeds Its Total Revenue