If TR TVC but TR

Question

If TR > TVC but TR < TC, a firm would ________ in the short run and ________ in the long run.
A) operate; expand
B) operate; exit the industry
C) shut down; expand
D) shut down; exit the industry

Quizplus · Accepted Answer

If Total Revenue (TR) is greater than Total Variable Cost (TVC) but less than Total Cost (TC), a firm would continue to operate in the short run because it can cover its variable costs and contribute to fixed costs. However, in the long run, if it cannot cover total costs, it would exit the industry to avoid losses.

If TR > TVC but TR < TC, a Firm