When Total Revenue Is Less Than Total Variable Cost, a Firm

question 122

Multiple Choice

When total revenue is less than total variable cost, a firm in a competitive market will:

• A)shut down
• B)continue to operate as long as average revenue exceeds marginal cost
• C)continue to operate as long as average revenue exceeds average fixed cost
• D)always exit the industry

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Definitions:

Depreciation Tax Shield

A decrease in taxable income for businesses due to the allowance for depreciation, resulting in a lower tax liability.

Projects

Specific, planned activities with defined goals and objectives, undertaken to achieve a desired outcome.

CCA Class

Stands for Capital Cost Allowance Class, a categorization in tax systems for depreciation of assets for tax purposes.