If Total Variable Cost Exceeds Total Revenue at All Output

question 72

Multiple Choice

If total variable cost exceeds total revenue at all output levels, a perfectly competitive firm

• A)should produce in the short run.
• B)is making short-run profits.
• C)should shut down in the short run.
• D)has covered its fixed cost.

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Definitions:

Variable Costs

Costs that vary directly with the level of production or the volume of services provided.

Gross Domestic Product

The total market value of all goods and services produced within a country in a specific time period, serving as a broad indicator of its economic health.

Unemployment Rate

The ratio of the number of people classified as unemployed to the total labor force.

Inflation

The rate at which the general level of prices for goods and services is rising, subsequently eroding purchasing power.