If Total Revenue Exceeds Fixed Cost, a Firm

question 143

Multiple Choice

If total revenue exceeds fixed cost, a firm

• A)should produce in the short run.
• B)has covered its variable cost.
• C)is making short-run profits.
• D)may or may not produce in the short run, depending on whether total revenue covers variable cost.

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Definitions:

Economic Loss

A monetary loss that occurs when the cost of producing a good or service exceeds the revenue gained from selling it.

Economically Efficient

A situation where resources are allocated in a way that maximizes the net benefit to society or an economy.

Total Costs

The sum of all expenses a firm incurs in the production of goods or services, including both fixed and variable costs.

Market System

A financial framework where the choices about investment, production, and allocation are directed by the price indicators generated through the dynamics of supply and demand.