When Total Revenue Is Less Than Variable Costs, a Firm

question 49

Multiple Choice

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

• A)continue to operate as long as average revenue exceeds marginal cost.
• B)continue to operate as long as average revenue exceeds average fixed cost.
• C)shut down.
• D)raise its price.

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Definitions:

Market Price

The price at which goods can be sold or bought in a market, reflecting the supply and demand dynamics at any given time.

Industry Supply Curve

A graphical representation showing the relationship between the price of a good and the total output supplied by the industry.

Technology Improvement

Enhancements or advancements in technological capabilities, leading to more efficient processes or products.

Economic Losses

Financial losses experienced by a business or economy, often resulting from unfavorable business conditions or poor investment decisions.