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.

---

Definitions:

Fixed Manufacturing Expenses

These are the expenses that remain constant regardless of the amount of goods produced, including rent for factory buildings or lease payments for manufacturing equipment.

Fixed Selling

Expenses that remain constant regardless of the level of sales or production, such as salaries of sales managers and rental charges of retail spaces.

Eliminating Product

The process of removing a product from a company's offerings, often due to low sales, obsolescence, or strategic repositioning.

Segment Margin

A segment’s contribution margin less its traceable fixed costs. It represents the margin available after a segment has covered all of its own traceable costs.