When a profit-maximizing firm in a competitive market is unable to generate enough revenue to pay all of its fixed costs, what should it do in the short run?

Question

Accepted Answer

It should continue to produce as long as total revenue is sufficient to pay variable costs.

Answer

It should shut down and incur a loss equal to its fixed costs.

Answer

none of the above

Answer

It should continue to produce as long as marginal cost is less than average revenue.

Answer

It should shut down until it is able to produce where average revenue exceeds average fixed cost.

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When a profit-maximizing firm in a competitive market is unable to generate enou...

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