Marty's Bird House suffers a short-run loss.Marty can reduce his loss below the amount of his total fixed costs by continuing to produce if his revenue
A)exceeds his implicit costs.
B)exceeds his nonmonetary opportunity costs.
C)exceeds his variable costs.
D)exceeds his marginal costs.

Question

Quizplus · Accepted Answer

Marty can reduce his loss below the amount of his total fixed costs by continuing to produce if his revenue exceeds his variable costs. This is because if he stops production, he will still have to pay his fixed costs, but if he continues producing and makes enough revenue to cover his variable costs, he will at least be able to reduce his losses. Implicit costs and nonmonetary opportunity costs are not relevant in this decision, and marginal costs should not be the sole factor considered when determining whether to continue production or not.

Marty's Bird House Suffers a Short-Run Loss