In the long run, a profit-maximizing firm will choose to exit a market when
A)average fixed cost is falling.
B)variable costs exceed sunk costs.
C)marginal cost exceeds marginal revenue at the current level of production.
D)total revenue is less than total cost.

Question

Quizplus · Accepted Answer

In the long run, a firm will exit the market if it cannot cover its total costs, meaning total revenue is less than total cost, leading to losses.

In the Long Run, a Profit-Maximizing Firm Will Choose to Exit