In the long run,if a firm's total cost exceeds its total revenue at all output levels,it should
A)always exit the industry
B)always continue operating
C)increase the amount of its fixed inputs
D)increase the proportion of its total cost that is fixed
E)maximize the difference between its marginal revenue and its marginal cost

Question

Quizplus · Accepted Answer

If a firm's total cost exceeds its total revenue at all output levels, it means that the firm is experiencing losses. These losses will continue to accumulate, and the firm will eventually run out of funds. Therefore, the best choice for the firm is to exit the industry and cut its losses. Continuing to operate will only lead to more losses, and increasing fixed inputs or proportion of fixed costs will not make up for the shortfall in revenue. Maximizing the difference between marginal revenue and marginal cost may not be possible if the firm is already incurring losses.

In the Long Run,if a Firm's Total Cost Exceeds Its