It may be advisable for a firm to stay in business, even if it's losing money,
A) but only in the short run
B) but only if its profit covers the loss
C) but only in the long run
D) because "things may change"
E) when the owner has lots of money

Question

Quizplus · Accepted Answer

In the short run, a firm might choose to stay in business despite losses if it covers its variable costs, with the expectation that conditions will improve, allowing it to cover its fixed costs and eventually make a profit. This is a strategic decision based on the anticipation of future profitability, not current earnings.

It May Be Advisable for a Firm to Stay in Business