If total revenue exceeds fixed cost, a firm
A)should produce in the short run.
B)has covered its variable cost.
C)is making short-run profits.
D)may or may not produce in the short run, depending on whether total revenue covers variable cost.

Question

Quizplus · Accepted Answer

If total revenue exceeds fixed cost, it does not necessarily mean that variable costs are covered. The firm should consider whether total revenue also covers variable costs to decide on short-run production.

If Total Revenue Exceeds Fixed Cost, a Firm