Ted's Pancake Kitchen suffers a short-run loss.When should Ted decide to shut down rather than continue to produce?
A) If his Kitchen's revenue is less than its variable costs.
B) If his Kitchen's revenue is less than its fixed costs.
C) If his Kitchen's revenue is less than its explicit costs.
D) If his Kitchen's revenue is less than its total costs.

Question

Quizplus · Accepted Answer

In the short run, a firm should shut down if its revenue is less than its variable costs, as it cannot cover the costs of production.

Ted's Pancake Kitchen Suffers a Short-Run Loss