Principles of Microeconomics, 7th Edition

Published by South-Western College
ISBN 10: 128516590X
ISBN 13: 978-1-28516-590-5

Chapter 14 - Part V - Firms in Competitive Markets - Questions for Review - Page 296: 4

Answer

A firm would shutdown temporarily if their total revenue is lower than their variable costs.

Work Step by Step

If total revenue would be higher than the firm's variable cost, it would be worth it for the firm to open. That is because even though the firm might not generate profit, it would still be better off than if it didn't open. If total revenue is higher than the variable cost, at least the firm is generating some revenue that can cover its fixed costs.
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