“Even if a firm is losing money, it may be better to stay in business in the short run." Is this statement ever true? If so, under what condition(s)?
Your initial reply should be no less than 200 words. Reply to at least two peers.
1. In some instances this statement is true, the thought process behind this is that if a company's revenue is more than the total variable cost then it's making enough to cover that. It is quite common for some companies to lose money at certain points and for small periods of time, like when first starting a business the companies revenue isn't going to be positive right away, in fact, companies may not see a profit for a few years after their company is launched, this is because everything costs money, and without putting money into it the person will never really get money out of it. If a company is making a good and they have a fixed cost and its profits exceed the fixed cost there is no need for the company to go out of business in the short run, as long as there is revenue coming in that covers the fixed cost of making a product then the company for a short time can survive without going out of business. When a company is making money but not quite enough money to cover its fixed cost that's when it should consider going out of business this is because without making enough revenue to cover the fixed income of a business or a product there is no way for any product to be made or any company to run, because nothing is going to be coming from it without being able to cover that variable cost.
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