Question

Your firm has a total revenue of $300, a total cost of $700, and a variable cost of $500 you should blank because blank exceeds.

Answer 1

Answer
First blank: shut down
Second blank: variable cost exceeds total revenue

The firm produces in the short run if the total revenue is above variable cost because it can minimize the losses
in this case, the losses are lower than the fixed cost
loss=fixed cost-(total revenue-variable cost)
but if the variable cost is above total revenue then to minimize losses the firm should shut down
the loss if shut down is the =fixed cost=700-500=200 loss if shut down
if it produces the loss=fixed cost+(variable cost-total revenue)
=200+(500-300)=400=TC-TR=700-300=400