Final answer:
The statement is false because a business makes a profit only when its total revenue exceeds total costs. If costs are higher than revenue, the business suffers a loss.
Step-by-step explanation:
When the revenue for a business is less than its costs, it is not making a profit; hence.Profit is calculated as the difference between total revenue and total costs. If a business's expenses exceed its revenues, it's operating at a loss. In a simple equation: Profit = Total Revenue - Total Costs. Therefore, a profit is only made when total revenues are greater than total costs.
If a company's total revenue line falls below its total cost curve at every level of output, the result is a financial loss. The best a profit-maximizing firm can do in this scenario is to minimize losses by producing the quantity of output where the difference between total costs and revenues is the smallest.
For example, if a company generates $10,000 in revenue but its total costs (including both fixed and variable costs) amount to $12,000, then the business is making a loss of $2,000. In order to become profitable, the business will need to either increase its revenue or reduce its costs.