Can it ever be wise to produce even if total cost exceeds total revenue?
You could have "personal" reasons. However, economically speaking, no.
Sra
It might be wise if you were introducing a new product and wanted to attract attention to it. Obviously you can't do this for very long.
It is generally not considered wise to produce if total cost exceeds total revenue, as in such cases the business would incur a loss. However, there might be instances when a company chooses to produce even if it is not profitable in the short term. Here are a few situations in which this might occur:
1. Strategic reasons: A business may temporarily produce at a loss to gain market share or establish a presence in a new market. This strategy is often observed in highly competitive industries where companies are willing to endure losses in the short term to position themselves for long-term success.
2. Economies of scale: If a business operates under economies of scale, it may continue production even when total cost exceeds total revenue in the short term. This is because producing at a larger scale can help lower the per-unit cost, making it more profitable in the long run.
3. Fixed costs: If a business has a significant portion of fixed costs that cannot be easily reduced or avoided, it might make sense to produce even when total cost exceeds total revenue. By continuing production, they can at least cover part of their fixed costs and minimize losses.
It is important to note that producing at a loss should be a temporary strategy, and the company should have plans in place to improve profitability or adjust its production levels in the long term. Consistently producing at a loss is not sustainable and can lead to financial difficulties for the business.