Answer: Continue operations in the short run but exit the market in the long run.

**Explanation:** - **Option A** is incorrect because while total revenue ($1,000 million) exceeds total variable costs ($700 million), it does not cover total costs (TVC + TFC = $1,100 million). Therefore, the firm cannot sustain operations in the long run. - **Option B** is correct. In the short run, the firm should continue operations since total revenue covers total variable costs, allowing it to minimize losses. However, in the long run, the firm cannot cover total fixed costs ($400 million), making it unsustainable to remain in the market. - **Option C** is incorrect because the firm should not shut down in the short run as total revenue exceeds total variable costs, enabling it to contribute to fixed costs. However, exiting the market in the long run is necessary due to insufficient revenue to cover all costs.

Author: LeetQuiz Editorial Team