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A firm has Total Costs (TC) of $12,000 over the next three months (TOTAL for the 3 months - not per month), of which $6,000 are fixed costs (TFC) for rent on its lease that cannot be broken. If it stays in business over those months, then the firm will collect only $4,000 in revenues (TR). So, considering only this information, should they stay in business for those three months, or should they close down right now? Provide your reasoning.

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Solution Summary

This post suggests to stay or not in business by calculating total variable cost and total revenue cost.

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Total cost=$12000
Total Fixed cost = $6000
Total Variable cost = ...

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