A firm has total costs (TC) of $10,000 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 $5,000 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 the reasoning.© BrainMass Inc. brainmass.com October 10, 2019, 12:29 am ad1c9bdddf
They should stay in business as long as variable costs are lower ...
Variable costs are explained.