Amira owns a small bakery where she sells the increasingly popular sweetened baked goods. Unfortunately, her small bakery is running at full capacity and as rents increase, Amira is losing money. So I decided to move to a more spacious and less expensive location starting next month.

She still has one month on rent at the current location. Now she has to choose between two things. The first is to close the old site immediately and to move to production in the new place next month. In this case, she must pay the rent for the old place because the contract has not expired yet. The second is to continue production in the old place and then move to the new place after the end of the month. Amira has to decide based on the possibilities of winning or losing.

Amira has collected the following information:

Sales: 100 sweet cakes per day. The price of a piece of local cake is $3 (it is the prevailing price in the market and it cannot be raised). The cost of the ingredients for each donut (flour, eggs, chocolate) is $2 per piece. You pay rent for the place at a rate of $150 per day. Amira did some calculations and it turns out that it is better to stay in production and not close. Do the calculations again for both cases (close or continue). Using your knowledge of the short-term closure rule, what do you think of her decision? Explain in your own words under what conditions it would be better for the firm to continue to produce in the short term, even in the event of a loss? Also, provide an example (different from the example above) where it would be better for the company to close. Analyze how fixed and variable costs affect closing decisions.

please do not copy-paste anything use your own words