Question
Hunter owns an ice cream parlor that is usually closed during the winter. This winter, however, he is considering opening his business in March instead
Hunter owns an ice cream parlor that is usually closed during the winter. This winter, however, he is considering opening his business in March instead of April. If Hunter opens his store in March, he will earn total revenue of $4,000 for the month, incurring variable costs of $3,500 and fixed costs of $1,500. If the stores remain closed in March, Hunter will earn no income. Hunter should:
a. stay closed in March because he will lose $1,000 if he closes.
b.stay closed in March because the $500 of operating profit is insufficient to cover the $1,500 of fixed costs.
c. open in March because the $4,000 of total revenues exceeds the $1,500 of fixed costs.
d. open in March because the $4,000 of total revenues exceeds the $3,500 of variable costs.
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