66) Val Alvarado, an accountant, quit his $80,000-a-year job and bought an exist
ID: 1228999 • Letter: 6
Question
66) Val Alvarado, an accountant, quit his $80,000-a-year job and bought an existing laundry from its previous owner. The lease had five years remaining and required a monthly payment of $4,000. Val's explicit costs are $3,000 per month more than his revenue. Should Val continue operating his busi¬ness?a. If Val's marginal revenue is greater than or equal to his marginal cost, then he should stay in business.
b. Val should continue to run the laundry until his lease runs out.
c. Val's explicit cost exceeds his total revenue. He should shut down his laundry.
d. cannot be determined without knowing his revenue
Explanation / Answer
66) Val Alvarado, an accountant, quit his $80,000-a-year job and bought an existing laundry from its previous owner. The lease had five years remaining and required a monthly payment of $4,000. Val's explicit costs are $3,000 per month more than his revenue. Should Val continue operating his business? b. Val should continue to run the laundry until his lease runs out.
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