Kates 24 hour breakfast diner menu offers one item, a $5.00 breakfast special. K

Question

Kates 24 hour breakfast diner menu offers one item, a $5.00 breakfast special. Kates costs of servers, cooks, electricity, food, etc. average out to $3.95 per meal. Her costs for rent, insurance cleaning supplies and business license average out to $1.25 per meal. Since the market is highly competitive, Kate should. a. keep the business open in the short-run, and plan to expand the business in the long-run b. raise her prices above the perfectly competitive level set by the market c. keep the business open in the short-run, but plan to go out of business in the long-run d. lay-off her staff break her lease, and close the business down immediately

Explanation / Answer

d. lay-off her staff break her lease, and close the business down immediately

Kates short term costs are exceeding the revenues made by her, so it is advisable for her to shut down operations.

Related Questions

Navigate

• Browse (All)
• Browse K
• Subjects

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.