The accountants hired by the Brookside Racquet Club have determined total fixed cost to be $75,000, total variable cost to be $130,000, and total revenue to be $145,000. Because of this information, in the short run, the Brookside Racquet Club should

Question

Quizplus · Accepted Answer

The Brookside Racquet Club should stay open because shutting down would be more expensive. While the firm is not making an economic profit, it is covering all of its variable and fixed costs with total revenue. In the short run, it would be more expensive for the club to shut down and incur fixed costs without any revenue. It may be necessary for the club to adjust its pricing or operations in order to generate an economic profit in the long run.

The Accountants Hired by the Brookside Racquet Club Have Determined