The accountants hired by Forever Fitness have determined total fixed cost to be $75,000, total variable cost to be $130,000, and total revenue to be $125,000. Because of this information, in the short run, Forever Fitness should

Question

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Forever Fitness should shut down in the short run because their total revenue ($125,000) is less than their total variable cost ($130,000), meaning they cannot cover their variable costs, let alone make a profit. Staying open would lead to greater losses.

The Accountants Hired by Forever Fitness Have Determined Total Fixed