Restaurants often remain open for lunch even if they attract few customers because, the variable costs are small relative to the revenue, even if the fixed costs are large.

Question

Quizplus · Accepted Answer

This statement is true. Variable costs, such as ingredients or staff wages, may be small in comparison to the revenue earned during lunch service, making it worthwhile for restaurants to remain open even if they are not attracting a large number of customers. Their fixed costs, such as rent or equipment maintenance, are already sunk costs that they must pay regardless of their level of business during lunch.

Restaurants Often Remain Open for Lunch Even If They Attract