Suppose a restaurant that is highly profitable during the summer months is unable to cover its total cost during the winter months. If it wants to maximize profits, the restaurant should
A) shut down during the winter, even if it is able to cover its variable costs during that period.
B) continue operating during the winter months if it is able to cover its variable costs.
C) go a out of business immediately; losses should never be tolerated.
D) lower its prices during the summer months.

Question

Quizplus · Accepted Answer

If the restaurant can cover its variable costs during the winter, it should continue operating to contribute to fixed costs, minimizing losses.

Suppose a Restaurant That Is Highly Profitable During the Summer