When a restaurant stays open for lunch service even though few customers patronize the restaurant for lunch,which of the following principles is (are)best demonstrated? (i) Fixed costs are sunk in the short run.
(ii) In the short run,only fixed costs are important to the decision to stay open for lunch.
(iii) If revenue exceeds variable cost,the restaurant owner is making a profitable strategic decision to remain open for lunch.

Question

When a restaurant stays open for lunch service even though few customers patronize the restaurant for lunch,which of the following principles is (are)best demonstrated? (i)	Fixed costs are sunk in the short run.
(ii)	In the short run,only fixed costs are important to the decision to stay open for lunch.
(iii)	If revenue exceeds variable cost,the restaurant owner is making a profitable strategic decision to remain open for lunch.

Quizplus · Accepted Answer

Fixed costs are sunk in the short run, and if revenue exceeds variable costs, it is a profitable decision to stay open. However, fixed costs are not the only consideration in the decision to stay open.

When a Restaurant Stays Open for Lunch Service Even Though