Darlene runs a fruit and vegetable stand in a medium-sized community where there are many such stands.Her weekly total revenue equals $2,000.Her weekly total cost of running the stand equals $3,500,consisting of $2,500 of variable costs and $1,000 of fixed costs.An economist would likely advise Darlene to:

Question

Quizplus · Accepted Answer

Darlene's total revenue ($2,000) is less than her total variable costs ($2,500), meaning she is not covering her variable costs. In the short run, if a business cannot cover its variable costs, it should shut down to minimize losses.

Darlene Runs a Fruit and Vegetable Stand in a Medium-Sized