Mars Inc.produces 100,000 boxes of Snickers bars which sell for $4 a box.If variable costs are $3 per box,and it has $150,000 fixed operating costs,in the short run,it should
A)shut down as fixed costs are not being covered.
B)keep producing as profits are $50,000.
C)keep producing as variable costs are being met.
D)keep producing as total costs are being recovered.

Question

Quizplus · Accepted Answer

In the short run, a firm should continue to produce if it can cover its variable costs. Here, the selling price per box ($4) is greater than the variable cost per box ($3), so variable costs are being met.

Mars IncProduces 100,000 Boxes of Snickers Bars Which Sell for $4