As? an? accountant, you decided two years ago to quit? your? $90,000 salary posi

Question

As? an? accountant, you decided two years ago to quit? your? $90,000 salary position to open your own firm. You have a five year lease which requires a monthly payment? of? $4,000. Your explicit cost amounts to?$3,000 per month more than the current revenue.

You know that business might not pick up. Should you continue operating the? business?

A.

Your explicit cost exceeds your total revenue. You should shut down your firm.

B.

If your marginal revenue is greater than or equal to your marginal? cost, then you should stay in business.

C.

You should continue to run the firm until your lease runs out.

D.

This cannot be determined without information on his revenue.

Explanation / Answer

Ans is C

Since lease cost is $4000

And the accounting loss is $3000

Which is less than explicit cost leading to loss decrease due to production.

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