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 smart decision to remain open for lunch.
A)(i) and (ii) only
B)(ii) and (iii) only
C)(i) and (iii) only
D)(i), (ii), and (iii)

Question

Quizplus · Accepted Answer

Fixed costs are sunk in the short run, and if revenue exceeds variable costs, it is beneficial to stay open as it contributes to covering fixed costs.

When a Restaurant Stays Open for Lunch Service Even Though