Mr. Santos is deciding whether to stop operations or not. He estimated that he would incur Php 45,000 in terms of raw materials and labor and he would receive an income of Php 40,000 per month. If you can give an advice to Mr. Santos, what will you tell him? A. continue to produce to be able to recover the fixed cost B. stop producing because the revenue is not enough to pay the fixed cost C. stop production and incur a loss equal to the fixed cost D. stop production because doing so will mean not being able to pay the fixed and the variable cost E. no answer
Mr. Santos is deciding whether to stop operations or not. He estimated that he would incur Php 45,000 in terms of raw materials and labor and he would receive an income of Php 40,000 per month. If you can give an advice to Mr. Santos, what will you tell him? A. continue to produce to be able to recover the fixed cost B. stop producing because the revenue is not enough to pay the fixed cost C. stop production and incur a loss equal to the fixed cost D. stop production because doing so will mean not being able to pay the fixed and the variable cost E. no answer
Chapter1: Making Economics Decisions
Section: Chapter Questions
Problem 1QTC
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Mr. Santos is deciding whether to stop operations or not. He estimated that he would incur Php 45,000 in terms of raw materials and labor and he would receive an income of Php 40,000 per month. If you can give an advice to Mr. Santos, what will you tell him?
A. continue to produce to be able to recover the fixed cost
B. stop producing because the revenue is not enough to pay the fixed cost
C. stop production and incur a loss equal to the fixed cost
D. stop production because doing so will mean not being able to pay the fixed and the variable cost
E. no answer
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