Question

Frank owns a soda fountain and sells milkshakes. he sells 50 milkshakes per day for $5 each. his daily cost is $290, of which $30 is fixed cost. what can you say about Franks short run decision regarding shut down and his long run decision regarding exit?

please help me out !

Answer 1

(290-31)/50
= $5.2 (bigger than $5)
he should shutdown because in short run cannot be operate so in the long run and exist business also cannot be operate