Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's total revenue from the sale of donuts is $12,000 a year. Homer's costs are $16,000 in annual rental payments for its five-year lease on its store and $5,000 for ingredients. Should Homer's exit the market in the long run?

Question

Answer

Yes, because Homer's is incurring an economic loss.

Answer

No, because Homer's is covering its variable costs.

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Yes, because all costs are fixed in the long run.

Answer

No, because all costs are variable in the long run.

Answer

No, because Homer's is covering its fixed costs.

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Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10...

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