cost. And so what is the fixed cost? Well, the $3,000 of rent is a fixed cost—you must pay that for the next 6 months, open or closed. The 1% of your sales is precisely $0 if you are closed. If you are closed, you will not buy ingredients ($2,500), hire workers ($6,000), or use your entrepreneurial ability to run your store ($2,000), so these are all variable costs. Hence your los if closed is only $3,000, which is less than your loss if open. You should close. 3. Corn is primarily purchased by two…
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