Tom is the owner of a struggling mattress manufacturing firm. In the short run, his revenue is greater than his variable costs but less than his fixed costs. Which of the following is true?
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Tom should shut down his mattress firm, since he cannot cover his fixed costs.
Tom should continue to produce, regardless of price.
Tom should shut down his mattress firm, since he cannot generate a positive cash flow.
Tom should continue to produce in the short run until P = MC.