Darlene Runs a Fruit and Vegetable Stand in a Medium-Sized

Darlene runs a fruit and vegetable stand in a medium-sized community where there are many such stands. Her weekly total revenue equals $3000. Her weekly total cost of running the stand equals $3500, consisting of $2500 of variable costs and $1000 of fixed costs. What would an economist likely advise Darlene to do?

A) Keep the stand open for a while longer, because she is covering all of her variable costs and some of her fixed costs.
B) Keep the stand open for a while longer, because she is covering all of her fixed costs and some of her variable costs.
C) Shut down as quickly as possible in order to minimize her losses.
D) Keep the stand open, because it is generating an economic profit.

Correct Answer:

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