Homer's Holesome Donuts Has Determined That Its Profit-Maximizing Quantity Is

Homer's Holesome Donuts has determined that its profit-maximizing quantity is 10,000 donuts per year. Homer's earns $12,000 in revenue from the sale of those donuts. Homer's has two costs. First he pays $16,000 in annual rental payments for its five-year lease on its store. Second Homer incurs an additional cost of $5,000 for ingredients. Should Homer's exit the market in the long run?

A) yes, because he is incurring an economic loss
B) yes, because all costs are fixed in the long run
C) no, because he is making an economic profit
D) no, because all costs are variable in the long run

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