| The Rizzo Soybean Farm has a long-term lease on 5000 acres of land. The annual lease payment is $250 000. Prior to planting in the spring of 2017, the farm anticipated it would have $135 000 left after paying all costs except the annual lease payment. In this case, the farm should ____ |
| | | A. shut down operations immediately | | | B. exit the soybean market, and move its resources to some other line of business | | | C. continue to operate at least in the short run | |
| The Rizzo Soybean Farm has a long-term lease on 5000 acres of land. The annual lease payment is $250 000. Prior to planting in the spring of 2017, the farm anticipated it would have $135 000 left after paying all costs except the annual lease payment. In this case, the farm should ____ |
| | | A. shut down operations immediately | | | B. exit the soybean market, and move its resources to some other line of business | | | C. continue to operate at least in the short run | |
Ans) c is the correct option. Continue to operate at least in the short run. As long as the firm is able to cover the variable cost which depends on output the firm should continue to operate. As the price the firm recieves is greater than the variable cost, firms operate
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