Answer: Yes, the firm should continue to produce in the short run as its revenues cover all of its total variable cost of $16,000.
Explanation:
Given that,
Produces = 3,000 units
Total cost = $36,000
Fixed cost of production = $20,000
price of each good = $10
Total cost = Total fixed cost + total variable cost
$36,000 = $20,000 + Total variable cost
Total variable cost = $36,000 - $20,000
= $16,000
Revenues = 3,000 units × price of each good
= 3,000 × $10
= $30,000
Yes, the firm should continue to produce in the short run as its revenues cover all of its total variable cost of $16,000.
