Candy Cane Corporation (CCC) produces 100,000 boxes of candy canes per year that sell for $3 a box. If variable costs are $2 per box and it has $125,000 in fixed operating costs, in the short run the CCC should:

A. reduce production until the break-even point is reached.
B. shut down as fixed costs are not being covered.
C. keep producing as profits are $25,000.
D. keep producing because variable costs are covered.


Answer: D

Economics

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