Bk022 Principles Of Economics Assessment Answer
Question:Gohrunsa FitnessCenter, which has signed a contract to rent space that costs RM3,500 per month. If Gohdecides to operate, the cost ofhiring fitnesstrainersis RM6,000 for the month. If Gohwants to shut down, hestill has to pay the rent, but doesnot have tohire labour. Now, consider THREE(3) possible scenarios. In the firstscenario: FitnessCenter does not have any members, and therefore does not make any revenues, in which case it faces losses of RM3, 500 equal to the fixed costs.In thesecond scenario:FitnessCenter has members that earn the center revenues of RM6,000 for the month, but eventually experiences losses of RM6,000 dueto hire fitnesstrainersto cover the classes.In the third scenario:FitnessCenter earns revenues of RM9, 000 for the month, but experienceslosses of RM500.Based on the given scenarios, is that Gohshould shut down his FitnessCenter immediately or lateror continue?
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