Nib Chocolate Company produces 100,000 chocolate bars, which sell for 4 ETB a bar. Variable costs are 3ETB per bar, and it has 150,000ETB fixed operating costs in the short run. Then, (5 pts) a) Should the firm keep producing, as profits are ETB 50,000? Why? b) Should the firm shutdown, as fixed costs are not being covered? Why? c) Should keep producing as variable costs are being met? Why? d) What do you think will be the decision of the firm in the long run?

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Nib Chocolate Company produces 100,000 chocolate bars, which sell for 4 ETB a
bar. Variable costs are 3ETB per bar, and it has 150,000ETB fixed operating costs in
the short run. Then, (5 pts)
a) Should the firm keep producing, as profits are ETB 50,000? Why?
b) Should the firm shutdown, as fixed costs are not being covered? Why?
c) Should keep producing as variable costs are being met? Why?
d) What do you think will be the decision of the firm in the long run?

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