Modules $4$ and $5$

Question $3(1$ point$)$ Saved

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Kate's $24-$Hour Breakfast Diner menu offers one item, a $$5\mathrm{.}00$ breakfast special. Kate's costs for servers, cooks, electricity, food, etc. average out to $$3\mathrm{.}95$ per meal. Her costs for rent, insurance deaning supplies and business license average out to $$1\mathrm{.}25$ per meal. Since the market is highly competitive, Kate should:

raise her prices above the perfectly competitive level set by the market.

keep the business open in the short$-$run, and plan to expand the business in the long$-$run.

lay$-$off her staff, break her lease, and close the business down immediately.

keep the business open in the short$-$run, but plan to go out of business in the long$-$run.