A profit-maximizing decision must be made about whether to keep a bed amp; breakfast operating. Until the place sells, the mortgage of $3000/month…

A profit-maximizing decision must be made about whether to keep a bed & breakfast operating. Until the place sells, the mortgage of $3000/month must be paid, since it is a sunk cost. If the restaurant operates, costs rise by $4000 per month, but revenue will be only $6000 per month. Until the building can be sold,

it is best to ignore sunk costs and keep the bed & breakfast operating.

it is best to keep the bed & breakfast operating because it is profitable.

it is best to shut down the bed & breakfast since it is taking a loss.