In the context of short-run production decisions, which of the following best describes the relationship between fixed costs and cost-benefit analysis when deciding to continue production?

In short-run production decisions, fixed costs are expenses that do not change regardless of how much a company produces, like rent or salaries. When a business is deciding whether to continue production, it must compare its variable costs, which do change with production levels, to the revenue it earns from selling its products. The key idea is that fixed costs should not influence the decision to continue or stop production, as they are already incurred and cannot be recovered. For example, if a factory pays $10,000 in rent (fixed cost) but can still earn $5,000 from selling products and only spends $3,000 on materials (variable cost), it makes sense to continue production in the short run because the revenue exceeds the variable costs. Thus, the focus should be on covering variable costs and maximizing profits rather than on fixed costs.