Problem 34

Introduction

Many companies invest a lot when they start their entities. When the companies incur losses, it is obvious that the firms are left with two choices, one declaring bankruptcy and the other shutting down their business. Either way, if the company has decided to resume or continue the operations, it is advisable to file a bankruptcy considering that the costs are way cheaper when compared to the costs of shutting it down. This is due to the difference between the average variable and total costs.