sions. Ima on seeing a newly movie. You buy a ticket for $10, but before entering the theater, you lose the ticket. Should you buy another ticket? Or should you now go home and refuse to pay a total of $20 to see the movie? The answer is that you I should buy another ticket. The benefit of seeing the movie ($15) still exceeds the opportunity cost (the $10 for the second ticket). The $10 you paid for the lost ticket is a sunk cost. As with spilt milk, there is no point in crying about it. CASE STUDY NEAR-EMPTY RESTAURANTS AND OFF-SEASON MINIATURE GOLF Have you ever walked into a restaurant for lunch and found it almost empty? Why, you might have asked, does the restaurant even bother to stay open? It might seem that the revenue from so few customers could not possibly cover the cost of running the restaurant. In making the decision of whether to open for lunch, a restaurant owner must keep in mind the distinction between fixed and variable costs. Many of Submissions IRM BEHAVIOR AND THE ORGANIZATION OF INDUSTRY elite Staying open can be profitable, even with many tables empty. ( a restaurant's costs-the rent, kitchen equipment, tables, plates, silverware, and so on--are fixed. Shutting down during lunch would not reduce these costs. In other words, these costs are sunk in the short run. When the owner is deciding whether to serve lunch, only the variable costs-the price of the additional food and the wages of the extra staff-are relevant. The owner shuts down the restau- rant at lunchtime only if the revenue from the few lunchtime customers would fail to cover the restaurant's variable costs. An operator of a miniature-golf course in a summer resort community faces a similar decision. Because revenue varies substantially from season to season, the firm must decide when to open and when to close. Once again, the fixed costs-the costs of buying the land and building the course-are irrelevant in making this short-run decision. The miniature-golf course should be business only during those times of year when its revenue exceeds its variable open for costs. 14-2e The Firm's Long-Run Decision to Exit c