The Yoga Center earns $10,000 in revenue for the month, but hiring instructors to cover classes costs $15,000 in variable costs, on top of $10,000 in fixed rent. According to the source, what should the center do?

1. The shutdown test compares revenue with variable cost, not with total cost. 2. Here revenue is $10,000, but variable cost alone is $15,000, so revenue does not even cover variable cost. 3. The source concludes the center should shut down now rather than keep hiring instructors it cannot afford. 4. Fixed costs are sunk either way, so ignoring them, as option C suggests treating them as the only thing that matters, gets the logic backward: it is the unpaid variable cost that forces the shutdown here. _Source: OpenStax Principles of Microeconomics for AP Courses (CC BY 4.0), Ch 8 "Perfect Competition", section 8.2 | How Perfectly Competitive Firms Make Output Decisions_