Final answer:
Jean's bicycle repair business, facing continued losses, may need to shut down in the short run if variable costs exceed revenues and will likely exit the business in the long run if the situation does not improve.
Step-by-step explanation:
If Jean's bicycle repair business continues to operate at a loss, it is likely that she will have to shut down her business in the short run if her revenues cannot cover her variable costs. This scenario is akin to a Yoga Center that faces continuous losses.
If the Yoga Center does not generate any revenues, it increases variable costs and losses by hiring yoga teachers, which means it should shut down immediately to only incur fixed costs. Similarly, Jean may need to cease operations to avoid accruing additional variable costs. In the long run, continued losses will lead to what is known as an 'exit' from the business, which involves stopping production entirely.
The decision to shut down immediately or to continue operating in the short run depends on whether the revenue is high enough to cover the variable costs despite the losses. If so, it might make sense to remain open for a short period. However, without an improvement in revenues, exiting the business in the longer term is the likely outcome.