Final answer:
Latasha should not shut down in the short run as she makes a profit of $75 daily and should not exit the industry in the long run unless market conditions change and profits are no longer sustainable.
Step-by-step explanation:
When considering whether Latasha's lawn-mowing service should shut down in the short run and exit the industry in the long run, we must assess her costs versus her revenues. Latasha is mowing 15 lawns a day at $25 each, which amounts to a total revenue of $375 per day. Given that her total cost each day is $300, of which $60 is a fixed cost, her daily profit is $75 ($375 in revenue – $300 in total cost).
In the short run, Latasha should not shut down because she is able to cover all her variable costs plus part of her fixed costs, and she makes a profit. As long as the price ($25 per lawn) is above her average variable cost, it contributes to covering the fixed costs, and so it makes sense for her to continue operating in the short run. In the long run, the assessment depends on whether Latasha can expect to continue making profits or not; if she can continue making profits or improve her situation, she should not exit the industry. However, if market conditions change and profits are no longer sustainable, she should then consider exiting the industry.