ipl-logo

Watch The Video About The Short-Run Shut-Down Decisions

502 Words3 Pages

Written Assignment Unit 6 Watch this video about the short-run shut down decision: https://www.youtube.com/watch?v=7XDEo2o-wm0&index=2&list=PLMrpXL7ZxXYXIStJLFOAoYv2hPDhXMNQB Explain in your own words why in the short run a firm may continue to produce even at a loss provided the price is more than the average variable cost. Also, provide an example (not from the video) of when a firm might face this decision. Include an analysis of how fixed and variable costs may affect shut-down decisions. Ensure you have presented your assignment in a logical format. Also ensure that you have the appropriate formatting to avoid plagiarism and the appropriate grammar (this may be achieved by using free tools available on the Internet). The short run is defined as a period at least one …show more content…

This means that the firm is operating under conditions where average cost exceeds average revenue. In such situations some firms will leave the industry but some will remain. Those firms which remain believe that they will be able to return to earning at least profits, which will cover their variable cost of production. A firm might face this decision of remaining open when earn enough revenue to cover at least its variable costs. According to OpenStax (2016),it can also remain open when it is making enough revenue to cover at least a portion of fixed costs. It has to keep going even if it is making losses in the short run, since at least the losses will be smaller than if the firm shuts down immediately and incurs a loss equal to total fixed costs (OpenStax, 2016, p. 191). Another facet of a firm remaining in business is that, if the price a firm is receiving is covering its average variable cost it will be covering the direct cost of production, which may make it able to be making some contributions to average fixed cost. Sometime even a situation where a business is having a price equal to minimum average variable cost, it can remain in

Show More
Related

Psy/270 Week 4 Case Study

372 Words | 2 Pages

What I have learned from my decisions and rationale from the solutions that I implemented in round four, five, & six is that one major decision can change a positive or negative course of your company in a matter of a year. As a result of my decision, the company faced financial hardship in year four but demonstrated its defiance against economic crisis in years five and six by making smart and concise choices to improve the business margins on most levels. In year four the company struggled immensely due to the product positioning in the market and forecasting issue which led to excessive inventories the outstrip the company cash flows, negative ROS ( -3.2%), ROA (-2.4), ROE (.3.7) and a negative profits ($1,214,319). Also, the firm stock

Read More

Nt1310 Unit 2 Assignment

961 Words | 4 Pages

Was my response five paragraphs, as specified by the assignment instructions? d. Formatting: Did I create my response as a Microsoft Word document? Is it written in Times New Roman 12-pt. font and double spaced?

Read More

Rhetorical Analysis Of Gary Steiner's Animal, Vegetable Mineral

755 Words | 4 Pages

I need to assess your writing as individuals and the class as a group so I can make adjustments. Assignment Outline Paragraph 1 is a summary. A summary should identify author, article, purpose, and give me an idea of the main points. One of the most challenging aspects of summary is the length. This summary paragraph should be 5-7 sentences.

Read More

Turnip Farm Case Summary

172 Words | 1 Pages

After reviewing all cost and profit amounts in question 1-5, Tom did not make a good economic decision in starting his own turnip farm. As the case did not specify how much Tom will be earning a year managing Turnip Tom’s, according to the income statement, Tom’s revenue at the organic farm is $3,000 more than his computer programmer salary at $95,000. Tom’s economic cost indicated he will be losing -&77,900 per year operating the business as well as spending $300,000 in savings to purchase land and equipment for the farm. Although utilizing saving was a good decision to own the land and equipment, however, Tom’s cost products sold is only $15,500, meaning consumers are not buying turnips as a supply and demand product. My suggestion to Tom

Read More

Personal Narrative Techniques In Elie Wiesel's 'Night'

167 Words | 1 Pages

You should work on run-on sentences. However, I do understand the difficulty of rewording and adding another period. That could take like 2 minutes, and who has time for that! In conclusion,

Read More

Tap Market Structure

876 Words | 4 Pages

However, once the market gets overly saturated with different firms there becomes a surplus of product. Once there is a surplus of product, and since the demand of the product is already being met, the equilibrium price will starts to decline. Subsequently firms will not be able to meet their variable and fixed costs, thus leading to the firm to exit the market. Having so many different firms selling one type of product creates major instability for the people of Tap, and creating an unpredictable standard of living for all

Read More

Managerial Economics Study Guide

511 Words | 3 Pages

7. There is no barrier to entry. If firm are making economic profit, other firms will enter the market. The demand for the firm product will decrease, the D and MR curve will shift left. New firms will stop entering the market if economic profit is zero.

Read More

Finance Case Study: The Wilkerson Company

895 Words | 4 Pages

The last product that this company produces are the flow controllers. Flow controllers are products that are very customizable but are not as competitive on the market demanding higher prices. The planned gross margin for the flow controllers was 35% with an actual margin of 41.%. There was a significant increase without the loss of any business. The Wilkerson company have a quality leadership team; however, there are some things that needs to be changed for the company to succeed and prepare for potential price

Read More

Competitive Case Analysis Of Wilkerson's Company

1770 Words | 8 Pages

Therefore on that basis, all products, including pumps would be generating substantial contribution to overhead and profits. Therefore, given the overhead allocation problems, Wilkerson’s best bet would be to adopt the variable costing method for various reasons, as follows: 1. This cost concept provides a better understanding of the effect of fixed costs on the net profits, due to the fact that total fixed cost for the period is shown on the income statement. 2.

Read More

Premier Inn Swot Analysis

1718 Words | 7 Pages

The temporary character of competitiveness, which can be lowered anytime. 4. The massive spending on technological advances. 5. The brand image misconception in which low prices are usually associated with low quality product.

Read More

Coles And Woolworths Case Study

2243 Words | 9 Pages

In this camp suppliers were designated into three tiers with tier 3 containing 220 suppliers. More than 30% business of Coles was coming through those suppliers. The tier 3 suppliers faced the harsh and brutal behaviour of Coles’s manager when they threatened suppliers to end their supply contracts and a range review of their current products. 62 suppliers were escalated for either termination of contract or a range review of their products within 35 days. Coles’s manager took decision in hurry for e.g. cancellation of planning and promotion of Stuart Alexander and a range review of Oates cleaning products.

Read More

Four Key Business Functions

707 Words | 3 Pages

Operation decisions are influenced by marketing strategies while marketing strategies are affected by the outcomes of other KBF’s. Marketing is largely concerned with strategies to ensure the sale of product which include influencing consumers to buy product by altering, design, pricing, the image of the product in the market, promotion and the quantity produced. These can all be restricted by other KBF’s. Pricing strategies, for example, can’t be set lower than the costs of making the products (reaching break even point). Every key business function has affects on marketing and physical limits on the amount that can be produced and the sorts of marketing strategies that can be implemented.

Read More

Unilever Executive Summary

1494 Words | 6 Pages

Moreover, although the sales turnover of Unilever Plc has decreased, the operating profit and net profit still remain increased. The most highlighted part of this assignment is Unilever

Read More

Unit 38 P4

329 Words | 2 Pages

Unit 38 – P3: Identify how government policies impact on a selected businesses In this assignment, I will identify on how government policies impact on a selected business, in this case, Honey Tree Holiday Park. Change in Government spending Data and Back up Reference Effect on the business Good or bad news Government rises the National Minimum Wage On the 1st of October 2015, the national minimum wage for adults went up by “57 pence to £3.30 for apprentices and rises by 20 pence to £6.70 per hour for adult workers.” This will have a negative impact on Honey Tree Holiday Park because they now have to pay their staff the minimum national wage, which has increased.

Read More

Pros And Cons Of Dynamic Revenue Management

2457 Words | 10 Pages

For instance, if a firm faces a high level of demand, it has an incentive to increase the price to reserve some products for later customers who may be willing to

Read More

More about Watch The Video About The Short-Run Shut-Down Decisions

Related Topics

Open Document