Microeconomics-Short Run

Microeconomics-Short Run

Under what conditions will a firm shut down operations
in the short run? Identify an example you are familiar with, or have identified
through research, of a business that has temporarily shut down operations in
the short run. What led to this decision? What did the firm due during the
shutdown period? Did the firm resume operations at a later date?

250 words

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Shut down decisions

The management of an organization usually prefers to shut down the operations of the business when the organization is indifferent between enduring operations and closing down temporary. This has an implication that when the firm decides to shut down the operations then, the management cannot avoid its fixed costs. The firm can therefore resume the operations when the market conditions improve (Gans, 2011).

A firm will make such a decision of shutting down of the operations when the marginal revenue is below the average variable cost at the…

APa

284 words