When Will a Firm Shut-Down Temporarily? When Do Firms Exit

question 53

Essay

When will a firm shut-down temporarily? When do firms exit an industry? Holding all else constant, is it ever the case that a firm will shut down in the short-run, but will find it profitable to stay in the long run?

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Definitions:

Opportunities

Chances or prospects available in the environment that individuals or organizations can exploit for their benefit.

Expectancy Theory

A motivational theory that explains how individuals decide on behavioral options based on the expected outcomes of those behaviors.

Employee Motivation

The measure of dynamism, allegiance, and creativity employees in an organization exhibit towards their duties.

Effort

The amount of physical or mental energy expended towards the achievement of a task, goal, or objective.