You've Been Hired by an Unprofitable Firm to Determine Whether

question 55

Essay

You've been hired by an unprofitable firm to determine whether it should shut down its operation.The firm currently uses 70 workers to produce 300 units of output per day.The daily wage (per worker)is $100,and the price of the firm's output is $30.The cost of other variable inputs is $500 per day.Although you don't know the firm's fixed cost,you know that it is high enough that the firm's total costs exceed its total revenue.You know that the marginal cost of the last unit is $30.Should the firm continue to operate at a loss? Carefully explain your answer.

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Definitions:

Global Perspective

The understanding and consideration of diverse cultures, economies, and geopolitical factors in decision-making and strategy formulation on an international scale.

SADC

Southern African Development Community, a regional organization aimed at economic integration and development in Southern Africa.

Southeast Asia

A geographic region located to the south of China and to the east of India, known for its diverse cultures, languages, and economies.

Sustainable Development

Development that meets the needs of the present without compromising the ability of future generations to meet their own needs, emphasizing environmental conservation, social equity, and economic growth.