Question: Assume you are the plant manager for a Company which

Assume you are the plant manager for a Company, which produces window frames in a market that approximates perfect competition. Due to a slow economy, business has been slow and the company is losing money every month. The owners have asked you whether to continue operations or to shut down at least until the economy improves. You have the following information available:
Marginal Revenue (MR) = $130
Total Cost (TC) = $1,100 + 135Q + 0.6Q2
Marginal Cost (MC) = 135 + 1.2Q
As the plant manager, should you recommend to the owners that the plant be shut down for a while? Justify your answer using at least two analytical techniques and presenting the information graphically.

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  • CreatedSeptember 19, 2013
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