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Should the firm shutdown immediately or should continue operating

Should the firm shutdown immediately or should continue operating - Assignment Example

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It aims to assist management in deciding whether to shut down operations or continue it if the firm is operating at a loss. The example and…

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Should the firm shutdown immediately or should continue operating

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Subject: Macro & Microeconomics
Type: Assignment
Level: High School
Pages: 4 (1000 words)
Downloads: 3
Author: olubowitz

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3. For one of the cases, if the firm can operate at a loss in the short-run, how many employees need to be laid off in order for the company to break even? To calculate the number of workers to be laid off, divide the loss for the two situations by the daily wage per worker. It is possible that the workers can increase their productivity through overtime work or working two shifts. However, this would also entail additional variable cost because of the overtime pay that must be given to them.

If we assume that the workers have not yet maximized their full potential, their productivity can still improve. The company can offer incentives to increase their

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