Unprofitable operation-produce fewer shirt-price-taking firm

Assignment Help Business Economics

Reference no: EM131107843

You’ve been hired as an economic consultant to a price-taking firm that produces shirts. The firm already has a shirt factory, so it is operating in the short run. The price of shirts is $5, the hourly wage is $12, and each shirt requires $1 worth of material. At the current level of output (20 workers and 70 shirts per hour), the firm is losing money: Its total cost exceeds it total revenue. The firm has experimented with different numbers of workers and discovered that 21 workers would produce 72 shirts; 15 workers would produce 60 shirts; and 16 workers would produce 63 shirts. You job as a consultant is to tell the firm which of these four options to take; and explain and show your calculations as to why you selected an option.

1. Option 1: Shut down the unprofitable operation. Explain why giving numerical calculations?

2. Option 2: Continue to produce 70 shirts per hour. Explain why giving numerical calculations?

3. Option 3: Produce more shirts. Explain why giving numerical calculations?

4. Option 4: Produce fewer shirts. Explain why giving numerical calculations?

Reference no: EM131107843

Questions Cloud

Create a colum chart to compare all of the source : Please create a Colum chart to compare all of the source of funds for Nordstrom and its competitors Macys Neiman Marcus and Off Sacks 5th avenue. Please research the data create original charts. CAN NOT BE PLAGERIZED!

Definition of demand and law of demand : In detail, explain how the 5 variables/determinants of Demand, Be sure to relate your explanations back to the definition of Demand and the Law of Demand.

List of the world largest firms : Under Lists, click on "Global 2000 Leading Companies" to see the list of the world's largest firms. View the complete list. From the list, select two firms from two different industries and discuss the likely sources of the economies of scale that..

Dividend-yield-plus-growth-rate approach to calculate : Wyatt Inc. uses the dividend-yield-plus-growth-rate approach to calculate the cost of equity. Investors expect Wyatt's year-end dividend (D1) to be $3.00 a share, its expected dividend growth rate is 5%, and the stock currently sells for $60 a sh..

Unprofitable operation-produce fewer shirt-price-taking firm : You’ve been hired as an economic consultant to a price-taking firm that produces shirts. The firm already has a shirt factory, so it is operating in the short run. The price of shirts is $5, the hourly wage is $12, and each shirt requires $1 worth of..

Find the y coordinate y of the point at which the electron : Find the y coordinate y of the point at which the electron strikes the screen.Express your answer in terms of D and the velocity components vx and vy.

Study of economics apply : In your opinion, how does the study of economics apply to our daily decisions? For example, can we use the lessons we learn about opportunity cost and efficiently allocating our resources to decisions we make about our individual lives

Uses the market value of equity to determine : Credit Limit. Refer to question 8. What will Mary and Marty's credit limit be if the bank uses the market value of equity to determine their credit limit and will loan them 70% of the equity?

Accrue to the company and its shareholders : Beta plc has been trading for twelve years and during this period has achieved a good profit record. To date, the company has not been listed on a recognised stock exchange.

User Account

All Pages