Assume you have been hired as a managing consultant by a company to offer some advice that will help
Assume you have been hired as a managing consultant by a company to offer some advice that will help it make a decision as to whether it should shut down completely or continue its operations. It currently uses 100 workers to produce 6,000 units of output per month (working 20 days / month). The daily wage (per worker) is $70, and the price of the firm’s output is $32. The cost of other variable inputs is $2,000 per day. You are told that the firm’s fixed cost is â€œhigh enoughâ€ so that the firm’s total costs exceed its total revenue. The marginal cost of the last unit is $30.
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