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Q. At a recent board meeting CEO and president got into a heated argument about whether to shut down the firm's plant in Miami. The Miami plant currently loses $60,000 monthly. The president of the firm argued that the Miami plant should continue to operate, at least until a buyer is found for the production facility. The president disagreement was based on the reality that the Miami plant's fixed costs are $68,000 per month. The CEO exploded over this point, castigating the president for considering fixed costs in making the shutdown decision. As per CEO, "Everyone knows fixed cost don't matter!"
a) Explain the Miami plant which is closed or continue to operate at a loss in short run?
b) Explain how would you explain to the incorrect party that he or she is wrong?
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A machine used to cereal boxes dispenses, on the average, ounces per box. What is the largest value.
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Subsequently the customer paid the balance on 22 October 2012. To customer the Credit terms offered.
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A farmer has a production function f(L) where the input is capital (L). The cost of this loan is L(1+i). The farmer also has an outside option (loan from family member) which generates a profit of A.
The cost of the grapes may be as much as 60% of total production costs but varies greatly from lower-quality inexpensive wines to the highest quality wines.
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