Elucidate why should industry continue to operate at a loss

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Q. You've been hired as a managing consultant by an unprofitable industry to conclude where it should shut down its operation. Industry currently uses 70 workers to produce 300 units of output per day. Daily wage (per worker) is $100 and cost of industry's output is $30. Cost of or variable inputs are $500 per day. Although you don't know industries fixed cost, you know that it is high enough that industry's total costs exceed its total revenue. You know that marginal cost of last unit is $30. Should industry continue to operate at a loss? Carefully elucidate your answer

Reference no: EM1367772

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