Chapter 14 provides a theoretical explanation for how firms decide to stay in business. For this week’s discussion board, I’d like you to identify a specific firm or a type of business which illustrates the shutdown concept (i.e. ice cream trucks in the winter, etc).
Shutdown occurs when a firm recognizes that it can’t earn enough revenue to cover their variable costs. Many seasonal businesses make the choice to close up for several months every year. Explain this decision using the competitive market model. What are the specific factors they consider? How is this decision different from going out of business permanently?
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