Bravo Pork Rinds Case Assume you are the plant manager for Bravo Pork Rinds, whi

Question

Bravo Pork Rinds Case

Assume you are the plant manager for Bravo Pork Rinds, which produces pork products in a market that approximates perfect competition. Due to a slow economy, business has been slow and you are losing money every month. The owners have asked you whether to continue operations or to shut down at least until the economy improves. You have the following information available:

Marginal Revenue (MR) = $105
Total Cost (TC) = $1,200 + 135Q %u2013 0.6Q2
Marginal Cost (MC) = 135 %u2013 Q

As the plant manager, should you recommend to the owners that the plant be shut down for a while? Justify your answer using at least two techniques and presenting the information graphically.

Explanation / Answer

Because Marginal Cost is the change in total cost that arises with the quantity produced is increased by one unit. As a result, you double the .6

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