Assume you are the plant manager for Crossroads Sign Company, which produces roa

Question

Assume you are the plant manager for Crossroads Sign Company, which produces road signs in a market that approximates perfect competition. Due to a slow economy, business has been slow and the company is 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) = $130 Total Cost (TC) = $1,100 + 135Q + 0.6Q2 Marginal Cost (MC) = 135 + 1.2Q 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 analytical techniques and presenting the information graphically.

Explanation / Answer

Yes i would recommend the owners that the plant be shut down for a while,because due to recession we may not get the profit or the turn over that we want in our firm actually Well obviously the global recession will hit the industrial sector in India since our exports will suffer. Also, a recession in our own domestic demand will hurt many of our industries. We could survive the global recession for a year or two by our own domestic demand being strong but if our own economy enters a recession our industrial sector is in trouble.

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