From the e-Activity, determine the environmental variable most likely to affect the short-run production over the next 12 months. Determine what managers can do to prepare for the possible change in short-run production.
The types and amounts of inputs—such as land, labor, raw and processed materials, factories, machinery, equipment, and managerial talent. These inputs can be used in the production of a desired quantity of ...view middle of the document...
First, we analyze the choice of a single variable input with fixed input prices. Later, we analyze the optimal multi-input combination and introduce the concept of returns to scale.
The types and amounts of inputs are set as named values - environment variables because they affect the ways of behavior of production processes. In addition, the size, and capacity of the variables can be fixed for a short-run – a period of time in which a firm employees the variable input(s).
Pick a real or fictitious business. Create a scenario around this business in which a manager would decide to either stop operations in the short-run or going out of business in the long-run. Provide a rationale with your response.
An example of a fictitious business where a manager would need to decide rather to stop operations in the short-run or to go out of business in the long-run could be any business that would have an initial fixed size and capacity. A firm can increase its input variables in the short-term but it may force the firm out of business.
McGuigan, J. R., Moyer, R. C., & Harris, F. H. D. (2011). Managerial economics: Applications,
strategy, and tactics (12th ed.). Mason, OH: South-Western Cengage Learning.