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1. What is the effect of the decline of Ford Australia’s productivity on its cost efficiency, production, and profit? Discuss.
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- Why will firms in most markets be located at or close to the bottom of the long-run avenge cost me?It is clear that businesses operate in the short run, but do they ever operate in the long run? Discuss.Many films in the United States file for bankruptcy every year, yet they still continue operating. Why would they do this instead of completely shutting down?
- Do entry and exit occur in the short run, the long run, both, or neither?Title Case: Ford to Shutdown Australian Production by 2016 The Ford Motor Company has decided to wind down production in Australia after 85 years. The carmaker says the closure of two plants and the loss of 1,200 jobs are because of production losses and the small market. “Manufacturing is not viable for Ford in Australia for the longer term,” said Chief Executive of Ford Australia Bob Graziano. “Our locally made products continue to be unprofitable, while our imported products continue to be profitable.” Analysts estimate the company has approximately $580 million in losses in the last fiscal year, and profit fell by 72 percent. Ford’s decision in Australia follows effort to also close shop in Europe. Graziano told reporters, Australian production was no longer sustainable as it was double the costs of Europe and quadruple the costs in Asia. The average hourly manufacturing salary in Australia in 2011 was $46.29, slightly lower than in Germany but 30 percent higher than the US and…Title Case: Ford to Shutdown Australian Production by 2016 The Ford Motor Company has decided to wind down production in Australia after 85 years. The carmaker says the closure of two plants and the loss of 1,200 jobs are because of production losses and the small market. “Manufacturing is not viable for Ford in Australia for the longer term,” said Chief Executive of Ford Australia Bob Graziano. “Our locally made products continue to be unprofitable, while our imported products continue to be profitable.” Analysts estimate the company has approximately $580 million in losses in the last fiscal year, and profit fell by 72 percent. Ford’s decision in Australia follows effort to also close shop in Europe. Graziano told reporters, Australian production was no longer sustainable as it was double the costs of Europe and quadruple the costs in Asia. The average hourly manufacturing salary in Australia in 2011 was $46.29, slightly lower than in Germany but 30 percent higher than the US and…
- Title Case: Ford to Shutdown Australian Production by 2016 The Ford Motor Company has decided to wind down production in Australia after 85 years. The carmaker says the closure of two plants and the loss of 1,200 jobs are because of production losses and the small market. “Manufacturing is not viable for Ford in Australia for the longer term,” said Chief Executive of Ford Australia Bob Graziano. “Our locally made products continue to be unprofitable, while our imported products continue to be profitable.” Analysts estimate the company has approximately $580 million in losses in the last fiscal year, and profit fell by 72 percent. Ford’s decision in Australia follows effort to also close shop in Europe. Graziano told reporters, Australian production was no longer sustainable as it was double the costs of Europe and quadruple the costs in Asia. The average hourly manufacturing salary in Australia in 2011 was $46.29, slightly lower than in Germany but 30 percent higher than the US and…Title Case: Ford to Shutdown Australian Production by 2016 The Ford Motor Company has decided to wind down production in Australia after 85 years. The carmaker says the closure of two plants and the loss of 1,200 jobs are because of production losses and the small market. “Manufacturing is not viable for Ford in Australia for the longer term,” said Chief Executive of Ford Australia Bob Graziano. “Our locally made products continue to be unprofitable, while our imported products continue to be profitable.” Analysts estimate the company has approximately $580 million in losses in the last fiscal year, and profit fell by 72 percent. Ford’s decision in Australia follows effort to also close shop in Europe. Graziano told reporters, Australian production was no longer sustainable as it was double the costs of Europe and quadruple the costs in Asia. The average hourly manufacturing salary in Australia in 2011 was $46.29, slightly lower than in Germany but 30 percent higher than the US and…Title Case: Ford to Shutdown Australian Production by 2016 The Ford Motor Company has decided to wind down production in Australia after 85 years. The carmaker says the closure of two plants and the loss of 1,200 jobs are because of production losses and the small market. “Manufacturing is not viable for Ford in Australia for the longer term,” said Chief Executive of Ford Australia Bob Graziano. “Our locally made products continue to be unprofitable, while our imported products continue to be profitable.” Analysts estimate the company has approximately $580 million in losses in the last fiscal year, and profit fell by 72 percent. Ford’s decision in Australia follows effort to also close shop in Europe. Graziano told reporters, Australian production was no longer sustainable as it was double the costs of Europe and quadruple the costs in Asia. The average hourly manufacturing salary in Australia in 2011 was $46.29, slightly lower than in Germany but 30 percent higher than the US and…
- Case A: Jackie Brown Company.Suppose you are the economic advisor of Jackie Brown Company, a perfectly competitive company that is suffering economic losses due to unforeseen continuous drop in the market price. Jackie Brown is a price taker; hence it cannot influence the market price, nor could it change production technology in the short run. You are asked to decide whether the company should shut down its operations or to continue to operate at a loss. Jackie Brown is selling 50 units of output per day, at a price of $20 per unit. The cost of raw material, direct labor, energy, and other variable inputs is about $24000 monthly. Unfortunately, an estimate of Jackie Brown fixed costs is currently unavailable.So, what is your decision? Justify your answer.1. A firm has three different production facilities, all of which produce the same product. Whilereviewing the firm’s cost data, Ron, a manager, discovered that one of the plants has a higher averagecost than the other plans and suggests closing this plant. Another manager, Jack, notes that the high-cost plant has high fixed costs but that the marginal cost in this plant is lower than in the other plants.He says that the high-cost plant should not be shut down but should expand its operations. Who isright? 2. Should a firm shut down if its weekly revenue is $1,000, its variable cost is $500, and its fixed cost is$800, of which $600 is avoidable if it shuts down? Explain.Ike’s Bikes is a major manufacturer of bicycles. Currently, the company produces bikes using only one factory. However, it is considering expanding production to two or even three factories. The following table shows the company’s short-run average total cost (SRATC) each month for various levels of production if it uses one, two, or three factories. (Note: Q equals the total quantity of bikes produced by all factories.) Number of Factories Average Total Cost (Dollars per bike) Q = 100 Q = 200 Q = 300 Q = 400 Q = 500 Q = 600 1 360 200 160 240 400 720 2 540 300 160 160 300 540 3 720 400 240 160 200 360 Suppose Ike’s Bikes is currently producing 500 bikes per month in its only factory. Its short-run average total cost is per bike. Suppose Ike’s Bikes is expecting to produce 500 bikes per month for several years. In this case, in the long run, it would choose to produce bikes using . On the following graph, plot the three SRATC…