In Problem 14, what would happen in the long run if the price of cement falls to

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In Problem 14, what would happen in the long run if the price of cement falls to less than Najran Cement’s ATC ?

Problem 14

Najran Cement Shuts Down Second Production Line A second production line of Najran Cement has been temporarily shut down owing to poor market conditions. The company stated that any financial effect of this decision will be publicly announced.

a. Explain the financial effect mentioned in the news clip in terms of TFC, TVC, and TC.

b. Explain the financial effect of the shutdown in terms of profit maximization or loss minimization.

c. Why is the decision to shut down the second production line temporary?

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Economics

ISBN: 9781292433639

14th Global Edition

Authors: Michael Parkin

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