To the casual observer it is often difficult to understand how a company would spend several million dollars building a plant or other structure and then simply stop and abandon the project midway. How can this be justified on economic grounds?
What will be an ideal response?
The building or structure is viewed as a fixed cost. The firm may very well have determined that even if finished the project would not be profitable. Rather than incur additional expenses on a project that is likely not to be profitable it is better to cut losses and abandon production of the structure rather than complete it.
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The four components of aggregate expenditure are
A. consumption, investment, government transfers, and net interest. B. spending on durable goods, inventory investment, government debt, and net exports. C. spending on domestic goods, domestic services, foreign goods, and foreign services. D. consumption, investment, government purchases, and net exports.
A bank run involves
A) a failure by a bank to get the maximum return on its investments. B) large numbers of depositors withdrawing their deposits within a short period of time. C) a bank being forced out of business. D) fraud on the part of a bank's managers.
The price of any productive resource is ____ related to ____ the final good or service:
a. inversely; demand for b. directly; demand for c. directly; supply of d. not; supply of
Traditional economies tend to be
a. unstable and unpredictable b. stable, predictable, and growing c. unstable, unpredictable, and stagnant d. unstable and unpredictable, but growing e. stable and predictable, but stagnant