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Economics

Eco 550 Week 4 Discussions 1 & 2

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Eco 550 Week 5 Dq
Imagine you are a manager of a chemical company. An accident has
occurred in which chemicals leaked into the ground water nearby, the
community is unaware. Assess the costs involved in cleaning up the
water immediately (confessing) versus hiding the fact and possibly
paying more in the future. Discuss the impact on profitability in both
situations.
The costs incurred for an accidental chemical leak are going to
associated with whatever agency that needs to be hired to clean up the
mess along with the costs of having the contaminated area inspected
after clean up. The cost of the leaked chemicals themselves should be
considered. Other costs would include the public relations campaign
including the agency hired to handle this along with the choice of media
to get the awareness out to the masses. How the company handles this
accident is going to affect their profitability. The textbook states “brand
names are capital assets that provide future net cash flows from repeat-
purchase customers as long as the brand reputation holds up. To
defraud customers by delivering less quality than the brand reputation
promised would destroy the capitalized market value of the brand name
(McGuigan, Moyer, & Harris, 2008, p.373).” The cost to the company’s
bottom line if they are not going to make the public aware will have an
impact both in the short-run and long-run. The short-term is going to see
the upfront costs of clean up and regulatory agency fees. Eventually, the
public will probably find out about this mishap and that will have a long-
run impact on profitability. It will damage the company’s reputation.
Consumers want to be made aware and ultimately trying to hide a
dangerous mistake, like a chemical leak, will cost them because
consumers will go elsewhere.
From the first e-Activity, assess the factors involved in conducting a
break-even analysis. Determine the conditions that may exist for a
manager of this good or service may decide to move forward with
operations even with the initial costs of operations is more than the
potential revenue.
From the first e-Activity, assess the factors involved in conducting a
break-even analysis. Determine the conditions that may exist for a
manager of this good or service may decide to move forward with

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