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ECO 204 Week 2 Assignment Short Run and Long Run Decision Making

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Short Run and Long Run Decision Making 1
Short Run and Long Run Decision Making
PRINCIPLES OF MICROECONOMICS
ECO204
YOUR NAME
DECEMBER 14, 2010

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Short Run and Long Run Decision Making 2
When an owner has a high demand venue that does not seat everyone that wants to attend the
event he/she must make short and long run decisions in order to keep the customers coming as
well as being able to maintain the business. As the president of a nonprofit theater that has tickets
constantly being sold out I must think about what needs to be done to secure more space for the
long run to maintain the profits along with a possible gain to expand the venue.
In the short run, I will first look at the fix cost such as the cost of utilities, props for the event,
employee pay, and determining the amount of employees that will be needed to maintain the
event remain a safe and secure event. After reviewing previous records from the same event at
least a few years back; this will give me a rough estimate on what to expect for the upcoming
event. Keeping the long run decision in mind I will raise the ticket cost slightly over the amount
to cover the fix cost, cost of parking the amount of the concession for the event. This will bring
in a little more revenue to assist with the long run decision.
The long run decision would be to build a bigger venue with more seating which will allow
for more ticket purchases. This venue will have the latest technology to assist with the building
being more cost effective when it comes to the fixed cost such as utilities. It will take some time
for the long run decision to become set in place and during this time there will be “no fixed
factors of production because the firm can increase or decrease the scale of operations, and new
firms can enter and existing firms can exit the industry.” (Case, Fair & Oster, pg. 139)
The alternate decision would be to continue with the short run plan as long as possible to
increase the revenue. To add to the short run plan the theater can also host more outside or
parking lot events placing more seating in a covered area during the summer months which will
also increase the sale of tickets. While short and long run decisions take time to execute a
company must have the knowledge needed to execute a successful and profitable plan.

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Short Run and Long Run Decision Making Principles of Microeconomics ECO204 YOUR NAME December 14, 2010 When an owner has a high demand venue that does not seat everyone that wants to attend the event he/she must make short and long run decisions in order to keep the customers coming as well as being able to maintain the business. As the president of a nonprofit theater that has tickets constantly being sold out I must think about what needs to be done to secure more space for the long run to maintain the profits along with a possible gain to expand the venue. In the short run, I will first look at the fix cost such as the cost of utilities, props for the event, employee pay, and determining the amount of employees that will be needed to maintain the event remain a safe and secure event. After reviewing previous records from the same event at least a few years back; this ...
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