This is the case of huge fixed cost involved in production, so the argument goes like this, if they will stop manufacturing, there will be a huge loss for them including the total fixed cost and sunk cost, which cannot be recovered.
I would suggest them to check there total revenue and their total variable cost, if the firm is able to cover its total variable cost and even a small portion of fixed cost, it would be better to run the business. On the other hand if firm is not even able to cover its total variable cost …show more content…
There is a possibility that the owner had hired the staff for dinner time, maybe she is not available during night time and she has to hire a proper manager to manage the dinner.
So these are the possible reasons which could make the dinner menu costlier than lunch menu.
4. A prominent hospital in New England decided in 1980 to turn down a request by staff surgeons to perform heart transplants. The general director of the hospital objected to the statement that this decision was "based largely on cost considerations." On the contrary, he insisted, "the decision was based largely on the limited physical resources and highly trained personnel of the hospital. For each heart transplantation operation," he pointed out, the hospital "would have to turn away a number of other patients who receive less resource-draining open-heart surgery that is much more predictably beneficial to them than heart transplants currently are." Do you agree that the decision was not based on cost considerations?
No, I will not agree that decision was not based on cost considerations, in fact in the statement of general director he himself mentioned that the hospital would be needing highly trained personnel for this project and when he says that the hospital is having limited resources, he is talking about cost only. For hiring trained surgeons and staff he would have to pay them higher salaries and in order