Question

Which of the following is NOT a result of a shutdown? Group of answer choices Highly negative consequences for future labor relations Lost production revenues Competitors gearing up to take over the lost production Possible reduction in the struck company's market share

Answer 1

Answer: Highly negative consequences for future labor relations

Explanation:

A Shutdown by a firm becomes necessitated when a firm is unable to cover even it's Variable costs.

At this point it would be more expensive to produce as opposed to not producing at all.

This prompts the Firm to go into a Shutdown mode.

When in this mode, the following happens;

- the company looses revenue from production as they are not in business.

- the Company's market share will most likely take a hit because they won't be producing goods to maintain it

- other companies in the industry will try to fill in the gap left by the company on Shutdown.

As sad as it would be to have labor problems in future labor relations, Economically, it is not the result of a Shutdown.