Firm Behavior
The general theory of the firm, the behavior of any firm, is believed to be driven by activities that maximize profits; hence decision-making can vary in all areas for adoption of policies that favor the environment around market forces. I think that Samuels and Son Seafood Co., decision was based on environmental conditions and the concept of behavioral economics in the market to make the rational decisions of dumping the seafood worth $100,000 into a landfill. I would compare this with intelligent decisions a firm would make because of the favor of the logic and objectivity that all seafood businesses were facing from the crisis of the coronavirus (Wernau, & Newman, n.p). The insights of psychology and economics seem to have guided them on decisions of the crisis in the eye of humans rather than economics hence bringing reasonable thoughts and choices that can benefit (Henderson et al., 378).
A firm that is running losses in the annual revenues realized due to specific crisis that is affecting the economy is likely to shut when it is entirely making zero profits. However, if the firm is falling between the zone of zero-profit point and shutdown point, it will continue to exist in the operations for the short run, for it is covering its variable costs. Consequently, if it happens, a firm is shut down for a quick run from adverse market conditions (Samaniego, 530). The short-run shutdown is only intended to be a temporary decision; hence it does not mean that the firm goes out of business altogether. A firm that is shut down in the short run continues to pay its fixed costs and cannot leave the industry because when market conditions improve, it can return to production since the market conditions increase prices, which provides for the production cost; hence the firm starts operating at a profit.
References
Henderson, John C., and Paul C. Nutt. “The influence of decision style on decision making behavior.” Management science 26.4 (1980): 371-386.
Samaniego, Roberto M. “Entry, exit and business cycles in a general equilibrium model.” Review of Economic Dynamics 11.3 (2008): 529-541.
Wernau, J. and Newman, J., 2020. Americans Are Cooking More Seafood, But Fishermen Are Struggling. [online] WSJ. [Accessed 16 June 2020] https://www.wsj.com/articles/americans-are-cooking-more-seafood-but-fishermen-are-struggling-11590062400