Business Shutdown Decision

Business Shutdown Decision
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Business Shutdown Decision
Why might a profitable motel shut down in the long run if the land on which it is located becomes extremely valuable due to surrounding economic development? 
Despite being profitable, the motel could end its operations as the land on which it stands becomes increasingly expensive because of commercial developments within the economic environment. This is because the motel managers could make a prudent decision to sell the land and make profits. Development attracts other motels, enabling the enterprise to increase its services and goods costs within that area. According to Rittenberg and Tregathen, an enterprise's economic profit entails the difference between total costs and total revenues (Rittenberg & Tregarthen, 2015). In case the motel is the only one operating within the economically developing area, the owner risks losing his monopoly power to other market entrants. The motel could also close its operations because of the opportu...