Summary

The case examines a decision concerning whether or not to close a municipal landfill. Economic, ethical and environmental issues are relevant to the decision. The case includes a spreadsheet for students to use to calculate a break-even analysis.

Teaching objectives

The case illustrates a number of different cost concepts, such as fixed costs, variable costs, and sunk costs. These costs provide the basis for the analysis of the competitive situation facing the landfill. The case also illustrates the idea of break-evens, which are often misunderstood and used incorrectly by students and managers. The case demonstrates that the break-even question is not always the right criterion for decision-making. Students are also encouraged to weigh economic, ethical and environmental considerations when making decisions about the case.

Keywords
  • Landfill
  • Waste disposal
  • Sunk cost
  • Fixed cost
  • Break-even.
    AR2002
  • RD0502