Every mainstream principles of microeconomics textbook has a treatment of the shut down condition. According to the theory, a firm will shut down operations in the short run (temporarily close) if the price of its product falls below average variable cost. Put another (and, in my opinion, more intuitive) way, a firm will shut down in the short run if demand for its product won't generate sufficient revenue to pay its variable cost.
Earth shattering, eh? But as an econ prof, I try to find unusual examples to talk about in class. Here's the most recent one I ran across this morning.
Some 4,000 sightseers have been trekking to the Apostle Islands each weekend to see glistening ice caves made accessible by frozen Lake Superior, leading to an unexpected tourism boom in otherwise hibernating villages.
Small businesses in Cornucopia and Bayfield, in far northern Wisconsin, are generally closed for the winter. However, establishments including an inn and general store are staying open to cater to the brisk business, Wisconsin Public Radio reported.
Mike Upthegrove, who runs Ehler's General Store in Cornucopia, generally closes down until April. But because of the surge in visitors he said he'd stay open during the weekend because the ice-cavers need hot drinks and brats.
Down the road, The Village Inn is full and its restaurant is unusually busy, proprietor Cheryl O'Bryon said.
"The last three weekends have been like nothing we've seen before," O'Bryon said. "It is definitely an economic miracle, there's no doubt about that. I'm staffed right now like I would be on the Fourth of July weekend. It's incredible."