The article “Break-even analysis for a green crab fishery in PEI, Canada” seeks to examine the experiment on the European green crab. The experiment was carried out to help reduce the negative impact the European green crab has on the ecosystem and the population of the native shellfish. Green crabs are aggressive animals; therefore, they compete for resources with other aquatic animals such as crustaceans. The study entailed using different fishing scenarios to determine the break-even price for green crabs. Market prices that fishers need to break-even are $0.50/1b, $1/1b and $3.50/1b (St-Hilaire, Krause, Wight, Poirier & Singh, 2016). The results of the experiment indicate that fishers would be motivated to continue and reduce the population of green crab if their prices are sufficiently high. The article relates with what we have learned in class. The article explains how the number of crabs per trap per day for fishers to break-even rely on the prices of green crab. With breakeven analysis, the business will have to determine when it will cover its expenses and start making profits.

Regarding a product that has a positive contribution margin, it is true that the firm will not drop it from its product line. Precisely, as long as the company earns contribution margin, it will continue to sell that product. However, in situations when the company finds another product that offers a higher profit margin, and due to its inability to produce both products, it can decide to drop one of the products even if its contribution margin is positive. Therefore, a limitation to capacity will prevent the company from selling a product even if it has a positive contribution margin. Similarly, the company cannot rely on the contribution margin to determine the product line that it should drop. The company can drop a product line that is harmful to the environment.

Reference

St-Hilaire, S., Krause, J., Wight, K., Poirier, L., & Singh, K. (2016). Break-even analysis for a green crab fishery in PEI, Canada. Management of Biological Invasions, 7(3), 297-303.

 
Do you need an Original High Quality Academic Custom Essay?