Should Cedar Creek Credit Union Close a Low Usage Branch?
Analyzing Cedar Creek Credit Union (CCCU) Elm Street Branch data, and keeping in mind that member service was the top priority for herself as a board member, Jamie wondered what position she should take on closing the Elm Street Branch. Jamie has served on the CCCU Board of Directors for nearly a decade. Now an attorney, she still remembered some microeconomic concepts from an economics class taken years ago. She considered herself a nonfinancial type and felt that credit unions, being non-profit institutions, exist first and foremost to provide great financial service to their members. At a previous board meeting, another board member commented that he thought the Elm Street Branch should be closed due to low member usage. At the following board meeting, CCCU management provided the board with data on the Elm Street Branch to consider in their decision on the branch’s fate.
1. Explain the differences between cooperatives and for-profit firms.
2. Compare the concepts of short-run costs and fixed costs for a credit union branch.
3. Examine the universal concept of marginal cost pricing.
4. Generate a recommendation to keep open or to close the Elm Street Branch using an analysis of the cost/benefits.