Bus Econ

|1. (TCO A) Suppose you are hired to manage a small manufacturing facility that produces Widgets. |
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|(a.) (15 points) You know from data collected on the Widget Market that market demand and market supply have both increased recently. As |
|manager of the facility, what decisions should you make regarding production levels and pricing for your Widget facility? |
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|Remember that supply and demand are about the market supply and market demand, which is bigger than your own company. You are being given |
|data on supply and demand for the whole market and are being asked what effect that has on you as a small part of that market. |
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|(b.) (15 points) Now, suppose that following the supply and demand changes in (a), a substitute good goes up in price, and your costs of |
|production increase. What new decisions will you make regarding production levels and pricing for your Widget facility? (Points: 30) |
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|2. (TCO B) Here is some data on the demand for marshmallows: