Problem 9
Applying Economic Concepts Analyze the factors that determine elasticity of supply to explain why it is difficult for orange growers to respond quickly to changes in the price of orange juice.
Problem 9
The owner of a factory that produces soccer balls determines that his marginal product is at its peak when he has 100 employees. He determines that his marginal cost and marginal revenue are equal when he has 150 employees. What number of employees should he hire in order to maximize his profits? Explain the reason for your answer.
Problem 10
Many companies choose to manufacture their products in countries where workers are paid lower wages than in the United States. Which variable costs decrease and which ones increase as a result of this decision? Why do companies make this choice? Consider what you know about the relationship of costs to profits as you formulate your answer.
Problem 10
Why might producers not always be able to sell their products at the higher prices they prefer? Think about the laws of demand and supply and the different attitudes that consumers and producers have toward price. How might the market resolve this difference? (You will learn more about this in Chapter \(6 .)\)
Problem 10
Challenge Prices are up 8 percent at the local juice shop. Its raw materials are inexpensive and easy to find, and the labor is unskilled. Should the shop be able to raise quantity supplied more than 8 percent? Why?
