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pieces to the decision than Cindy is considering. You decide to research
the market in terms of supply and demand, elasticity, costs of production,
pricing, and economic or normal profit or loss. You want to provide
Cindy with the most informed advice possible.
Situation C
Cousin Edgar is always thinking of the next business idea. This time, he
plans to invest in buying two gas stations. He reckons American
consumers have come to accept the high gasoline prices, and estimates
world prices for gasoline to increase even further with high demand
from India and China. Besides, Cousin Edgar thinks he will make a good
profit on the sale of convenience items at each station. But before buying
the gas stations, he decides to ask for your advice because you are taking
this course in business economics.
You happened to read the piece “$4-a-Gallon Gas Fueling Fears for
Recovery” on page 196 of the textbook. Being skeptical of Cousin
Edgar’s optimism on the profitability of selling gasoline and
convenience items, you decide to research the market in terms of supply
and demand, elasticity, costs of production, pricing, and normal or
economic profit or loss. You want to provide Cousin Edgar with the
most informed advice possible.
Situation D
After hearing of you taking this course in business economics, Uncle
Dan has e-mailed you asking for advice on his 100-acre corn farm. He
mentioned how, after 30 years of growing corn, he wishes to leave that
commodity’s market and enter a more profitable market instead. He is
thinking of planting some organic crop. But he is not sure which crop
would be most profitable. He already knows that going organic requires
changing some of his practices to qualify for the certification. Therefore