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 he wants to know how much it costs to become a certified organic farmer , and which crop would be best suited for him to grow given his current equipment .
Luckily before you can find time to answer Uncle Dan ’ s e-mail , you read the piece on organic farming in the United Kingdom on page 422 of the textbook . Recognizing the costs and risks for Uncle Dan in making the switch , you decide to research the market in terms of supply and