( a .) ( 15 points ) You know from data collected on the Widget Market that market demand has recently decreased and market supply has recently increased . As manager of the facility , what decisions should you make regarding production levels and pricing for your Widget facility ?
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 . ( b .) ( 15 points ) Now , suppose that following the supply and demand changes in ( a ), a substitute good goes down in price , and your costs of production decrease . What new decisions will you make regarding production levels and pricing for your Widget facility ? 2 . ( TCO B ) Suppose the governor of California has proposed increasing toll rates on California ' s toll roads , and has presented two possible scenarios to implement these increases . Following are projected data for the two scenarios for the California toll roads : Scenario 1 : Toll rate in 2012 : $ 10.00 . Toll rate in 2016 : $ 22.50 For every 100 cars using the toll roads in 2012 , only 81.6 cars will use the toll roads in 2016 . Scenario 2 : Toll rate in 2012 : $ 10.00 . Toll rate in 2016 : $ 17.50 For every 100 cars using the toll roads in 2012 , only 96.2 cars will use the toll roads in 2016 . 3 . ( TCO C ) You have been hired to manage a small manufacturing facility whose cost and production data are given in the table below .
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. ( TCO C ) John operates a small business out of his home and has very little in terms of fixed costs . Answer the next questions ( Parts A and B ) on the basis of the following cost data for John ’ s firm operating in pure competition : ( a .) ( 15 points ) Refer to the above data . If the product price is $ 60 , at its optimal output , will the firm realize an economic profit , break even , or