Business 640 Applied Problems

Chapter 11 8. Suppose you own a remodeling company. You are currently earning short-term profits. The home remodeling industry is an increasing cost industry. In the large drive, what do you expect bequeath happen to a. Your firms costs of production? Explain. As the company is making short-term profits, new companies leave behind enter into the market. Demand for input factors provide increase. Thomas and Maurice tell us that When a market is characterized by a large number of small producers, the demand hack facing the manager of each undivided company is horizontal at the price determined by the market (2008, p. 402). So, inputs will become costlier for increasing-cost industry. We can say that costs of production will increase. The companys cost of production will increase, because the bring out is that the industry is an increasing-cost industry, which is true in real life, at least in the USA. b. The price you can charge for your remodeling services? why? As costs of variable and other input will increase, prices are dependent on marginal costs, therefore, prices will withal increase. Our text book explains that …if each company is so small, individual changes may go unnoticed (Maurice and Thomas, 2008, p. 400).

That doesnt necessarily inculpate that you can charge more for your services though. Naturally, you have to spree on the cost of materials used to the client, but if you raise your projection rates or the amount you charge for services too, you run a risk not desexualizeting any jobs. Again, in the USA, there actually isnt a whole lot of extra gold floating around for luxuries like home remodeling projects right now. My fellow is a contractor who is very good at remodels, and the noncurrent two years have been the slowest years in his 25+ year old business, because people just usurpt have a lot of extra money right now. c. Profits in home remodeling? Why? As discussed, new companies will enter because of current short run profits. This will increase competition and will pressurize... If you want to get a full essay, order it on our website: Orderessay

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