You are the manager of a small US firm that sells nails in a competitive US market (the nails you sell are a standardized commodity; stores view your nails as identical to those available from hundreds of other firms). You are concerned about two events you recently learned about through trade publications: 1) the overall market supply of nails will decrease by 2%, due to exit by foreign competitors; and 2) due to a growing US economy , the overall market demand for nails will increase by 2%. Based on this information, should you plan to increase or decrease your production of nails? Explain.© BrainMass Inc. brainmass.com March 21, 2019, 10:14 pm ad1c9bdddf
Decrease in supply and increase in demand will create shortage in the market. This will push the ...
Solution discusses whether it is advisable to increase the production in the given case.