ou are a minimum-wage worker at a U.S. company that makes cars. Last month’s finance report on your profits and sales is below. This morning, your government announced it would save the American people money on cars by capping the price of the kind of cars you make at $10,000. Some of your co-workers know you are taking this course and want to know what you think will happen. Monthly Financial Report Total Profit Total Monthly Revenue $2,400,000 Total Monthly Costs $2,000,000 Total Monthly Profit $400,000 Revenue Average Price of Cars # of Cars
Answer the questions on the right based on the following scenario:
Car Manufacturer Scenario: You are a minimum-wage worker at a U.S. company that makes cars. Last month’s finance report on your profits and sales is below. This morning, your government announced it would save the American people money on cars by capping the price of the kind of cars you make at $10,000. Some of your co-workers know you are taking this course and want to know what you think will happen.
|
Monthly Financial Report |
||||
|
Total Profit |
||||
|
Total Monthly Revenue |
$2,400,000 |
|||
|
Total Monthly Costs |
$2,000,000 |
|||
|
Total Monthly Profit |
$400,000 |
|||
|
Revenue |
||||
|
Average Price of Cars |
# of Cars Sold |
Total Revenue |
||
|
$12,000 |
200 |
$2,400,000 |
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Employee Salaries |
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|
Hourly Rate |
Monthly Pay per Employee |
# of Employees |
Total Monthly Cost |
|
|
General Manager |
$30/hour |
$4,800 |
1 |
$4,800 |
|
Shift Managers |
$15/hour |
$2,400 |
5 |
$12,000 |
|
Assembly-Line Employees |
$12/hour |
$1,920 |
25 |
$48,000 |
|
Total Monthly Cost of Salaries |
$64,800 |
a. What would your company’s monthly profits be if they did not make any changes except reducing the price of the car from $12,000 to $10,000?
b. Identify at least one action your company would take.
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Car Manufacturer Scenario:
Be specific and explain why you came to that conclusion using the principles of supply and
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