You are a manager of an advertising company. The company is running short of funds, so you decide to increase revenue. Should you increase or decrease the price of running ads? Explain.
Relating to these two objectives, please answer the following:
- Examine the principles and theories underlying the concepts of production and cost as well as the relationship between these two concepts.
- Analyze these principles of production and cost in order to derive the optimum behavior of producers and sellers
Question 1
You are a manager of an advertising company. The company is running short of funds, so you decide to increase revenue. Should you increase or decrease the price of running ads? Explain.
Question 2
You own a printing firm. Two of your senior managers provide you with advice. The first manager states that your company is losing money for every unit that is printed. To minimize losses, she advises that you reduce your production levels. The second manager states that if your firm sells some more units, the price will cover your increase in costs. In order to reduce losses, the second manager recommends that you should increase production. Explain which manager is correct and who is offering the correct advice?
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