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lectur2-page45 - Lowering the price a little may be all...

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If the production of F-150 trucks is currently at “full production capacity”, then it might not be so costly to slow the rate of production down a little, and monitor inventories to determine if the market has stabilized. Slowing the assembly line down, or cutting back to 36 hour weeks from 40 hour weeks may be a viable option. If the production of F-150 trucks is currently at less than full production capacity, then it will become increasingly expensive to slow the rate of production further. Our manager would probably look on the consumption side of the equation for some help.
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Unformatted text preview: Lowering the price a little may be all that is necessary to bring the market back into equilibrium. We would again monitor inventories to determine if our pricing strategy has been successful or not. Another strategy may be to increase advertising in an effort to enhance consumption. Have you heard, read or witnessed any of what we have discussed occurring in the real world out there? What should our manager do? Well, he/she will need to assess the costs and benefits of each of the alternative courses of action to determine which action would be the most profitable. 45...
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This note was uploaded on 12/29/2011 for the course ECO 210 taught by Professor Malls during the Fall '10 term at SUNY Stony Brook.

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