A supplier in the country of Whiteland has current output of 10 Million units priced at...

 

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A supplier in the country of Whiteland has current output of 10 Million units priced at $1.10 per unit. Factor prices rise and costs increase to $1.30 per unit. Uh-oh... now not earning profit and producing for a $20 Million loss. The availability of competitor substitutes convince the supplier a price increase is out of the question. Sales - Mil 10 Total Cost Average (TC) $Mil 130 Marginal Price - $ Revenue - Cost (AC) - Cost $Mil (MC) - $ - constant 13 3 11 110 TC - $Mil For 3 pts: do you take the deal? For 4 pts: what principle/s do you apply to make your decision? For 3 pts: what is the size of the opportunity, if-any? 130 P/L - SMil (x) = Loss (20) A purchasing agent from the country of Knightland makes a timely appearance and offers to purchase for import an additional 10 Million units priced at $0.80 per unit. A supplier in the country of Whiteland has current output of 10 Million units priced at $1.10 per unit. Factor prices rise and costs increase to $1.30 per unit. Uh-oh... now not earning profit and producing for a $20 Million loss. The availability of competitor substitutes convince the supplier a price increase is out of the question. Sales - Mil 10 Total Cost Average (TC) $Mil 130 Marginal Price - $ Revenue - Cost (AC) - Cost $Mil (MC) - $ - constant 13 3 11 110 TC - $Mil For 3 pts: do you take the deal? For 4 pts: what principle/s do you apply to make your decision? For 3 pts: what is the size of the opportunity, if-any? 130 P/L - SMil (x) = Loss (20) A purchasing agent from the country of Knightland makes a timely appearance and offers to purchase for import an additional 10 Million units priced at $0.80 per unit.