ADJ Enterprises produces hydro thermo corticoids. Consider the following facts about ADJ and the hydrothermocorticoid market:

For each of the past three years, ADJ has earned the following profits: a Net Profit Margin of 6% and a Return on Investment of11%. (Net Profit Margin and Return on Investment are twocommon measures of the profitability of a business; the exact details of Net Profit Margin and Return on Investment are notimportant for this question – in other words, you don’t have toknow anything about Net Profit Margin and Return on Investment inorder to answer this question successfully.)

For the past three years, other hydrothermocorticoid producershave also earned profits of a Net Profit Margin of 6% and a Returnon Investment of 11%. 

Producers in other industries with resources similar to ADJ havebeen earning profits for the past three years of: Net Profit Marginof 6% and Return on Investment of 11%. 

ADJ is currently operating at full capacity; that is, it has allthe business it can handle.

ADJ is currently producing a quantity of hydrothermocorticoidswhere Marginal Revenue is equal to Marginal Cost.

There are between 125 and 150 hydrothermocorticoid producers inthe U.S. The number of additional hydrothermocorticoid producersoutside the U.S. is unknown.

The largest U.S. producers of hydrothermocorticoids produceabout 1.2 million tons of hydrothermocorticoids each year; thesmallest producers produce about 850,000 tons ofhydrothermocorticoids each year; for the last three years, ADJ hasaveraged production of about 1.1 million tons each year.

Worldwide demand for hydrothermocorticoids is expected to remainconstant for the next ten years.

The costs of producing hydrothermocorticoids are expected toremain constant for the next ten years.

The hydrothermocorticoids produced by ADJ are identical to thoseproduced by all other firms in the industry

There are no patents in the production ofhydrothermocorticoids

Neither a government license nor a large capital investment isrequired to begin producing hydrothermocorticoids.

There are no network externalities or economies of scale in theproduction and sale of hydrothermocorticoids.

What price should ADJ Enterprises charge for itshydrothermocorticoids? Explain how you know. Your answerwill not include any specificnumber. 

Answer rating: 100% (QA)

Question Description ADJ Enterprises produces hydro thermo corticoids Consider the following facts about ADJ and the hydrothermocorticoid market For e... View the full answer