1003 Words5 Pages

Assignment #1 Economics and Ethical Issues
Mrs. Acres Homemade Pies
In relationship between supply and demand for Mrs. Acres Homemade Pies, according to the growth of production, consumers are willing to buy Shelly pies at $4.50 each with a production of 8000 pies per month with a profit of $12,000. In order to stay at a $12,000 monthly profit, if Shelly decide to raise her price to $9.50 per pie; the impact will decrease the demand for her pies and her production would only have to be 2000 pies per month. The equilibrium price for Shelly pies is $6.00 per pie with a production of 4000 pies a month.
In considering Mrs. Acres dilemma, if she continues to maintain production levels and raise her prices, she risk the chance of not selling as many pies as she previously sold causing her to have a surplus in supply. One reason the pies has sold so well was because of the demand for quality pies and the price being low. If she changes her price to a higher level, Mrs. Acres may be left with too much supply and then she would incur another expense for storage and could*…show more content…*

Shelly would also risk loosing her customer base and not being able to rebound from a downfall which could occur in production. In the short run, the price would be consistent with what the consumers are willing to pay, but in the long run, Shelly is going to have to raise her price in order to pay the national restaurant chain, pay for cost of goods, and still stand a chance of making a

Shelly would also risk loosing her customer base and not being able to rebound from a downfall which could occur in production. In the short run, the price would be consistent with what the consumers are willing to pay, but in the long run, Shelly is going to have to raise her price in order to pay the national restaurant chain, pay for cost of goods, and still stand a chance of making a

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