Refer to the above diagrams, one can conclude that if expectations are always fulfilled, Fancy Auto Company:

Managerial Economics: Applications, Strategies and Tactics (MindTap Course List)
14th Edition
ISBN:9781305506381
Author:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Publisher:James R. McGuigan, R. Charles Moyer, Frederick H.deB. Harris
Chapter5: Business And Economic Forecasting
Section: Chapter Questions
Problem 3E: Metropolitan Hospital has estimated its average monthly bed needs as N=1,000+9X where...
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$40,000
37,000
35,000
0
Du
900
Cars per week
(a) Flexible price
DH
+
$37,000
DH
D
D₂
0
700 900 1150
Cars per week
(b) Fixed price
Refer to the above diagrams, one can conclude that if expectations are always fulfilled, Fancy Auto Company:
has to adjust both optimal output level and employment accordingly.
will never have to adjust the optimal output and employment levels accordingly.
has to adjust the optimal output level but not the employment.
has to adjust the employment level but not the optimal output.
Transcribed Image Text:$40,000 37,000 35,000 0 Du 900 Cars per week (a) Flexible price DH + $37,000 DH D D₂ 0 700 900 1150 Cars per week (b) Fixed price Refer to the above diagrams, one can conclude that if expectations are always fulfilled, Fancy Auto Company: has to adjust both optimal output level and employment accordingly. will never have to adjust the optimal output and employment levels accordingly. has to adjust the optimal output level but not the employment. has to adjust the employment level but not the optimal output.
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