Max Whitley,manager of Whitley Construction,builds New Homes in a Booming

question 32

Essay

Max Whitley,manager of Whitley Construction,builds new homes in a booming community in the Midwest.Although sales have slowed because of a national recession,it now looks as if the recession is about to end.Max wants to be ready with material,labor,and foremen to meet the demand for housing.Last year,Max built and sold 40 starter homes which is the most popular model.Max thinks that his sales will increase to 50 units over the current year.The going market price for this model (which Max and his numerous competitors have charged)has been $175,000.In addition,Whitley Construction's marginal cost of building this model averages $155,000.
(a)Based on these facts,recommend a course of action for Max.

Explain the concept of short-run and long-run equilibrium within purely competitive markets.

Assess the role of cost structures (including MR=MC, ATC, AVC) in determining the firm’s profitability and the market's competitive behavior.

Understand the dynamics of supply and demand in long-run market equilibrium in purely competitive markets.

Comprehend the characteristics and outcomes of constant-cost, increasing-cost, and decreasing-cost industries.

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Definitions:

Hydrogen Research

The study and development of technologies and methodologies aimed at harnessing hydrogen as an energy source, including production, storage, and usage techniques.

Sustainable Developers

Professionals or organizations that focus on creating projects and solutions that meet present needs without compromising the ability of future generations to meet their own needs.

Automobile Manufacturers

Companies engaged in designing, developing, manufacturing, marketing, and selling motor vehicles.