You manage a U.S. based company that makes #2 pencils that sell in a highly competitive market (your pencils are considered a standardized commodity by your customers). Your marketing data predicts that in the upcoming year overall industry production will fall by at least 5% because some of your U.S. competitors cannot continue to compete with foreign suppliers and plan to cease production, but market demand will rise at least 4%. How, if at all, should you alter your production plans for the coming year? Explain.

Question

You manage a U.S. based company that makes #2 pencils that sell in a highly competitive market (your pencils are considered a standardized commodity by your customers).  Your marketing data predicts that in the upcoming year overall industry production will fall by at least 5% because some of your U.S. competitors cannot continue to compete with foreign suppliers and plan to cease production, but market demand will rise at least 4%.  How, if at all, should you alter your production plans for the coming year?  Explain.