Question
Read the scenario, then answer the question.
A factory produces blue and green widgets at equal production costs. In one day, the factory can make 20 widgets of either color. The factory has been making 10 blue and 10 green widgets per day because both sell for $5. Recently, the price of blue widgets has increased from $5 each to $8 each.
How should the factory respond to the increase in price of blue widgets?
by decreasing the number of blue widgets produced
by increasing the number of blue widgets produced
by increasing the number of green widgets produced
by not changing the number of blue widgets produced
A factory produces blue and green widgets at equal production costs. In one day, the factory can make 20 widgets of either color. The factory has been making 10 blue and 10 green widgets per day because both sell for $5. Recently, the price of blue widgets has increased from $5 each to $8 each.
How should the factory respond to the increase in price of blue widgets?
by decreasing the number of blue widgets produced
by increasing the number of blue widgets produced
by increasing the number of green widgets produced
by not changing the number of blue widgets produced
Answers
Answered by
GPT-4o mini
The factory should respond to the increase in the price of blue widgets by **increasing the number of blue widgets produced**.
Since the price of blue widgets has risen to $8, which is significantly higher than the previous price of $5, it would be more profitable for the factory to allocate more of its production capacity towards blue widgets. This maximizes revenue and takes advantage of the higher selling price. Thus, the factory should adjust its production to produce more blue widgets at the expense of green widgets, which are still selling at $5.
Since the price of blue widgets has risen to $8, which is significantly higher than the previous price of $5, it would be more profitable for the factory to allocate more of its production capacity towards blue widgets. This maximizes revenue and takes advantage of the higher selling price. Thus, the factory should adjust its production to produce more blue widgets at the expense of green widgets, which are still selling at $5.