Describe the short term effect in terms of the mix of production inputs and the overall level of output in detail of the following:
i) A drought in the Midwest which cuts the production of corn.
ii) A business failure in the area where your factory is that results in a large increase in the unemployment of unskilled workers but does not affect your overall demand.
iii) The completion of a major housing development with no accompanying increase in electrical generation capacity in the area.
iv) A technological advance in the technology of the of your production that requires an increase in the technical skills of the operators but cuts overall costs by 20%
Describe the long term effect in terms of the mix of production inputs and the overall level of output in detail of the following:
i) A drought in the Midwest which cuts the production of corn.
ii) A major breakthrough that allows for on-site generation of electricity for an investment in the generating capacity but after that essentially a zero variable cost of electricity.
iii) A technological advance in the technology of your production that requires an increase in the technical skills of the operators but cuts overall costs by 20%.