Q1. Explain how the listed events (marginal cost, average variable cost, average fixed cost and average total cost) would affect the following at the Ford motor company and please EXPLAIN/JUSTIFY why.
a) ford signs a new contract with the unions that requires the company to pay higher wages
b) the federal government starts a levy of $1500 per vehicle tax on new cars
c) the company decides to give its senior executives a one-time $100,000 bonus
d) Ford decides to increase the amount it spends on designing new car models
Q2.
a) How might advertising reduce economic wellbeing? how might advertising increase economic welling? Give an example of each case and EXPLAIN
b) A sceptic says 'marketing research and brand management are redundant. If a company wants to find out what customers want, it should simply look at what they are already buying'/ Do you agree with the comment? Explain - under what conditions are firms able to earn economic profits.