The recent recession seems to be ending, the number of people with jobs is expanding, and it appears that wage levels are beginning to increase.
Against that background, assume that you own a perfectly competitive company that makes a popular line of informal clothing. Your company has cost and revenue curves similar to those of the book’s Figure 9.1b (it’s on page 191 of the 11thedition), and operates in a market similar to that pictured in Figure 9.1a. In 75-150 words, please address the following points:
What change would you expect in the market’s demand and/or supply curves, and why?
Based on market changes, what changes would you anticipate experiencing in your firm’s revenue and cost curves, and why?
How would you alter your firm’s operations on the basis of these developments, and why?