Discuss the likely short-run and long-run effects/ Managerial Economics
1. How can cross elasticities be used to help define the relevant firms in an industry?
2. Suppose the price of heating oil increases significantly. Discuss the likely short-run and long-run effects.
3. The Alexander Machine Tool Company faces a linear demand curve. Currently, it is selling at a price and quantity where its demand elasticity is 1.5. Consultants have suggested that the company expand output because it is facing an elastic demand curve. Do you agree with this recommendation?
