1. How do the forces of supply and demand affect the decision of a firm on the Jersey Shore that makes salt water taffy to adjust their labor supply.
A First the firm would have to identify when it typically sells the most taffy (quantity of output). Since this firm is on the Jersey Shore I suspect that is during the summer probably between Memorial Day and Labor Day. Additionally increased sales would probably occur over the 4th of July and on weekends. The demand for labor (choose quantity of labor required) would be high and the supply will need to increase to increase production prior to Memorial Day to increase their supply of taffy prior to the start of the season. Labor would continue to increase so that production, sales and shipping needs meet the demand for taffy throughout this time period. As the season wains the need of additional labors tapers off due to the reduced demand. (output would need to stay in line with marginal cost)
C If there is a demand for taffy a company would have to increase their labor supply to meet the demand.
2. What are the factors of production and how are they linked together in the event a volcanic eruption significantly reduces the production of a pineapple plantation in Hawaii.
A Labor, Land and Capital would all be affected in this scenario and the ripple effects in the economy would seemingly go on for ever. Assume that lava and ash destroy the pineapple crop. Those that work (Labor) on the plantation would be out of work, the plantation owner would be out his crop that was destroyed (capital) along with a storage barn a sorting barn and machine shed (Capital) that collapsed because of the weight of the ash. The plantation owner leased a number of acres (Land) that was covered with a thick flow of lava. That land would never be usable by the plantation again or able to lease by the land owner. As the ripple continued beyond Hawaii the price of pineapple would increase because of the reduced supply and bars might stop selling Pina Colada's because of the increased cost of pineapple juice.
C The factors of production are Labor, Land and Capital and a volcanic eruption would certainly affect all of those factor. people would be out of work, there would be no pineapple to sell and the land would be ruined
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