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Sergeu [11.5K]
3 years ago
9

Due to the h1n1 flu outbreak, the demand for hand sanitizer tripled. Should johnson & johnson increase production of their p

urell hand sanitizer? Should it invest in doubling production capacity?
Business
1 answer:
GuDViN [60]3 years ago
3 0

Answer: No, johnson & johnson should not double its production capacity of their purell hand sanitizer.

Explanation: An increase in demand of hand sanitizers due to the H1N1 flue will shift the demand curve for hand sanitizers to the right. The price of hand sanitizers will increase meaning that greater production levels are profitable. The firms can take advantage of this profitability by increasing manufacturing capacity. However, capacity will be increased for many years and the H1N1 flu is a temporary phenomenon. So, once the H1N1 flu is controlled demand for hand sanitizer is likely to return to previous levels. As a result the increased capacity will then remain idle and unprofitable. So, johnson & johnson should not double its production capacity of their purell hand sanitizer.

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4 years ago
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<h3><u>How does price elasticity work?</u></h3>

A measure of a product's consumption change in response to a price change is called price elasticity of demand. Price elasticity is a tool used by economists to analyze how changes in a product's price affect its supply and demand. Supply has an elasticity similar to demand, and it's called the price elasticity of supply.

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8 0
1 year ago
Do you consider it morally and ethical wrong to pay bribes through an agent entering an international market faster, receiving n
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3 0
2 years ago
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3 years ago
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3 years ago
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