A factory produces blue and green widgets, both at equal production costs. In one day, the factory can make 20 widgets of either

Question

4 years ago

6

A factory produces blue and green widgets, both at equal production costs. In one day, the factory can make 20 widgets of either

color. The factory has been making 10 blue and 10 green widgets per day because they both sell for $5.00. Recently, the price of blue widgets has increased from $5.00 each to $8.00 each.

Business

2 answers:

Mars2501 [29] · Answer 1 · 2022-01-14T11:34:53+03:00

Question:

The question is incomplete. It can be found in search engines. However, kindly find the complete question below:

A factory produces blue and green widgets, both at equal production costs. In one day, the factory can make 20 widgets of either color. The factory has been making 10 blue and 10 green widgets per day because they both sell for $5.00. Recently, the price of blue widgets has increased from $5.00 each to $8.00 each.

How does the law of supply say the factory will respond to the increase in the price of blue widgets?

Answer

by increasing the number of blue widgets supplied

Explanation:

If we recall the law of supply in economics, it states that: Considering that all factors are retained at equilibrium, an increase in the price of a product or service will result in an increase in the quantity supplied of the good and services. So therefore, if we relate this back to the question asked,

We have:

10 blue and 10 green at $5 each.

Therefore,

Sales = 5 (10+10)

Sales = 5 (20)

Sales = 100

Now, considering the fact that the price of blue widget increase to $8.00

Sales will now therefore be = 8 (10) + 5 (10)

Sales = 80 + 50 = 130

So we can hence conclude that to maximize the earning potential of the blue widget, the company should produce more of blue widgets and increasing the number of blue widgets supplied which will give us:

Sales = 8 (20) = 160

densk [106] · Answer 2 · 2022-01-14T09:42:37+03:00

Incomplete question; here is the completed part:

How does the law of supply say the factory will respond to the increase in the price of blue widgets?

Answer:

The factory should increase the number of blue widgets supplied

Explanation:

Remember the law of supply encourages companies to increase supply when price of their product rises.

Prior to the increase they may maintain a steady supply, but due to certain factors such as demand the price for widgets became higher, thus supply for widgets should be increased.