Max Whitley manger construction build new homes in booming community in Midwest although sales have showed because of a national recession, it now looks as if the recession is about to end . Max wants to be ready with material, labor, and foremen to meet demand for housing. Last year, Max build and sold 40 starter homes the most popular model. While recent recession over, max think that his sale will increase to 50 unites for the current year. The going market price for this model (which max and his numerous competitors have charged) has been $75,000. In addition, whitely construction marginal cost of building this model averages $ 55,000.
a. Based on these facts, recommend a course of action for Max.
b. suppose that the economic boom raises the cost of labour and raw materials, so that additional cost of a starter house rise to $65,000. What max most profitable course of action? Explain.