Question
Assume a supplement company is facing a capacity constraint in manufacturing this new diet pill. Analytically, this implies its marginal cost curve is extremely steep
Assume a supplement company is facing a capacity constraint in manufacturing this new diet pill. Analytically, this implies its marginal cost curve is extremely steep as diet pills is often used for cosmetic reasons. it is reasonable to assume consumers have quite elastic demand curves. Hypothetically, assuming a study will cast some doubt onto the safety of the diet pill for cosmetic reasons. Given this potential study, where should the supplement company focus its strategic resources?
A) Staffing, specifically preparing to significantly reduce its staff to prepare for a large reduction in the number of units of diet pills sold
b. Marketing/Pricing, specifically preparing to significantly lower the price for the diet pill.
c. Operations, specifically finding ways to lower costs in an effort to justify a price increase.
I'm leaning towards B, but I also think C could be an option.
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started