You are the manager of a midsized company
1)You are the manager of a
midsized company that assembles personal computers.
You purchase most components—such as random access memory
(RAM)—in a
competitive market. Based on your marketing research,
consumers earning over
$80,000 purchase 1.5 times more RAM than consumers with
lower incomes.
One morning, you pick up a copy of The Wall Street Journal
and read an article
indicating that input components for RAM are expected to
rise in price, forcing
manufacturers to produce RAM at a higher unit cost. Based on
this information,
what can you expect to happen to the price you pay for
random access memory?
Would your answer change if, in addition to this change in
RAM input prices,
the article indicated that consumer incomes are expected to
fall over the next
two years as the economy dips into recession? Explain.
