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A co-worker’s husband works for 3M as a manager that oversees the production of the respirator masks that are so vital for healthcare workers. They have greatly increased capacity in order to match the huge demand. Oddly enough, they are experiencing lower profits than they used to even though they are selling much more.
Tasks
- Using the diagram for ATC in the Long Run, show where a company like 3M would be currently regarding the masks. Provide a diagram (2 mark)
- Why is this current position on the long run ATC causing profits to drop? (2 marks)
- Although profits are falling and market logic would dictate that 3M should reduce production…is this viable? Why or why not? (2 marks)
- What lessons could government and business learn from this pandemic? (1.5 marks)
Sample Solution
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