Company ZAP operates in car industry. WhenZAP operates at full capacity (10.000cars/month), economies of scale is reached,and cost/car is minimum. However, due to aneconomic crisis, the sales of ZAP decreasedto 6.000 cars/month. Economic forecastsshow that the crises will continue for 2-3years more.a) As the manager of ZAP what would youdo to adjust scale? Why?b) After 3 years if the demand for your carsstarts to increase how would you react?Explain.

Given that economic crisis have caused the sell to decline .

Answered: a) do to adjust scale? Why? b) After 3…

a) do to adjust scale? Why? b) After 3 years if the demand for your cars starts to increase how would you react? Explain. As the manager of ZAP what would you

ENGR.ECONOMIC ANALYSIS

14th Edition

ISBN:9780190931919

Author:NEWNAN

Publisher:NEWNAN

Chapter1: Making Economics Decisions

Section: Chapter Questions

Problem 1QTC

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Question

Company ZAP operates in car industry. When
ZAP operates at full capacity (10.000
cars/month), economies of scale is reached,
and cost/car is minimum. However, due to an
economic crisis, the sales of ZAP decreased
to 6.000 cars/month. Economic forecasts
show that the crises will continue for 2-3
years more.
a) As the manager of ZAP what would you
do to adjust scale? Why?
b) After 3 years if the demand for your cars
starts to increase how would you react?
Explain.

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