Question

If the demand increases by 100%, annual production will have to increase to jaw-breakers next year to meet the expected increase. gummy land has two options:

Answer 1

If demand increases by 100% in one year, gummy land has two options. First, they could increase their staff and production hours to meet the increased demand. Second, if demand is increased by 100%, gummy land needs to take a look at a supply and demand chart and decide if increasing the price may slow demand by a little bit but will still increase profits. They need to look at an equilibrium price and decide which of the two options makes the most sense economically. If their demand increased by such a large number, it would be reasonable to assume that their demand would not decrease significantly with a slight increase in price.