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Ta Officer

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Submitted By Rabbit73
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2.Until 1998, there were two major American manufacturers of DRAMs – Texas Instruments (TI) and Micron Technology. Then, TI sold its factories in Avezzano (Italy), Richardson (Texas), and Singapore, and interests in two Asian joint ventures to Micron Technology. TI shut the remainder of its DRAM production facilities including one in Midland, Texas.
(A)Which probably had the higher average cost – the Richardson or Midland plant? (B)Compare the effects on the world wide long-run DRAM supply of TI’s sale of the Richardson plant with its closure of the Midland factory.
(C)Explain Micron’s decision to buy TI’s plants in terms of differences between the two companies in their expectations of long-run DRAM prices.
Answer
(a) TI’s sale of the Richardson factory did not change the worldwide longrun supply of DRAMs. Its closure of the Midland factory did reduce the supply. (b) The Midland plant probably had the higher average cost, which explains
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391 366 339
Production (‘000 ounces)
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why TI could not sell it and had to shut it.
(c) No. There might have been other DRAM plants in the United States, but owned by non-US firms.
3.The short-run supply of gasoline has been estimated to have an elasticity with respect to price of 1.61, and with respect to wages of −0.05.
(A)Explain why the elasticity of supply with respect to price is positive while the elasticity with respect to wages is negative.
(B)How would a 5% increase in the price of gasoline and a 10% increase in wages affect the short-run supply of gasoline?
(C)Do you expect the impact to be smaller or larger in the long run? Explain your answer.
4.When the annual Valentine’s Day is coming, the demands for rose flower, chocolate, and love card suddenly increase. Please make comparisons in the change sizes of price and quantity between these products. Explain your reasoning

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