Review the following case study and answer the questions that are provided. Provide a complete and detailed response. The purpose of the case study is for you to express your knowledge of concepts and theories of managerial economics learned in chapters 2 and 3 of the text and the assigned readings. You may use the CSU Online Library and other reliable sources in presenting solutions to the case. Best Homes Inc., a real estate company, has two sources of income. The first is from rental properties and the second is from sales of new construction. The company makes $18,000 on each new construction home with a projection of 20 homes in 2017. Rentals are projected to add approximately $25,000, which is almost the amount of fixed costs of operation for the same period. Variable costs are unknown. Respond to the following questions: Based on your knowledge of marginal analysis, what should the company do to earn optimal income? At what point should it discontinue operation? Explain the theories of supply and demand and market equilibrium and how they apply to this case. Discuss marginal revenue and marginal cost as applied to this case. How would the market forces of demand and supply determine the company’s profit maximization? Your response must be a minimum of two pages in length. You are required to use at least your textbook as source material for your response. All sources used, including the textbook, must be referenced; paraphrased and quoted material must have accompanying citations. All citations should be in APA format, and your paper should be formatted in accordance to APA style.
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