1      A trendy French restaurant is one of the first businesses to open in a small corner of a commercial building still under construction. The restaurant has received rave reviews and has lines of diners waiting for tables most nights.

In the short run (next few months), what measures should the restaurant take to maximize its profits? Explain. In the long run (next six months and beyond), how can it maximize its profits? (Assume that the impressive state of demand is permanent).

2      In recent years, Chrysler Corporation initiated three-shift or nearly continuous (21-hours-per-day) production at a number of its plants. Explain why Chrysler’s decision might have been prompted by movements in its wage costs or capital costs, or both. Why would Chrysler have instituted this production change for its most popular (and profitable) vehicles, its minivans and Jeep Cherokee? What risks might such a plan pose?

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