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Evaluate the following USING ECONOMIC THEORY:

Bernice Jenkins is the CEO of Pear MePhone Corporation. Pear buys the majority of the components for its phones from third party suppliers; then Pear uses the components to assemble its MePhone. One of the major components of the phone, the processor, will double in price next month and the price will be sustained for the foreseeable future.

Pear experienced a 200% increase in phone sales last year and is considering doubling its workforce so it can assemble more phones. With the news of the increase in the price of the processor, should Pear move forward with its plans to double its workforce?

Why?

 

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