Question: You are a manager of a small US firm that sells nails in a competitive market (the nails are a standardized commodity; stores view your nails as identical to those available from hundreds of other firms). You are concerned about two events you recently about through trade publications:
(1) The overall market supply of nails will decrease by 2%, due to exit by foreign competitors
(2) Due to a growing US economy, the overall market demand for nails will increase by 2%
Based on this information, should you plan to increase or decrease your production of nails. Explain.