SCENARIO 1.1: An economist wants to understand the relationship between minimum wages and the levelof teenage unemployment. The economist collects data on the values of the minimum wage and the levelsof teenage unemployment over time. The economist concludes that a 1% increase in minimum wagecauses a 0.2% increase in teenage unemployment. From this information he concludes that the minimumwage is harmful to teenagers and should be reduced or eliminated to increase employment amongteenagers.

M. cotteleer electronics supplies microcomputer circuitry to a company that incorporates microprocessors into refrigerators and other home appliances. one of the components has an annual demand of 235 units, and this is constant throughout the year. carrying cost is estimated to be $1.25 per unit per year, and the ordering (setup) cost is $21 per order. a) to minimize cost, how many units should be ordered each time an order is placed? b) how many orders per year are needed with the optimal policy? c) what is the average inventory if costs are minimized? d) suppose that the ordering cost is not $21, and cotteleer has been ordering 125 units each time an order is placed. for this order policy (of q = 125) to be optimal, determine what the ordering cost would have to be.