Managerial Economics & Organizational Architecture 5th Edition by James Brickley, Jerold Zimmerman, Clifford Smith

تمرين 26

Over the past few years the federal government has taken significant steps to encourage the development of ethanol and other fuels made from plants as a partial replacement for gasoline. These actions have been undertaken by politicians in the midst of public concerns about the dependence on foreign oil, war in the Middle East, and global warming. The primary input for ethanol production is corn. In 2006, the 5 billion gallons of ethanol produced in the United States consumed about 20 percent of the domestic corn supply. Under new legislation passed in late 2007, the production of corn ethanol would reach 15 billion gallons by 2015 and 21 billion gallons by 2022.
You manage the Hog Heaven restaurant chain. Your restaurant chain, which has about 300 outlets throughout the United States, specializes in barbecue pork dishes but also offers chicken, beef, and vegetarian meals. Currently about 80 percent of your revenue comes from your pork dishes. The price of pork has a major impact on your costs. You are concerned that the federal promotion of ethanol might have an impact on pork prices and the profitability of your restaurant chain. Feed cost is typically about 50-60 percent of the total cost of production of pork producers. About 80 percent of the feed that hogs consume is corn.
What actions might you consider given the results of your analysis