A Doctoral Student Has Just Completed A Study For Her Disser

A Doctoral Student Has Just Completed A Study For Her Dissertation And

A doctoral student has just completed a study for her dissertation and found the following demand and supply schedules for hand-held computers to be as follows: Price/Computer Quantity Demanded Quantity Supplied. Questions: Using Microsoft Excel, draw a graph illustrating the supply and demand in this market. What is the equilibrium Price and Quantity in the market? Now suppose the government imposes a special tax on these computers. Describe what would happen in this market in terms of the supply and demand curve. Disregard the new tax in part three. Now assume that the government imposes a price ceiling of $100 in this market, as a result of protests of price gouging by the sellers. What would happen to the price and quantity in this market? Disregard the events of part four. Assume that the manufacturers of this product lobby the government’s lawmakers, in terms of this product being an essential for college students but they are considering halting production due to the lack of profits. The lawmakers agree and now set a price floor at $150. What would happen in this market? If consumers’ expectations were such that they were concerned about the economy and jobs, what would you think would happen in this market? N/B The chart you create in Excel must be copied and pasted into a Word document.

Paper For Above instruction

The study conducted by the doctoral student reveals critical insights into the dynamics of the market for hand-held computers, highlighting how various governmental interventions such as taxes, price ceilings, and price floors influence market equilibrium, supply, and demand. Utilizing the provided supply and demand schedules, this paper aims to analytically interpret the market equilibrium and forecast the consequences of different policy measures through economic theory and graphical illustration using Microsoft Excel.

Market Equilibrium: Creation and Interpretation

Based on the supplied demand and supply schedules, the first step involves constructing a demand and supply curve in Excel. For example, assuming that the price points and corresponding quantities are entered in Excel columns—prices in one column, demanded quantities in another, and supplied quantities in a third—one could generate a graph depicting how the market balances. The equilibrium point occurs where the demand and supply curves intersect, indicating the equilibrium price and quantity.

Suppose the demand schedule shows that at a price of $120, 100 units are demanded, and at a price of $150, 60 units are demanded. Conversely, the supply schedule indicates that at $120, suppliers are willing to supply 60 units, and at $150, supply increases to 120 units. Plotting these figures produces a graph with typical downward-sloping demand and upward-sloping supply curves, and their intersection points identify equilibrium. In this scenario, the equilibrium price might be approximately $130, with an equilibrium quantity of around 80 units, depending on the specific schedules.

The Impact of a Special Tax

If the government imposes a special tax on hand-held computers, the immediate effect will be a shift of the supply curve upward (or to the left), reflecting increased costs for producers. This shift results in a higher market price and a decreased quantity purchased. Consumers pay more per unit, and the quantity demanded declines. In graphical terms, the original supply curve moves vertically upward by the amount of the tax. As a consequence, the new equilibrium will be at a higher price point but associated with a lower quantity traded. Disregarding the tax as per the prompt, these changes highlight how taxation can distort market efficiency and consumer choices.

Effect of Price Ceiling at $100

When a price ceiling of $100 is set—below the original equilibrium price—the market experiences a binding constraint causing the ceiling to become effective. At this price, the quantity demanded exceeds the quantity supplied, leading to a shortage. The demand increases as consumers rush to buy the cheaper computers, but the supply diminishes since producers are less willing to supply at that lower price. The result is a persistent shortage, black markets, or long waiting lines for buyers. The gap between demand and supply signifies inefficiency and potential market distortions, illustrating the adverse effects of rent control policies.

Impact of a Price Floor at $150

The establishment of a price floor at $150 surpasses the equilibrium price, intending to support producers’ incomes. Since the floor is above equilibrium, it effectively prevents prices from falling to equilibrium levels, leading to a surplus. Suppliers are willing to produce and offer more units, but consumers’ willingness to buy decreases at this higher price. Consequently, excess inventory accumulates, and market inefficiencies emerge. If manufacturers consider halting production due to low profits, the price floor’s effectiveness could be compromised, and producers might still withdraw from the market, leading to reduced supply over time.

Consequences of Consumer Sentiments and Economic Expectations

When consumers anticipate economic downturns or job losses, their buying behavior generally becomes more cautious, reducing demand for non-essential products like hand-held computers. Even in the presence of a price floor, such pessimistic expectations can further diminish demand, exacerbating surpluses or causing consumers to delay purchases. Perceived economic instability can also dampen overall market activity, potentially accelerating manufacturers’ decisions to halt production if profits remain elusive. The interplay between consumer expectations and policy measures underscores the complexity of market responses and the importance of macroeconomic stability in maintaining healthy demand and supply balances.

Conclusion

In conclusion, analyzing the supply and demand for hand-held computers through graphical modeling and economic principles illuminates the diverse impacts of government interventions and market perceptions. Price ceilings and floors create distortions that influence prices and quantities, often leading to shortages or surpluses. Taxes shift supply curves and increase market prices, reducing quantities exchanged. Additionally, consumer sentiment significantly influences demand, especially in uncertain economic climates. Understanding these dynamics is vital for policymakers seeking to regulate markets effectively while mitigating unintended consequences.

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