Assignment 3: Supply, Demand, And Government In The M 396640

Assignment 3 Supply Demand Government In The Marketsa Doctoral St

Assignment 3: Supply, Demand, & Government in the Markets 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? Compose your solutions to this assignment in a report as a MS Word document. This assignment requires you to create a chart in Microsoft Excel. In order to accomplish that, you will need to enter the data in an Excel worksheet, and then use Excel to graph the data. Copy the graph from your Excel worksheet and paste it into your MS Word document along with any explanations or discussion, in-text citations if required, and responses to the list of the questions asked in this assignment. DO NOT UPLOAD THE EXCEL WORKSHEET TO THE DROPBOX. The chart you create in Excel must be copied and pasted into a Word document.

Paper For Above instruction

Introduction

The interaction of supply and demand curves is fundamental to understanding market equilibrium and the effects of government interventions. In analyzing the market for handheld computers, we explore various scenarios, including changes in government policy such as taxes, price ceilings, and price floors, alongside expectations of economic conditions. This paper provides a comprehensive analysis by constructing supply and demand graphs, identifying equilibrium points in the market, and examining the implications of government actions and consumer expectations.

Constructing the Supply and Demand Graph

Using the given supply and demand schedules, the first step is to create a graph in Microsoft Excel. The data typically includes prices, quantities demanded, and quantities supplied at various levels. For example, suppose the demand schedule shows higher quantities demanded at lower prices and vice versa, while the supply schedule indicates higher quantities supplied at higher prices.

After inputting the data into Excel, a line graph illustrating the intersection of the supply and demand curves can be generated. This intersection point marks the equilibrium price and quantity. Based on typical schedules, the equilibrium often occurs where quantity demanded equals quantity supplied. For illustrative purposes, if the demand curve intersects the supply curve at a price of approximately $130 and a quantity of around 500 units, that would be identified as the market’s equilibrium.

Market Equilibrium

The equilibrium price is the point at which the quantity consumers are willing to buy equals the quantity producers are willing to sell. In our hypothetical situation, this would be at a price of about $130 per computer, with an equilibrium quantity of approximately 500 units. This equilibrium ensures market stability under normal conditions, without government interference.

Impact of a Special Tax

If the government imposes a special tax on handheld computers, this would effectively increase the cost of production or the price paid by consumers. Consequently, the supply curve shifts leftward or upward, leading to a higher equilibrium price and a lower equilibrium quantity. Consumers would face increased prices, and producers might reduce supply due to decreased profitability. This creates a new market equilibrium with a higher price but reduced quantity sold.

Price Ceiling of $100

When the government enforces a price ceiling at $100, below the original equilibrium price, a shortage would occur. At this artificially low price, the quantity demanded would surpass the quantity supplied because producers are less willing to supply at such low prices. The result is a reduction in the quantity sold and persistent shortages, potentially leading to black markets or rationing, and a decline in the quality or availability of products.

Price Floor of $150

Implementing a price floor at $150, which is above the prior equilibrium, would create a surplus. Suppliers would produce more than consumers are willing to buy at that price, leading to excess inventory. Manufacturers may halt or reduce production due to lack of sales, and the government may need to intervene to purchase excess stock or sustain the industry. Consumers might also turn to alternative products or substitutes, affecting overall demand.

Consumer Expectations and Economic Concerns

If consumers anticipate economic downturns or fears of job insecurity, their demand for handheld computers could decrease as they prioritize essential expenses. This shift would exacerbate the surplus caused by a price floor, depress prices despite the government setting a minimum price, and could lead to decreased production. Conversely, if consumers believe technology remains a vital tool regardless of economic conditions, demand might stay relatively stable, but the overall market could still experience reduced sales and higher inventories due to economic uncertainty.

Conclusion

Understanding how supply and demand interact under different government policies and consumer expectations is critical for policymakers and businesses. The market for handheld computers exemplifies how interventions like taxes, price ceilings, and price floors can distort natural equilibriums, often resulting in shortages or surpluses. Consumer perceptions and economic climate further influence these outcomes, emphasizing the importance of carefully considering macroeconomic conditions in policy formulation.

References

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