The Details Of The Assignment Are As Followed As An Economis
The Details Of The Assignment Are As Follwed As An Economist For Abc
The Details Of The Assignment Are As Follwed As An Economist For Abc
THE DETAILS OF THE ASSIGNMENT ARE AS FOLLWED, : As an economist for ABC Plastics, your boss has asked you to respond to some questions she has regarding the company’s main product, tablet cases. A marketing research firm recently developed the following supply and demand schedules for tablet cases: Price/Case Quantity Demanded Quantity Supplied $ You are to develop a report addressing the following questions and present your findings to the Board of Directors: Questions: Construct a graph showing supply and demand in the tablet case market, using Microsoft Excel. How are the laws of supply and demand illustrated in this graph? Explain your answers. What is the equilibrium price and quantity in this market?
Assume that the government imposes a price floor of $16 in the tablet case market. What would happen in this market? Assume that the price floor is removed and a price ceiling is imposed at $8. What would happen in this market? Now assume that the price of tablet cases drops by 50%.
How would this change impact the demand for tablet cases? Explain your answer and reconstruct the graph developed in question one to show this change. Assume that incomes of the consumers in this market increase. What would happen in this market? Explain your answer and reconstruct the graph developed in question one to show this change.
Assume that the number of sellers decreases in this market. What would happen in this market? Explain your answer and reconstruct the graph developed in question one to show this change. Explain the difference between a normal good and an inferior good. Would your answers to question #7 change, depending on whether this good is a normal or inferior good?
Why or why not? Present your analysis in Microsoft Excel format. Enter non-numerical responses in the same worksheet using textboxes. - NO PLAGIARISM PLEASE
Paper For Above instruction
The analysis of supply and demand for tablet cases in the market provides crucial insights into how various economic factors influence market equilibrium, pricing policies, and consumer behavior. By understanding these dynamics, businesses and policymakers can make informed decisions that optimize market outcomes and consumer welfare.
Constructing the Supply and Demand Graph
The first step involves plotting the supply and demand curves based on the provided schedules. The demand schedule typically shows a downward-sloping curve, indicating that as prices decrease, consumers are willing to purchase more tablets cases. Conversely, the supply schedule usually presents an upward-sloping curve, where higher prices incentivize producers to supply more. Using Microsoft Excel, these data points can be easily graphed by plotting quantity demanded and supplied against corresponding prices, resulting in intersecting curves reflecting market equilibrium.
Law of Supply and Demand Illustrated
The laws of supply and demand are visually depicted in this graph as the intersection point of the two curves. The demand curve's downward slope exemplifies the inverse relationship between price and quantity demanded. Conversely, the supply curve's upward slope demonstrates the direct relationship between price and quantity supplied. This intersection signifies the equilibrium point where the market clears, with the quantity consumers wish to buy equaling the quantity producers are willing to supply at that price.
Equilibrium Price and Quantity
Based on the scheduling data, the equilibrium price is the point at which the quantity demanded equals the quantity supplied. For example, if demand at $12 is 1000 units and supply at the same price is 1000 units, then $12 is the equilibrium price, and 1000 units is the equilibrium quantity. Identifying this point on the graph confirms where the market naturally settles without external interventions.
Impact of a Price Floor of $16
Introducing a price floor at $16, above the equilibrium price, creates a situation where the price cannot fall below this level. This typically results in excess supply or surplus, as producers are willing to supply more at the higher price, but consumers demand less. Surplus accumulates when supply exceeds demand at that price. If the quantity demanded at $16 is less than the quantity supplied, the market experiences surplus, potentially leading to unsold inventory and pressure to lower prices in the long run.
Imposing a Price Ceiling at $8
When a price ceiling is set at $8, below the equilibrium price, it leads to a shortage. Consumers demand more tablets cases at this lower price, but producers are less willing to supply due to reduced profitability. The gap between demand and supply increases, resulting in a shortage. This situation could cause non-price rationing mechanisms, such as queues or favoritism, to allocate the limited supply.
Demand Change: 50% Price Drop
A 50% decrease in the price of tablet cases would significantly increase demand, as lower prices generally make consumers more willing to purchase. Graphically, this shift would move the demand curve to the right, resulting in a higher equilibrium quantity demanded at a new, lower price point. This effect exemplifies the law of demand, where price reductions lead to increased consumption.
Impact of Increased Consumer Income
An increase in consumer incomes typically boosts demand for normal goods, shifting the demand curve outward. If tablet cases are a normal good, higher incomes mean more consumers purchasing at each price point, raising the equilibrium price and quantity. Conversely, if they are inferior goods, demand might decrease with higher incomes, shifting the demand curve inward or downward, leading to different market adjustments.
Reduction in the Number of Sellers
A decrease in the number of sellers reduces market supply, shifting the supply curve inward (to the left). This causes an increase in the equilibrium price and a decrease in the equilibrium quantity, assuming demand remains unchanged. Fewer sellers mean less overall output, which can cause shortages if demand remains high.
Normal Goods Versus Inferior Goods
Normal goods are products for which demand increases as consumer incomes rise, reflecting a positive income elasticity of demand. Inferior goods show opposite behavior; demand decreases as incomes increase, indicating a negative income elasticity. The classification influences market responses to changes, such as income increases: demand for a normal good would rise, while demand for an inferior good would fall. Consequently, the effect on equilibrium prices and quantities varies accordingly.
Conclusion
Understanding the interactions of supply, demand, and various market interventions is essential for effective market analysis. External factors such as government policies, income changes, and market entry or exit significantly influence prices and quantities in the tablet case market. Recognizing whether a good is normal or inferior helps predict how consumer behavior shifts in response to income changes, further guiding strategic decision-making.
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