You Have Been Hired By A New Firm Selling Electronic Dog Fee
You Have Been Hired By A New Firm Selling Electronic Dog Feeders
You have been hired by a new firm selling electronic dog feeders. Your client has asked you to gather some data on the supply and demand for the feeder, which is given below, and address several questions regarding the supply and demand for these feeders. Price/Feeder Quantity Demanded Quantity Supplied $ Your client has asked that you develop a report addressing the following questions so that you can present these findings to their Board of Directors: Questions: Construct a graph showing supply and demand in the electronic dog feeder 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 $180 in the feeder market. What would happen in this market? Assume that the price floor is removed and a price ceiling is imposed at $90. What would happen in this market?
Now, assume that the price of feeders drops by 50%. How would this change impact the demand for feeders? Explain your answer and reconstruct the graph developed in question one to show this change. Assume that incomes of the consumers in this market increases. 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? Deliverables: Develop your analysis in Microsoft Excel format. Enter non-numerical responses in the same worksheet using textboxes.
Paper For Above instruction
Introduction
The market for electronic dog feeders offers an insightful context into fundamental economic concepts such as supply and demand, equilibrium, government interventions, and consumer behavior. Understanding how these factors influence the market outcome can assist the firm in making strategic decisions. This paper analyzes the supply and demand dynamics of electronic dog feeders, illustrates fundamental economic laws with graphical representations, and evaluates how various external and internal factors impact market equilibrium. Additionally, the distinction between normal and inferior goods is discussed to interpret the implications of market changes more comprehensively.
Graphical Representation of Supply and Demand
To begin, constructing a supply and demand graph using Microsoft Excel involves plotting the quantity demanded and supplied against different prices. The demand curve typically slopes downward, indicating that lower prices increase quantity demanded, while the supply curve slopes upward, signifying that higher prices incentivize producers to supply more. In Excel, data should be entered with prices in one column, demand quantities in another, and supply quantities in a third. Using the chart function to create a scatter plot with lines will visually depict the intersection point—representing market equilibrium.
This graphical representation comprehensively illustrates the laws of supply and demand: the downward-sloping demand curve demonstrates that as prices decrease, consumers purchase more, and the upward-sloping supply curve shows that higher prices motivate suppliers to produce and sell more. The equilibrium point signifies the price and quantity where the quantity demanded equals the quantity supplied, balancing consumer preferences and producer incentives.
Market Equilibrium
The equilibrium price and quantity in the market can be identified at the intersection point of the supply and demand curves in the graph. Assuming specific data points (e.g., at $120, the quantity demanded equals the quantity supplied at 500 units), the equilibrium facilitates stable market conditions without external interference.
Impacts of Government Price Controls
Introducing a price floor of $180, which is above the equilibrium price, leads to a surplus. At this higher price, consumers demand fewer units, while producers are willing to supply more, resulting in excess supply that cannot be sold. This surplus can cause goods to pile up, potentially leading to wastage or price adjustments in the long term.
Conversely, when a price ceiling of $90 is imposed, below the equilibrium, a shortage occurs. Consumers demand more units at this lower price, but producers supply fewer, creating excess demand that cannot be met. Such shortages can lead to black markets or rationing of the product.
Effects of Price and Income Changes
A 50% reduction in the price of feeders increases the quantity demanded, showcasing the law of demand. Graphically, the demand curve shifts upward/rightward at each price point, leading to a higher equilibrium quantity but at a lower price. Consumers are incentivized to purchase more, especially if income levels remain unchanged.
An increase in consumer income, assuming electronic dog feeders are normal goods, would shift demand outward/rightward, raising both equilibrium price and quantity. Higher incomes typically enable consumers to purchase more durable goods, leading to an increased demand at each price level.
Impact of Changes in the Number of Sellers
A decrease in the number of sellers reduces market competition, which can lead to an upward shift of the supply curve (or a leftward shift in supply). This results in higher equilibrium prices and lower quantities supplied. The reduced competition and supply scarcity can increase prices, affecting consumer purchasing behavior.
Normal Goods versus Inferior Goods
Normal goods are those for which demand increases as consumer incomes rise, whereas inferior goods experience decreased demand with income increases. Electronic dog feeders are generally considered normal goods, as higher incomes tend to lead to increased demand for optional or premium products.
Implications Based on Good Type
If electronic dog feeders are normal goods, then an increase in consumer income will boost demand, shifting the demand curve outward. Conversely, if they are inferior goods, higher incomes might reduce demand, shifting the demand curve inward. Therefore, the classification influences how market changes affect demand, and responses to income fluctuations must consider this distinction.
Conclusion
Understanding the dynamics of supply and demand, government interventions, income effects, and the nature of the good itself helps businesses anticipate market responses and strategize accordingly. The graphical analysis in Excel supports visualization of these concepts, making it a vital tool for market analysis. Recognizing whether a product is a normal or inferior good influences forecasting and decision-making, underscoring the importance of market segmentation and consumer income considerations.
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