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Managerial economics assignment

Interpret basic scenarios: Within the VRRP market, correctly identify the correct function (either the supply of, or the demand for, Press) and the appropriate direction of change (increase or decrease), for each situation below. Illustrate each answer with a simple graph. Then, in a short paragraph, explain why it is a supply- side or demand-side change, and why the predicted change is an increase or a decrease. A. VRRP Scenario 1 . The number of users [consumers] of Press increases, because of publicity and advertising programs that have increased the consciousness of nonusers to make investments in “green” technologies.

These new customers prefer products that have a “smaller carbon footprint. ” In simple terms, there is an increased popularity among residential consumers for Press, and greater numbers of residential consumers decide to enter the VRRP market. In this scenario, does the supply or the demand for Press change? Why? What is the direction of change? Why? Mans. Increase or decrease in the number of consumers will make the demand curve shift as the market is determined by the consumers. The demand for the product will also increase and vice versa if there is an increase in the number of buyers in

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the market.

Therefore according to the given scenario, number of users for Press increases due to the publicity and advertising programs. VRRP being considered as a greener source to produce electricity, demand for the same increases. Therefore as the number of buyers in

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creases demand increases too. Therefore this will cause the demand curve to shift to the right hand side. The price for Press. Considering D line as demand under normal condition and ODL is the shift in demand curve after increase in the number of users.

It shows that as there is an increase in the number of consumers for Press, its demand curve shift from original D curve to ODL in the right hand side. B. VRRP Scenario 2. A technological advance reduces the cost of production for Press. Firms who manufacture Press can now make their VRRP product more cheaply. In this scenario, does the supply or the demand for Press change? Why? What is the direction of change? Why? Mans. Improvement in technology is one of the key determinants that shift the supply curve.

Due to the improvement in technology, cost to produce the goods decreases which enables the firm to make more products at a lower cost for any given quantity. Therefore the supply of Press product increases due to lower cost of production to manufacture. S is the normal supply curve before the improvement in technology in the above mentioned diagram. After the improvement of technology, cost to produce the goods decreases which enables the firm to make more products at a lower cost for any given quantity Therefore, supply for Press increase.

Thus, the supply curve shifts from S to SSL . C. VRRP Scenario 3. Suppose gee-thermal energy is viewed by consumers as a bustiest source of power (as compared to Press ). If the price (overall cost) of using gee-thermal as residential energy source decreases, then what change is predicted in the VRRP market, using the model of supply and demand? Does the consumers. Thus, demand for VRRP will decrease with a decrease in the price of Gee-thermal energy in the market. Therefore, if two goods are substitutes, decrease in the price of one good reduces the demand for the other good.

As seen in the above diagram; demand of price of Press determines the x-axis whereas the quantity demand of Press determines the y-axis. Considering D as the demand curve before the decrease in the price of Gee-energy. As, Gee- energy and Press are substituted goods. A decrease in the price of Gee-energy will enable the demand for Press to decrease as well. Therefore this change would shift the demand curve to D from ODL . D. VRRP Scenario 4. A new, larger government subsidy is made available to the firms who produce and sell Press. What change is predicted in the VRRP market?

In this scenario, does the supply or the demand for Press change? Why? What is the direction of change? Why? Mans. Subsidy is also considered as one of the key determinants which lead the supply curve to shift. As per the above scenario, if larger government subsidy is made available to the firms producing and selling Press product, then the cost to produce the goods decreases which enables the firm to make more products at a lower cost for any given quantity. This will also enable the firm to earn maximum profit which in turn would increase supply and would also lead the supply curve to shift.

After large government subsidies are made available, the firms who produce and sell Press will be able to produce more with the extra money they are receiving from the government. Thus, there is a shift from S to SSL e. VRRP Scenario 5. Suppose that “amorphous silicon” is a key raw material (a resource) used in the production of Press. If global shortages of amorphous silicon cause the price of amorphous silicon to rise dramatically, predict the impact on the VRRP market. In this scenario, does the supply or the demand for Press change? Why?

What is the direction of change? Why? Mans. According to the given scenario, if the price of amorphous silicon rises dramatically, then the produces would produce ewer amounts of goods. This would impact for fewer number of Press goods in the market. Therefore the consumers will have to pay more for fewer quantities. As seen in the diagram, S is the supply curve before the price of amorphous silicon rises dramatically. Due to the global shortage of amorphous silicon, price rises significantly letting the producers to produce fewer quantities.

Thus the supply curve is affected and the increase in the unit cost of production will result in decrease in market supply. This causes the supply curve to shift towards the left hand side. F. VRRP Scenario 6. Suppose the entrepreneurs who make and sell Press for the residential market, also have the technological capacity to readily changeover their production operations to produce large-scale Industrial Photovoltaic Solar Panels (Phips) for corporations, large factories and other commercial users.

With the proper incentives, firms can switch production from Press to Phips. If the price and profitability of producing Phips increases, what is the expected impact on Press for the residential market? In this scenario, does the supply or the demand for Press change? Why? What is the direction of change? Why? Mans. If producing Industrial Photovoltaic Solar Panels generates more revenue, then the rate of production would also increase. Therefore with the increase in production of Industrial Photovoltaic Solar Panels, supply of VRRP decreases.

Thus the demand generate a shift to the left hand side of the supply curve. As seen in the above diagram S is the supply curve before entrepreneurs from changeover their production operations to produce large-scale Industrial Photovoltaic Solar Panels (Phips) for corporations, large factories and other commercial users. Thus as the revenue from producing Industrial Photovoltaic Solar Panels increases, apply for VRRP decreases in the market. It generates a shift to the left hand side of the supply curve leading the supply curve S to decrease to SSL . 2.

Suppose the model of Supply and Demand is used to make predictions about changes in the equilibrium price and the equilibrium quantity of Wheat. Interpret market scenarios: Within the wheat market, predict the impact of changes in the determinants of demand or supply. In each scenario, identify the correct function (either wheat supply or wheat demand) and the appropriate direction of change (increase or decrease), for each situation below. Then use the analysis to predict the impacts of the change in the equilibrium wheat price and equilibrium wheat quantity.

Illustrate each answer with a simple graph. Remember, some complex analyses can produce the end-result of an “indeterminate change” in either the equilibrium price or quantity of wheat. Then, in a short paragraph, explain why the change in the market equilibriums occurred, and whether they “make sense” in comparison to outcomes in the real world market for corn. Treat each scenario as a separate event. [e. G. , severe drought in the US, floods in the wheat-growing eastern-European area of he Ukraine, large-scale pest infestations, etc. ] create a global “disaster-yield” of wheat.

Wheat yields and wheat production drop worldwide. Use supply-and-demand to predict the impact of the below-normal growing- conditions on the equilibrium price and equilibrium quantity of wheat. Are the results of the model consistent with what typically happens in commodity markets, when below-normal growing conditions impact agricultural production? Why is it important that the results of a model be consistent with reality? Mans. According to the above mentioned situation, if there’s a disaster-yield of wheat u to severe drought or floods, then there is a decrease in the level yield expected.

Therefore the supply of wheat will shift S to SSL . In other words price would increase as quantity decreases. The equilibrium will shift to a price which would be higher than expected but quantity would still remain low if the demand curve D is constant. B. Wheat – Scenario 2. In this scenario, assume that wheat is a viewed as a “normal good” from the consumer perspective. If a worldwide recession reduces household consumer incomes on global scale, use supply-and-demand to predict the impact of creased consumer income on the equilibrium price and equilibrium quantity of Wheat. He demand curve. As seen in the above diagram, D and S are demand and supply before the decrease in the income level of the consumer at equilibrium at E due to the recession. As people’s incomes goes down, it is reasonable to expect their demand for a product to decrease and vice-versa. Therefore, the Demand curve will shift to the left hand side. Thus the equilibrium price and quantity of wheat will also go down, which in turn will make the supplier to lower its prices so as to match the consumer demand. . Wheat – Scenario 3.

Suppose the wheat market is impacted by multiple forces, and a complex supply and demand analysis is required. In this scenario, suppose that a decreased number of wheat consumers leave (exit) the wheat market because they are pursuing a Low-carbohydrate (“low-Carr”) diet to combat the problem of obesity. Simultaneously, the US Department of Agriculture decreases subsidies for wheat production, because members of the US Congress now believe that it was a mistake to subsidize the production agricultural products; as a result they voted to greatly educe government payments for wheat production .

Apply the supply-and-demand model to predict the impact of these complex changes on the equilibrium price and equilibrium quantity of wheat Mans. In the year 2002, many Americans began to adopt low-carbohydrate diets; this resulted in change in the tastes and preferences of consumers and also had an impact on the demand. This scenario also resulted in the decrease of wheat supply which tends to shift the supply curve to the left hand side, and also the equilibrium price goes up whereas the quantity goes down. As the supply decreases, price increases.

Managerial Economics Assignment

American Seafood Distributors Association. Using the five forces framework: – Entry: Since Brazil producers and the other five countries named in the complaint has a natural competitive advantage like lower labor costs, availability of cheap land, and favorable climate, which results in a higher yield per acre and three harvests per year, Brazil producers and the other five countries named in the complaint enjoy the economies of production which in turn saves them from such challenges, complaints and threats of new entry. – Power of Input Suppliers: Brazil exports more than 58,000 ones of shrimp, with about one-third of that going to the U.

S. Since a large amount is bought from the U. S. , there are only a few substitutes to buy that amount. So, the U. S. Has limited alternative, leading to Brazil having power over the U. S. – Power of Buyers: The American Seafood Distributors Association has supported Brazilian and other foreign producers, arguing that the Southern Shrimp Alliance is engaging in unfair trade practices by trying to impose 300 percent tariff. The buyers prefer cheaper products, so the buyers have power in negotiating trade terms.

Industry Rivalry: Brazil and other foreign countries have a natural competitive

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advantage, such as lower labor costs, availability of cheap land, and a more favorable climate. Since these advantages are naturally obtained and sustainable, the rivalry is not very intense. – Substitutes and Complements: There isn’t any substitute for shrimp. People who demand shrimp will only demand shrimp, since they would not change their preference to other seafood as a substitute for shrimp. Week 1 Managerial Economics Assignment By agrarian

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