Scribd
Upload
36 views

ASSESSMENT (L2) : Case Analysis

1. An increase in consumer incomes or a decrease in the prices of complementary goods like internet service or semiconductors would increase demand for computers. An expected future sale would also increase demand. 2. A decrease in mobile phone production costs or an increase in the price of a key input like LCD screens would respectively increase or decrease the supply of mobile phones. An increase in assembly worker wages would decrease supply by raising costs. 3. A sugar tariff that raises input costs and aggressive competitor advertising that reduces demand would both decrease the supply and demand for generic soft drinks. This would lower the equilibrium quantity but the impact on price is undetermined as it depends on the relative shifts in supply and demand.

Uploaded by

Rocel Domingo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
36 views

ASSESSMENT (L2) : Case Analysis

1. An increase in consumer incomes or a decrease in the prices of complementary goods like internet service or semiconductors would increase demand for computers. An expected future sale would also increase demand. 2. A decrease in mobile phone production costs or an increase in the price of a key input like LCD screens would respectively increase or decrease the supply of mobile phones. An increase in assembly worker wages would decrease supply by raising costs. 3. A sugar tariff that raises input costs and aggressive competitor advertising that reduces demand would both decrease the supply and demand for generic soft drinks. This would lower the equilibrium quantity but the impact on price is undetermined as it depends on the relative shifts in supply and demand.

Uploaded by

Rocel Domingo
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
You are on page 1/ 2

ASSESSMENT (L2): Case Analysis

1.      Consider the demand for computers. For each of the following, state the effect on demand:
a.      An increase in consumer incomes 
When consumer’s income increases it may also increase the demand for computers.
Since the capacity of consumers to buy the product is high, also income is one of the
shifters of demand.
b.      An increase in the price of computers
This would not cause any effect on demand. An increase in price of mobile phones
decreases the quantity demanded that leads to a surplus because quantity supplied
increases as the price of computers increases. Changes in price don’t shift the curves of
demand, changes in price causes movements along the curve. 
c.       A decrease in the price of Internet service providers

This would cause the demand of computers to increase. Because internet service is a
complementary goods and there is a decrease in its price that leads to increase the demand
for computers. 

d.      A decrease in the price of semiconductors

This would cause the demand of computers to increase. Because semiconductors


are related goods for computers and there is a decrease in its price that may lead to
increase the demand for computers.

e.      It is October, and consumers expect that computers will go on sale just before
Christmas.
This would cause the demand of computers to increase. Because when consumers
expected that computers may go on sale, it will attract consumers to demand more. And
future expectation is one of the non-price factors for computers demand. 
 
2.      Consider the supply of mobile phones. For each of the following, state the effect on supply:
a.      A change in technology that lowers production costs
This would cause supply of mobile phones to increase. Because a lower production
costs of a firm leads to produce more mobile phones for the same price. And it can also
increase the profits when producing more mobile phones with lower costs of production. 
b.      An increase in the price of LCD screens
This would cause supply of mobile phones to decrease. Because the price of LCD
screens or the key resource of mobiles phones increases. And that’s leads to less mobile
phones will produce. 

c.       A decrease in the price of mobile phones


This would not cause any effect on supply. A decrease in price of mobile phones
decreases the quantity supplied that leads to a shortage because quantity demanded
increases as the price of mobile phones decreases. Changes in price don’t shift the curves
of supply, changes in price causes movements along the curve.

d.      An increase in the wages of mobile phone assembly workers

This would cause supply of mobile phones to decrease. Because an increase in


wages causes the overall production costs of the firm to increase. So, as the production
costs increases the capacity of the firm to produce mobile phones decreases and that’s lead
to increase the price of mobile phones.

e.      An increase in consumer incomes

This would not cause any effect on supply. Because income of consumers only
affects the demand and also it is not one of the shifters of supply. When consumer’s income
increases it may increase only the demand for mobile phones not the supply. If we put it on
the graph there is no movements in supply curve. 

3.      You are the manager of a firm that produces and markets a generic type of soft drink in a
competitive market. In addition to the large number of generic products in your market, you also
compete against major brands such as Coca-Cola and Pepsi. Suppose that, due to the
successful lobbying efforts of sugar producers in the United States, Congress is going to levy a
P50 per pound tariff on all imported raw sugar—the primary input for your product. In addition,
Coke and Pepsi plan to launch an aggressive advertising campaign designed to persuade
consumers that their branded products are superior to generic soft drinks. How will these
events impact the equilibrium price and quantity of generic soft drinks?
If Congress is going to levy a P50 per pound tariff on all imported raw sugar—the primary
input for my product, it means that the cost of sugar is going to increase and that’s lead for me
to also increase the cost of my product and to reduce the production or supply of it. Therefore,
supply curve will shift to the left or decrease.
If the Coke and Pepsi plan to launch an aggressive advertising campaign, it means that the
preferences and tastes of my consumers might change and that’s lead to decrease the demand
of my product or the demand curve will shift to the left. Because consumers might choose to
buy more Coke and Pepsi than my product.
The supply and demand of my product is both now shift to the left or decrease. It means that
the quantity of generic soft drinks will fall and the equilibrium price is depends upon the
seriousness of falls of supply and demand. Because a decrease in supply will cause to increase
the price and a decrease in demand will cause to decrease the price. So, therefore, the
equilibrium price is undetermined.

You might also like

pFad - Phonifier reborn

Pfad - The Proxy pFad of © 2024 Garber Painting. All rights reserved.

Note: This service is not intended for secure transactions such as banking, social media, email, or purchasing. Use at your own risk. We assume no liability whatsoever for broken pages.


Alternative Proxies:

Alternative Proxy

pFad Proxy

pFad v3 Proxy

pFad v4 Proxy