Managerial Economics Assignment
Unit 2 Assignment
Student Name: Magida Taracena
1. Analyze what would happen to equilibrium price and quantity in the market for Pepsi if the following occurred (be sure to indicate WHY it happens as well):
a. The price of Coke decreases: If the price of coke diminishes the demand will increase and if Pepsi stays the same the demand will stand still. This means that if the price of Coke decreases and the price of Pepsi remains the same, since Pepsi has a higher price which will increase the quantity demand for Coke and the demand for Pepsi will fall down.
b. Average household income falls from $50,000 to $43,000: As a whole the average household income falls then the last decision I think it’s up to the customer’s budget and if they have money left to buy or not Pepsi. However demand would definitely decrease because of household budget falls.
c. There are improvements in soft-drink bottling technology: If there are improvements in soft-drink bottling it would definitely increase the supply of Pepsi and show outward shift of the supply curve. There would be a higher in demand and decrease price. So the demand will be met faster for Pepsi and an improvement in consumer satisfaction as well.
d. The price of sugar increases and the Pepsi launches an extremely successful advertising campaign: If sugar increases then it will cost more to produce Pepsi and the profit margin will decrease unless the price to the consumer goes up
2.
a. Analyze the following demand and supply equations. What is market equilibrium price? What is market equilibrium quantity?
Demand: Qd = 100 – 4P
Supply: Qs = 10 + 6P
- Market equilibrium price is the state in which the market supply and demand is at balance eand as a result prices become stable. Equilibrium quantity is equals the quantity demanded and quantity supplied. In a market graph, the equilibrium quantity is located at the
Student Name: Magida Taracena
1. Analyze what would happen to equilibrium price and quantity in the market for Pepsi if the following occurred (be sure to indicate WHY it happens as well):
a. The price of Coke decreases: If the price of coke diminishes the demand will increase and if Pepsi stays the same the demand will stand still. This means that if the price of Coke decreases and the price of Pepsi remains the same, since Pepsi has a higher price which will increase the quantity demand for Coke and the demand for Pepsi will fall down.
b. Average household income falls from $50,000 to $43,000: As a whole the average household income falls then the last decision I think it’s up to the customer’s budget and if they have money left to buy or not Pepsi. However demand would definitely decrease because of household budget falls.
c. There are improvements in soft-drink bottling technology: If there are improvements in soft-drink bottling it would definitely increase the supply of Pepsi and show outward shift of the supply curve. There would be a higher in demand and decrease price. So the demand will be met faster for Pepsi and an improvement in consumer satisfaction as well.
d. The price of sugar increases and the Pepsi launches an extremely successful advertising campaign: If sugar increases then it will cost more to produce Pepsi and the profit margin will decrease unless the price to the consumer goes up
2.
a. Analyze the following demand and supply equations. What is market equilibrium price? What is market equilibrium quantity?
Demand: Qd = 100 – 4P
Supply: Qs = 10 + 6P
- Market equilibrium price is the state in which the market supply and demand is at balance eand as a result prices become stable. Equilibrium quantity is equals the quantity demanded and quantity supplied. In a market graph, the equilibrium quantity is located at the