Assume Tea brands ChotooChai and BaraChai are competing brands in the market. With arrival of winter season, ChotooChai announces good promotional deals. Using ‘Comparative Statics Analysis’ of demand and supply model: How will the managements of the two brands study the short-run and long-run impact on Tea Sales, after the announcement of promotions in the market of Tea? Demonstrate and explain, with clearly labelled two panel diagrams, the ‘Rationing Function’ and the Allocating or ‘Guiding Function’ of Price.

Assume Tea brands ChotooChai and BaraChai are competing brands in the market. With arrival of winter season, ChotooChai announces good promotional deals. Using ‘Comparative Statics Analysis’ of demand and supply model: How will the managements of the two brands study the short-run and long-run impact on Tea Sales, after the announcement of promotions in the market of Tea? Demonstrate and explain, with clearly labelled two panel diagrams, the ‘Rationing Function’ and the Allocating or ‘Guiding Function’ of Price.

Macroeconomics

13th Edition

ISBN:9781337617390

Author:Roger A. Arnold

Publisher:Roger A. Arnold

Chapter5: Supply, Demand, And Price: Applications

Section5.7: Application 7: Why Do Colleges Use Gpa,s Actss, And Sats, For Purposes Of Admission?

Problem 2ST

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Assume Tea brands A and B are competing brands in the market. With arrival of winter season, A announces good promotional deals. Using ‘Comparative Statics Analysis’ of demand and supply model: How will the managements of the two brands study the short-run and long-run impact on Tea Sales, after the announcement of promotions in the market of Tea? Demonstrate and explain, with clearly labelled two panel diagrams, the ‘Rationing Function’ and the Allocating or ‘Guiding Function’ of Price.
Assume that the Clothing brands J. and GulAhmed are two competing brands in Karachi. With the arrival of the winter season, GulAhmed announces a 30% discount on all products. Using ‘Comparative Statics Analysis’ of demand and supply model: a. Explain how the managements of the both brands will study the short-run and long-run impact on the sale of cloths, after the announcement of discount on all products in the Cloth market? b. Demonstrate and explain, with clearly labelled two panel diagrams, the ‘Rationing Function’ and the Allocating or ‘Guiding Function’ of Price.
Two brands ABC and XYZ are competing brands in the market. With arrival of winter season, ABC announces good promotional deals. Using ‘Comparative Statics Analysis’ of demand and supply model. How will the managements of the two brands study the short-run and long-run impact on Tea Sales, after the announcement of promotions in the market of Tea? Demonstrate and explain, with clearly labelled two panel diagrams, the ‘Rationing Function’ and the Allocating or ‘Guiding Function’ of Price?
The coffee and tea demand functions depend on both prices. Suppose the demand curves for coffee and tea are Qc = 120 − 2pc + pt and Qt = 90 − 2pt + pc, where Qc is the quantity of coffee, Qt is the quantity of tea, pc is the price of coffee, and pt is the price of tea. These crops are grown in separate parts of the world, so their supply curves are not interrelated. We assume that the short-run, inelastic supply curves for coffee and tea are Qc = 45 and Qt = 30. Solve for the equilibrium prices and quantities. Now suppose that a freeze shifts the short-run supply curve of coffee to Qc = 30. How does the freeze affect the prices and quantities
QUESTION 1: Assume Tea brands ChotooChai and BaraChai are competing brands in the market. With arrival of winter season, ChotooChai announces good promotional deals. Using ‘Comparative Statics Analysis’ of demand and supply model: How will the managements of the two brands study the short-run and long-run impact on Tea Sales, after the announcement of promotions in the market of Tea? Demonstrate and explain, with clearly labelled two panel diagrams, the ‘Rationing Function’ and the Allocating or ‘Guiding Function’ of Price. QUESTION 2: Demand for Orange Juice is given as Qd = 5000 – 2500 P + 1200 I + 650 E – 255 Ps Suppose Income is I = Rs.500, Expectations E = 55, and Price of Ps = Rs 25. Find the Demand Equation. Using the demand function from part a., Calculate Elasticity of Demand for price range of Rs.125 and Rs.155. What will be the ‘Price Elasticity of Demand’ at P = Rs.125? Interpret the Elasticity of Demand calculated in (C) above.
Walmart can be viewed as a first mover. Now suppose both Walmart and HEB are considering whether and how to enter a potential market. Market demand is given by the inverse demand function p= 900−q1−q2, where p is the market price margin, q1 is the quantity sold by Walmart and q2is the quantity sold by HEB. To enter the market, a retailer must build a store. Two types of stores can be built: Small and Large. A Small pantry store requires an investment of $50,000, and it allows the retailer to sell as many as 100 units of the goods at zero marginal cost. Alternatively, the retailer can pay $175,000 to construct a Large full-service supermarket that will allow it to sell any number of units at zero marginal cost. *Assume Walmart has built a Large full-service supermarket there (i.e.Walmartchooses to build a large full-service supermarketL1at the first stage). Calculate HEB’s profit for the following cases: a.) HEB chooses not to enter N′′ at the second stage after viewing Walmart’s…
Walmart can be viewed as a first mover. Now suppose both Walmart and HEB are considering whether and how to enter a potential market. Market demand is given by the inverse demand function p= 900−q1−q2, where p is the market price margin, q1 is the quantity sold by Walmart and q2is the quantity sold by HEB. To enter the market, a retailer must build a store. Two types of stores can be built: Small and Large. A Small pantry store requires an investment of $50,000, and it allows the retailer to sell as many as 100 units of the goods at zero marginal cost. Alternatively, the retailer can pay $175,000 to construct a Large full-service supermarket that will allow it to sell any number of units at zero marginal cost. Assume Walmart stays out of the potential market (i.e.Walmart chooses not to enterN1at the first stage,q1= 0). Calculate Walmart's profit for the following cases: a.) HEB chooses not to enter N at the second stage after viewing Walmart’s choice. b.) HEB chooses to build a small…
Walmart can be viewed as a first mover. Now suppose both Walmart and HEB are considering whether and how to enter a potential market. Market demand is given by the inverse demand function p= 900−q1−q2, where p is the market price margin, q1 is the quantity sold by Walmart and q2is the quantity sold by HEB. To enter the market, a retailer must build a store. Two types of stores can be built: Small and Large. A Small pantry store requires an investment of $50,000, and it allows the retailer to sell as many as 100 units of the goods at zero marginal cost. Alternatively, the retailer can pay $175,000 to construct a Large full-service supermarket that will allow it to sell any number of units at zero marginal cost. Assume Walmart stays out of the potential market (i.e.Walmart chooses not to enterN1at the first stage,q1= 0). Calculate HEB’s profit for the following cases: a.) HEB chooses not to enter N at the second stage after viewing Walmart’schoice. b.) HEB chooses to build a small…
Walmart can be viewed as a first mover. Now suppose both Walmart and HEB are considering whether and how to enter a potential market. Market demand is given by the inverse demand function p= 900−q1−q2, where p is the market price margin, q1 is the quantity sold by Walmart and q2is the quantity sold by HEB. To enter the market, a retailer must build a store. Two types of stores can be built: Small and Large. A Small pantry store requires an investment of $50,000, and it allows the retailer to sell as many as 100 units of the goods at zero marginal cost. Alternatively, the retailer can pay $175,000 to construct a Large full-service supermarket that will allow it to sell any number of units at zero marginal cost. *Assume Walmart has built a Small pantry store there (i.e.Walmart chooses to build a Small pantry store S1 at the first stage). Calculate Walmart's profit for the following cases: a.) HEB chooses not to enter N at the second stage after viewing Walmart’s choice. b.) HEB chooses…
Walmart can be viewed as a first mover. Now suppose both Walmart and HEB are considering whether and how to enter a potential market. Market demand is given by the inverse demand function p= 900−q1−q2, where p is the market price margin, q1 is the quantity sold by Walmart and q2is the quantity sold by HEB. To enter the market, a retailer must build a store. Two types of stores can be built: Small and Large. A Small pantry store requires an investment of $50,000, and it allows the retailer to sell as many as 100 units of the goods at zero marginal cost. Alternatively, the retailer can pay $175,000 to construct a Large full-service supermarket that will allow it to sell any number of units at zero marginal cost. *Assume Walmart has built a Large full-service supermarket (i.e.Walmart chooses to build a large full-service supermarket L1 at the first stage). Calculate Walmart's profit for the following cases: a.) HEB chooses not to enter N at the second stage after viewing Walmart’s…
Three products compete in a market and their demand and supply functions are qd1 = 44-2p1+p2+p3 qs1 = -10+3p1 qd2 = 25+ p1 –p2 +3p3 qs2 = -15+5p2 qd3 = 40 +2p1+p2 -3p3 qs3 = -18+2p3 where p1, p2, and p3 are the prices. Determine the prices and quantities which result in equilibrium in each market using Cramer’s rule.
Suppose there are 1,000 hot pretzel stands operating in New York City. Each stand has the usual U-shaped average-total-cost curve. The market demand curve for pretzels slopes downward and the market for pretzels is in long-run competitive equilibrium. Draw the current equilibrium, using graphs for the entire market and for an individual pretzel stand. Now the city decides to restrict the number of pretzel-stand licenses, reducing the number of stands to only 800. What effect will this action have on the market and on an individual stand that is still operating? Use graphs to illustrate your answer. Suppose that the city decides to charge a license fee for the 800 licenses. How will this affect the number of pretzels sold by an individual stand, and the stand’s profit? The city wants to raise as much revenue as possible and also wants to ensure that 800 pretzel stands remain in the city. By how much should the city increase the license fee? Show the answer on your graph.