Explore BrainMass

Demand & Supply

Demand and supply in microeconomics is the reigning mechanism that determines the price of a good or service in a market. According to neoclassical economics, the price and quantity traded will, in the long run, be determined by point where demand is equal to supply - the equilibrium. The forces that draw a deviated price back to equilibrium is self correcting. The demand and supply curves are defined as the relationship between the price, and the quantity demanded and quantity supplied. 

The law of supply, in microeconomics, states that when the price of a good increase, then the quantity supplied of that good will increase. The converse is also true. The law of demand states that when the price of a good increases, the demand of the good will decrease. The laws of supply and demand can be represented in graphs by movements in the supply and demand curves. Changes in quantity demanded as a function of price is seen in the movement along the demand curve. When the entire demand curve shifts, this is described as a change in demand. Changes in quantity supplied are referred to as movements along the supply curve. When the entire supply curve shifts, it is known as a change in supply.

Some of the factors that cause a demand curve to shift are:
1. Changes in consumer taste or preferences – if consumers lose interest in a product, demand will decrease
2. Changes in income – if consumer income increases then it is expected that demand for certain goods will increase
3. Distribution of income

Some of the factors that cause a supply curve to shift include:
1. Cost – Changes in technology can decrease costs and increases in manufacturing costs cause the supply curve to shift up and to the left
2. Number of producers – if the amount of firms who product a certain product increases, supply will increase
3. Government tax policy – Increases in business taxes will make the supply curve shift up and to the left

Demand and supply are central to the understanding of microeconomics, and economics as a whole. Factors that influence demand and supply can have an effect on the success of a firm or product.

Inverse, Direct Demand Function, & Point Price Elasticity

Inverse, Direct Demand Function, & Point Price Elasticity Copy and paste the following data into Excel: a) Run OLS to determine the inverse demand function (P = f(Q)); how much confidence do you have in this estimated equation? Use algebra to then find the direct demand function (Q = f(P)). b) What is the point price elasti

Substitute and Complementary Goods with Legalization of Marijuana

Snack food venders and beer distributors earn some monopoly profits in their local markets but see them slowly erode from various new substitutes. When California voted on legalizing marijuana, which side would you think that California beer distributors were on? What about snack food venders? Why?

Equilibrium Price/Pricing Strategies

In 2000, the town of Brother's Bay in Door County Wisconsin had a more-or-less free market in boat services. Any adult citizen could provide boat services as long as the drivers and the boats satisfy certain safety standards. Suppose that the marginal cost per trip of a boat ride is constant, where MC = $5, and that each boat ha

Derive demand for hotel rooms

A sudden discovery of an enormous gold mine in Florida would mean a _______ a.Rightward shift in the supply curve for gold. b.Rightward shift in the demand curve for gold. c.Leftward shift in the supply curve for gold. d.Leftward shift in the demand curve for gold. In a shorefront tourist town, a hurricane washes

The demand for university education is inelastic

Raise or Lower Tuition? Suppose that, in an attempt to raise more revenue, Nobody State University increases its tuition. Assess a raise in tuition and if it will necessarily result in more revenue.

Government Affects of Fundamental Economics

1. Does economics help teach us how to approach problems, or does it provide us with a set of answers to problems? What do you think your opportunity cost is? 2. How does government affect the answer to the "What", "How", and "For Whom" fundamental economic question? 3. Under what conditions would a nation be able to cur

Microeconomics in Tea and Soft Drink Markets

1. Suppose news reports predicted that the price of coffee was about to rise by about 20%. What could be the causes of the predicted price increase? What impact might this have on consumer demand for coffee in the short and long term? What might happen in the tea market or the soft drink market? 2. Consider the market for per

Output Decisions in Perfect Competition

Forgot how to solve this? Micro I need help how to solve this step by step A perfectly competitive flip flops industry has the following demand an supply curves Qs=16+p Qd=80-p a) what is equilibrium price and quantity? b) a particular firm (summer flip flops) in the same industry (flip flop industry) has the fo

Fixed and Floating Exchange Rate System

a) Assume countries U and Q are trading partners, and that there are no other countries in the world. The following functions represent the demand and supply functions for the currency of country U. Supply of country U's currency :E = 1.3 - 0.1Qd Demand of country U's currency :E = -1.1 + 0.2Qs Where E = exchang

Baby Boomers Economic Impact

How do baby boomers effect the following? IV. Findings and Observations a. Age plays a significant part in consumer decisions (baby boomers) i. Elasticity of goods ii. Technology Prepare a two to three page summary of an article from The Wall Street Journal or any other business or economic periodical that relates to th

Own price and cross-price elasticity of demand

Please see file, text below is unformatted. 7. Consider a market characterized by the following inverse demand and supply functions: PX = 40 - 4QX and PX = 10 + 2QX. Compute the surplus received by consumers and producers. $25 and $25, respectively. $20 and $40, respectively. $40 and $20, respectively. $50 and $25, re

Translating Scenarios into Supply and Demand Curve Graphs

1. Before economic reforms were implemented in the countries of Eastern Europe, regulation held the price of bread substantially below equilibrium. When reforms were implemented, prices were deregulated and the price of bread rose dramatically. Illustrate the market for bread before reforms and show the impact of reforms on qua

Optimal Price and Quantity Calculations

Please see attached file for details. A monopoly is considering selling several units of a homogeneous product as a single package. A typical consumer's demand for the product is Qd = 130 - 0.25P, and the marginal cost of production is $160 As a manager of a chain of movie theaters that are monopolies in their respective m

Sensitivity of the demand for iPods

Evaluate how the following situations will affect the demand curve for ipods. A. Income statistics show that income of 18-25 year old have increased by 10% over the last year. B. Efforts of music artists wanting greater protection of their music result in more stringent enforcement of copyrights and the shutdown of numerous il

Elasticity of Demand and Supply and Demand Analysis

1. What is elasticity of demand? What are the determinants of elasticity of demand, and give an example elasticity of demand for a product or service that you sell or use. 2. Discuss why both supply and demand analysis and marginal analysis must be used in making rational business decisions. Please include specific examples in

Marginal Willingness and Demand Curve

Let p denote price and q denote quantity demanded of wild salmon. a) Using the data provided in Table 1, plot the relationship between the quantity of wild salmon and the marginal willingness to pay for John. Calculate the slope of this relationship. Table 1: John's marginal willingness to pay for wild salmon q

Demand and Supply factors in Hotels

Consider what your firm produces. What are some things that would change the demand for your product? Discuss at least two factors. What are some things that would affect changes in supply? Discuss at least two factors. How can quantity demanded be changed? What kind of demand (elastic or inelastic) does the product that your

Supply and demand analysis of price change of product

a. Use demand and supply analysis to illustrate the changes in chicken prices described in the article. b. Describe what has happened in the corn and soybean-meal markets and how that has influenced the chicken market. Article It has been a tough year in the poultry business, with supply outpacing demand and feed-grain pr

Sunbest Orange Juice

Complete the following operations in Microsoft Excel to complete the supply/demand analysis for Sunbest Orange Juice. The spreadsheet has been set up and the first half of each section has been completed. A. Already completed: Set up a spreadsheet to illustrate the effects of changing economic assumptions on the demand for

Supply and Demand in Real Estate Field

You are between jobs and have decided to relocate to a city west of the Mississippi River, but you are unsure of what size or type of city you and your family can afford to live in. Choose 4 cities west of the Mississippi River, each of a different size, and research the housing prices for a 3-bedroom, 2-bath condo for each c

Elasticity and Inelasticity

See the attachment. Problem 1 Suppose that the U.S. Department of Agriculture (USDA) administers the price floor for cheese, set at $0.17 per pound of cheese. (In real life, the actual price floor was officially set at $16.10 per hundredweight of cheese. One hundredweight is 100 pounds.) At that price, according to data fr

Major Factors Affecting Natural Gas Demand

Using the natural gas business as an example, can you please help me describe the major factors affecting demand and discuss the major competitors (other suppliers)? Thank you!!!

Demand and Supply Schedule

The Market for Pizza has the following demand and supply schedules: Price Quantity Demanded Quantity Supplied $4 135 pizzas 26 pizzas $5 104 pizzas 53 pizzas $6 81 pizzas 81 pizzas $7 68 pizza

Price equilibrium and demand curve

Discuss how each of the following will affect the price and quantity of equilibrium. To determine the new values, discuss how the supply and/or demand curves will shift in the following cases (if at all). a. Income diminishes and the good is a normal good. b. Minimum wage increases

E-Business Environment and the Marketing System

I) Please describe how relationships are created and enhanced in an e-business environment. II) Discuss the potential risks of using Web 2.0 tools. Provide several examples. III) What are the benefits of "build-to order" to buyers and sellers? Are there any disadvantages? IV) What role does promotion play in the marketi

Concepts in Managerial Economics

1. In a competitive market, the market-determined price is $60. For a typical firm producing 100 units of output, short-run marginal cost is constant at $65, average total cost is $95, and average fixed cost is $30. Is this firm making the profit-maximizing decision? If not, what should it do? a) No, it is not making the profit

Equilibrium price for physiotherapy

The equilibrium price for physiotherapy visits is $30 and the quantity utilized is 150 visits as a result of the demand and supply conditions in this diagram. The state legislature is concerned that the current price does not give the physiotherapists enough incentive to produce a high volume of services. A proposal has been m

Annual and Linear Trend Lines Predicting Quantity Demanded

FORECASTING PROJECT The following table represents the demand for a product for the years 1990 to 2007: Year Quantity 1990 2753 1991 2634 1992 3169 1993 3301 1994 3754 1995 3834 1996 5117 1997 6448 1998 7908 1999 9213 2000 11502 2001 10791 2002 10022 2003 8342 2004 10453 2005 10784 2006 10718 2007 12460

Macroeconomics: Demand Curves

A reduction in the demand for money is the equivalent of a(n) ______ in velocity and will shift the aggregate demand curve to the _______