Supply and Demand Concepts.

| August 18, 2015

Supply and Demand Concepts.

You have been hired by a new firm selling electronic dog feeders. Your client has asked you to gather some data on the supply and demand for the feeder, which is given below, and address several questions regarding the supply and demand for these feeders.

Price/Feeder    Quantity Demanded    Quantity Supplied
$300                          500                        1800
270                       600                         1700
240                       700                        1600
210                       800                        1500
180                         1000                       1400
150                         1100                         1300
120                         1200                         1200
90                         1300                          1100
60                     1400                          1000
30                     1500                           900
10                        1600                           800

Your client has asked that you develop a report addressing the following questions so that you can present these findings to their Board of Directors:
Questions:
1.    Construct a graph showing supply and demand in the electronic dog feeder market, using Microsoft Excel.
2.    How are the laws of supply and demand illustrated in this graph? Explain your answers.
3.    What is the equilibrium price and quantity in this market?
4.    Assume that the government imposes a price floor of $180 in the feeder market. What would happen in this market?
5.    Assume that the price floor is removed and a price ceiling is imposed at $90. What would happen in this market?
6.    Now, assume that the price of feeders drops by 50%. How would this change impact the demand for feeders? Explain your answer and reconstruct the graph developed in question one to show this change.
7.    Assume that incomes of the consumers in this market increases. What would happen in this market? Explain your answer and reconstruct the graph developed in question one to show this change.
8.    Assume that the number of sellers decreases in this market. What would happen in this market? Explain your answer and reconstruct the graph developed in question one to show this change.
Explain the difference between a normal good and an inferior good. Would your answers to question 7 change depending on whether this good is a normal or inferior good? Why?

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