Your supervisor, Jorge, has assigned you the task of evaluating a new product. The new pro

SoccerBoss
Category:
Economics
Price: $5 USD

Question description

Your supervisor,
Jorge, has assigned you the task of evaluating a new product. The new product,
oven mittens, has several competitors in the marketplace, but your company will
be using a new patented material that provides protection from heat and maintains
a great deal of flexibility. The supply and demand functions for oven mittens
are as follows:



Qd =
45 – 6.9P



Qs =
–15 + 10P



where Qd
is the quantity demanded, Qs the quantity supplied, and P the
price.



Tasks:



Jorge has asked
you to research the market and provide detailed responses to the following
questions:




  • What
         is the equilibrium price and quantity for oven mittens? Using Microsoft
         Excel, construct a table that shows the quantity demanded, the quantity
         supplied, and the surplus or shortage associated with prices from $2 to
         $5.55. (Use appropriate intervals.) Indicate the level at which
         equilibrium is achieved. Graph the data, indicating the equilibrium level
         and the areas of shortage or surplus.

  • If
         a price floor were established at $4, what would happen in this market?
         Explain your answer.

  • If
         a price ceiling were established at $3, what would happen in this market?
         Explain your answer.

  • What
         will happen to the demand curve for the product if the following changes
         occur? Answer separately for each change, assuming each event to be
         independent of the other:


    •  
    • The price of the substitute Good A increases.




The price of the complementary Good C
increases.

Tutor Answer

(Top Tutor) Daniel C.
(997)
School: Cornell University
PREMIUM TUTOR
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