MBA Economic Analysis for Decision Makers

MBA Economic Analysis for Decision Makers
1 TV Market (Make sure to include a graph and an analysis (causation) as well as the assumptions you are making to support your answer for each question.) (40 points)
* As the Super Bowl approaches and people want a bigger TV to watch the game, what happens to the price and quantity of TVs? (10 Points)
There is an increase in the demand for the biggest TVs as more people want to watch the Super Bowl. Consequently, there is a rightward shift in the demand and the price increases. At first, the supply is lower as the demand outpaces the supply and the quantity decreases, but when the sellers respond to the higher demand, they may stock more TVs, but still, the quality decreases because of the higher demand. The number of buyers increases, which reflects a change in the demand.
* As consumers expect the new better HD TV to come out, what happens to price and quantity of the current TV model? (10 Points)
There would be increased demand for the new better HD TV and reduced demand for the current TV model. As fewer people buy the current TV model, the supply would be higher in the market, but fewer sellers would be stocking these models over time. Because of the rise in the supply of the current TV model, the price would reduce, while supply would increase
* As the Price of Samsung increases, what happens to the price and quantity of Sony TVs? (10 Points)
Samsung is a substitute product, and as price increases, people consume less of Samsung and the quantity sold. But, on the other hand, there is a rightward shift in the demand for Sony TVs, and more Sony TVs would be bought. Thus, the quantity of Sony TVs increases. At first, the price is constant before sellers adjust to the new demand, but as demand increases further, the price of the TVs increases.
* As parts coming from North Korea cost more money, what happens to the price and quantity of TVs? (10 Points)
The parts are essential inputs, resulting in a higher cost of production and higher sales prices. Based on the law of demand, as the prices increase, the quantity demand falls. Thus, the prices of TVs will increase, and the number of TVs will decline.
1 The Clothing Market. (Make sure to include a graph and the assumptions you are making to support your answer for each question.) (40 points)
* As income falls, what happens to the price and quantity of clothes? (10 points)
As the income falls, there is less money and disposable income to spend. Income directly affects consumer choices as there is less demand for a good and a preference for cheaper alternatives. For example, there is less demand for clothes and higher supply, and consumers purchase fewer clothes than before. An increase in the quantity results in lower prices for the clothes.
* As the cost of material falls, what happens to the price and quantity of jackets? (10 Points)
The cost of materials affects the cost of total production; as the cost of materials falls, so is the price of the jackets. Therefore, as the prices fall, the quantity of jackets increases as the sellers sell more when demand increases.
* As the price of Nike’s increases, what happens to the price and quantity of Reebok? (10 Point...