Look at the following demand and supply schedules for the new Pepsi product just being introduced....

Look at the following demand and supply schedules for the new Pepsi product just being introduced. We will assume that the units are case lots bought by an individual family within the first six months of introduction.

price	quantity demanded	quantity supplied
10	10	50
8	20	40
6	30	30
4	40	20
2	50	10

1. If the price of Crystal Pepsi were $2.00 per case, how many cases would be offered for sale?

2. If the price of Crystal Pepsi were $2.00 per case, how many cases would people be willing to buy?

3. How many cases would actually be traded (go through the market) if the price were left at this $2.00 level?

4. Would this constitute a surplus or a shortage?

5. How much of a surplus or shortage would there be?

6. If the market process were allowed to work, what would you expect to happen to the price of Crystal Pepsi?

7. If the price of Crystal Pepsi rose to $8.00 per case, how many cases would be offered for sale?

8. If the price of Crystal Pepsi rose to $8.00 per case, how many cases would be demanded by families.

9. If the price remained at $8.00 per case, how many cases would actually be traded (go through the market)

10. Would this constitute a surplus or a shortage?

11. How much of a surplus or shortage would there be?

12. If the market process were allowed to work, what would you expect to happen to the price of Crystal Pepsi?

Expert Solution

If the price of Crystal Pepsi were $2.00 per case, then 10 cases would be offered for sale.
If the price of Crystal Pepsi were $2.00 per case, then 50 cases would people be willing to buy.
10 cases would actually be traded (go through the market) if the price were left at this $2.00 level.
Since demand is greater than supply, this, constitute a shortage.
Shortage = Demand –supply = 50 – 10 = 40
If the market process were allowed to work, then price of Crystal Pepsi will increase.
If the price of Crystal Pepsi rose to $8.00 per case, then 40 cases would be offered for sale.
If the price of Crystal Pepsi rose to $8.00 per case, then 20 cases would be demanded by families.
If the price remained at $8.00 per case, 20 cases would actually be traded.
Since supply is greater than demand, this constitutes a surplus.
Surplus = supply – demand = 40 -20 =20
If the market process were allowed to work, then price of Crystal Pepsi will decrease.

Rahul Sunny answered 1 year ago

The following schedules shows the demand and supply for a product. Schedule 1: Demand of individual...

The following schedules shows the demand and supply for a product. Schedule 1: Demand of individual consumers Schedule 2: Supply from individual producers Schedule 1 Schedule 2 Price Consumer X Consumer Y Consumer Z Price Producer A Producer B Producer C 10 40 40 60 10 20 20 20 20 35 35 50 20 25 30 25 30 30 30 40 30 30 40 30 40 25 25 30 40 35 50 35 50 20 20 20 50 40 60...

The following demand and supply schedule show the annual U.S. demand and supply schedules for pickup...

The following demand and supply schedule show the annual U.S. demand and supply schedules for pickup trucks. Refer the schedule and answer the questions that follow. Price of Truck $ Quantity of Trucks Demanded (Millions) Quantity of Trucks Supplied (Millions) $20,000 20 14 25,000 18 15 30,000 16 16 35,000 14 17 40,000 12 18 a. Illustrate the demand and supply graph of the Pickup trucks and indicate the equilibrium price and quantity on the graph. b. Suppose...

2 Suppose the following are the supply and demand schedules for rice in India. Demand Schedule...

2 Suppose the following are the supply and demand schedules for rice in India. Demand Schedule for Rice Price ($ per Pound) Quantity Demanded (pounds/week) 0.50 700 1.00 500 1.50 300 2.00 100 2.50 0 Supply Schedule for Rice Price ($ per pound) Quantity Supplied (pounds/week) 0.50 100 1.00 200 1.50 300 2.00 400 2.50 500 Graph this market on a clearly labeled supply-demand diagram. Is there an equilibrium? If yes, what are the price and quantity? If no, please...

A new product, an automated crepe maker, is being introduced at Knutt Corporation. At a selling...

A new product, an automated crepe maker, is being introduced at Knutt Corporation. At a selling price of $40 per unit, management projects sales of 80,000 units. Launching the crepe maker as a new product would require an investment of $280,000. The desired return on investment is 11%. The target cost per crepe maker is closest to: (Round your answer to 2 decimal places.) Multiple Choice $47.42 $47.80 $39.62 $40.00

Given the following schedules relating to the weekly demand and supply of milk (in litres) for...

Given the following schedules relating to the weekly demand and supply of milk (in litres) for a given market, Quantity Demanded Price ($ per litres) Quantity Supplied 5,000 2.00 14,000 6,000 1.75 12,000 7,000 1.50 10,000 8,000 1.25 8,000 9,000 1.00 6,000 10,000 0.75 4,000 11,000 0.50 2,000 if a free market were allowed to operate, a. What would be the equilibrium price of a litre of milk? b. What would be the equilibrium quantity? c. Would there be a...

(0, 5 or 10) The following are the demand and supply schedules for bushels of peaches...

(0, 5 or 10) The following are the demand and supply schedules for bushels of peaches for one week. Quantity Quantity Price Supplied Demanded $6 2,000 1,200 5 1,800 1,400 4 1,600 1,600 3 1,400 1,800 2 1,200 2,000 a. What is the equilibrium price, and what is the equilibrium quantity? b. If price were temporarily $5, would there be a surplus or a shortage, and how much would that surplus or shortage be? c....

The following table sets the demand and the supply schedules for flower bouquet on a normal ...

The following table sets the demand and the supply schedules for flower bouquet on a normal weekend. 16 marks Price of a flower bouquet Quantity demanded Quantity supplied (Flower bouquet per week) 7 90 30 9 80 35 12 50 50 19 40 70 24 25 80 What is the market equilibrium price and quantity? Why? Describe the situation in the flower market if the price of a flower bouquet...

Using the following supply and demand schedules: Price Quantity Demanded &n

Using the following supply and demand schedules: Price Quantity Demanded Quantity Supplied $2 200 50 $4 150 80 $6 125 100 $8 110 110 $10 80 135 Draw the market in a graph and indicate the point of equilibrium. Show and explain the effect on this market of a price floor at $10 Show and explain the effect on this market of a price ceiling at $10 Explain, in your own words, why the production possibilities frontier (PPF) is a downward-sloping curve. Also, explain why all points inside of that curve represent inefficient...

The market for Wolverine Root Beer is shown in the following demand and supply schedules: Price...

The market for Wolverine Root Beer is shown in the following demand and supply schedules: Price (6-pack of Wolverine Root Beer) Quantity Demanded Quantity Supplied 5.00 300 300 4.50 400 250 4.00 600 200 3.50 900 150 3.00 1400 100 Draw a graph to illustrate the market demand and supply for Wolverine Root Beer. What is the equilibrium price and quantity? Describe the situation that would result if the price of Wolverine Root...

Please answer questions 14 and 15 by referring to the following demand and supply schedules for...

Please answer questions 14 and 15 by referring to the following demand and supply schedules for crude oil: price per barrel quantity demanded quantity supplied $100 100 160 $90 120 120 $80 140 80 $75 150 60 $70 160 40 $60 180 0 $50 200 0 14. The equilibrium price and quantity exchanged of crude oil are: A. $50 and 200 units, respectively. C. $90 and 120 units, respectively. B. $60 and 180 units, respectively....

Question