Assume that you are the owner of a sports shoe shop in a shopping mall that sells Nike running shoes From your till slips that indicate your annual sales and from a questionnaire answered by your customers you found the following The potential amount of shoes that you can sell per year is 6 000 pars, regardless of whether you change the prices of the shoes or not. If you adjust your price downwards or upwards by 1%, the consumers tend to buy 15% either more or less Your supply curve indicates that you should always keep 500 units in stock and that al% change in the price of a pair of shoes tends to increase or reduce the sales of a pair of shoes by 0.5%. 221 Construct your shop's demand and supply functions for running shoes. 2.22 Calculate the price of a pair of shoes as well as the expected annual sales (4) 2.23 Determine the elasticity of demand of your shoes (3) 224 Would it be worthwhile for you to launch a sale at the end of the month, in other words, would it help you to increase your revenue?

If the company hires an incompetent president to run the company. He has the opportunity to introduce his idea for kids' toys but his idea failed. He keeps reducing the price of the products and eventually gives out free products. As a result, the sales go down along with the stock price that leads to a takeover target by other companies. Supply was more than demand. Later, the company decided to give out free samples or products, people start noticing and start using the toys. As a result, demand for toys is up and so the price increase. Is it a good idea to give free products to attract more sales or more demand?

1. Select a concept associated with Supply and Demand that is illustrated in this case

2. Use the information we're given to support an economic analysis or to explain the behavior of the concept you selected

3. Be sure to explain the supply and demand concept you selected being careful to distinguish between a change in quantity demanded or supplied (movement along the curve) versus a change in demand or supply (shift of the curve) and how it applies to the particular segment you are analyzing.

Please explain your answer in detail and clearly

1. The following table provides the quantity of fish and coconuts that each individual can catch or gather in one hour.

           Coconuts Fish
Adam         6        2
Friday        6        4

a. Who has the absolute advantage in catching fish?
b. What is Friday's opportunity cost of gathering one coconut?
c. Who has the comparative advantage in catching fish?

2. Classify each statement as either a normative economic statement or a positive economic statement.
a. As a person consumes more and more of a good, marginal utility declines.
b. The United States has the best health care system in the world.

3. Consider the market for the Apple iPod, a normal good, for the month of September. Record in the following table how the following event would affect the market for an iPod. Use the words increase, decrease, unchanged, and uncertain.

Event Supply Demand Equilibrium Price Equilibrium Quantity {this is the table}

There is a technological advance in the manufacture of an iPod.

4. You own an electronics company that supplies to local businesses. In a typical month, you sell 200 Dell laptops and 200 HPlaptops. HP estimates the price elasticity of demand for their laptops to be -1.5. Dell estimates that the cross-price elasticity of demand between their laptop computers and HP laptops is 0.80 (Monday's lecture will help you answer this part of the question). This month HP lowered the price of their computers by 5 percent. Based on this information, what would expect to happen to your sales of HP and Dell computers? (State whether this change is an increase or decrease and give the percentage change.)

HP _____________ of ______________%

Dell ______________ of ____________%

Given your answers above, estimate the number of HP and Dell computers you will sell this month.

HP:_______________ Dell:_____________________

Representative multiple-choice questions.

5. If there is a surplus of a product, its price:
a. is in equilibrium.
b. is below the equilibrium level.
c. will rise in the near future.
d. is above the equilibrium level.

6. Suppose that steak and potatoes are complements. Then, other things being equal, an increase in the supply of steak will lower its price and:
a. increase the demand for potatoes and increase the price of potatoes.
b. increase the demand for potatoes and decrease the price of potatoes.
c. decrease the demand for potatoes and increase the price of potatoes.
d. decrease the demand for potatoes and decrease the price of potatoes.

Your firm has a 20% market share in a high growth market [35% annual growth] where the major competitor [50% market share] is pursuing a conservative policy of only growing as fast as the market. Your firm on the other hand has unlimited access to external debt funding at 5%. Assume the major competitor sets the price at $25 and that your firm decides to price below the lead competitor at $22 so you can grow twice as fast as the market. Market Growth [Units]: 35% Initial Market Size [units]: 350K Initial Market Size [$]: $8.75 million [price set by a lead competitor is $25 per unit] Elasticity Demand: elastic Elasticity Supply: elastic Industry Accumulated Experience at beginning year one: 350K units Cost Reduction Each Doubling Experience: 20% Initial Annual Production Of Lead Firm: 175K Market Share [units]: 50% Firm’s Initial Market Share and production is 20% or 70 units Based on this information indicate Firms Competitive Position? Dog, $, ?, * Competitive Strategy [Grow, Maintain or Divest]? Pricing Strategy? Market Share at end of 1st and 2d years? Gain In Market Share at the end of one year, year two? Percentage reduction in cost per unit at end of 1, year 2? Assuming a one-to-one sales-to-assets ratio and that the firm finances the required increase in assets using debt how much debt will it add in year 1, year 2, and what are interest costs?