Principles of Macro-Economics | ECO2072

  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.

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.
9. 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?

Deliverables:

Develop your analysis in Microsoft Excel format. Enter non-numerical responses in the same worksheet using textboxes.

Applications of Forecasting by Firms

Forecasting is used as a tool for planning. When developing forecasts, firms need to think of all possible scenarios and their future impacts.

For example, if you are in a management role and overforecast sales, you will then overforecast employees or payroll as you will schedule more employees than needed to meet your projected sales. This overforecasting will lead to excess purchasing of supplies and, ultimately, lead to insufficient cash flows because you will need to pay for expenses incurred to maintain and provide services for revenues that did not come in as projected. A small error in forecasting at the start can significantly affect overall results. In this assignment, you will be exposed to the basic principles of forecasting.

Tasks:

Research a firm that applies forecasting principles and methods. You can take examples from your own work experiences. You can also consult sources such as the Wall Street Journal, Financial Times, Bloomberg Markets, the Economist, US News and World Report, and the Argosy University online library resources.

Create a 4-page research paper that includes responses to the following:

• Identify the sales forecast for the firm.
• Analyze how this sales forecast impacts all other forecasts for the firm, such as materials, labor, overhead, cash receipts, and disbursements.
• Explain the exogenous factors that you need to be aware of when developing these forecasts. Assess the GDP, rate of inflation, rate of unemployment, and interest rates trends.
• Evaluate the prerequisites of a good forecast that you should keep in mind as a manager when budgeting sales and production amounts.

At the end of your report, include a reference page and cite scholarly sources in APA style.