You are an economist for the Vanda-Laye Corporation, which produces
and distributes outdoor cooking supplies. The company has come under new
ownership and management and will be undergoing changes in its product
lines and operating structure. As an economist, your responsibilities
include examining the market factors that affect success or failure of a
product, including the supply and demand for the product, market
conditions, and the behavior of competitors with similar products.
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
Qd = 45 – 6.9P
Qs = –15 + 10P
where Qd is the quantity demanded, Qs the quantity supplied, and P the price.
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:
o The price of the substitute Good A increases.
o The price of the complementary Good C increases.
This is what I have so far do I need to do something else with the equation above????
Average price Supply Demand Surplus/Shortage