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Business 10th Edition by Ferrell,Geoffrey Hirt,Linda Ferrell
Edition 10ISBN: 978-1259179396Business 10th Edition by Ferrell,Geoffrey Hirt,Linda Ferrell
Edition 10ISBN: 978-1259179396 Exercise 2
The Forces of Supply and Demand
Background
WagWumps are a new children's toy with the potential to be a highly successful product. WagWumps are cute and furry, and their eyes glow in the dark. Each family set consists of a mother, a father, and two children. Wee-Toys' manufacturing costs are about $6 per set, with $3 representing marketing and distribution costs. The wholesale price of a WagWump family for a retailer is $15.75, and the toy carries a suggested retail price of $26.99.
Task
Assume you are a decision maker at a retailer, such as Target or Walmart, that must determine the price the stores in your district
FIGURE 1.6
Equilibrium Price of WagWumps
should charge customers for the WagWump family set. From the information provided, you know that the SRP (suggested retail price) is $26.99 per set and that your company can purchase the toy set from your wholesaler for $15.75 each. Based on the following assumptions, plot your company's supply curve on the graph provided in Figure 1.6 and label it "supply curve."
Using the following assumptions, plot your customers' demand curve on Figure 1.6 and label it "demand curve."
For this specific time, determine the point at which the quantity of toys your company is willing to supply equals the quantity of toys the customers in your sales district are willing to buy and label that point "equilibrium price."
Background
WagWumps are a new children's toy with the potential to be a highly successful product. WagWumps are cute and furry, and their eyes glow in the dark. Each family set consists of a mother, a father, and two children. Wee-Toys' manufacturing costs are about $6 per set, with $3 representing marketing and distribution costs. The wholesale price of a WagWump family for a retailer is $15.75, and the toy carries a suggested retail price of $26.99.
Task
Assume you are a decision maker at a retailer, such as Target or Walmart, that must determine the price the stores in your district
FIGURE 1.6
Equilibrium Price of WagWumps
should charge customers for the WagWump family set. From the information provided, you know that the SRP (suggested retail price) is $26.99 per set and that your company can purchase the toy set from your wholesaler for $15.75 each. Based on the following assumptions, plot your company's supply curve on the graph provided in Figure 1.6 and label it "supply curve."
Using the following assumptions, plot your customers' demand curve on Figure 1.6 and label it "demand curve."
For this specific time, determine the point at which the quantity of toys your company is willing to supply equals the quantity of toys the customers in your sales district are willing to buy and label that point "equilibrium price."
Explanation
Verified
Verified
The supply demand curve has been plotted below in Figure 1.
Figure 1
As per the figure, the point of equilibrium is where price is $19.5 and quantity produced is 4000.
Figure 1As per the figure, the point of equilibrium is where price is $19.5 and quantity produced is 4000.
Business 10th Edition by Ferrell,Geoffrey Hirt,Linda Ferrell
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