Submitted by: Submitted by vtek007
Views: 468
Words: 1314
Pages: 6
Category: Business and Industry
Date Submitted: 06/01/2011 09:26 PM
Situation 1. (Suburban Community A)
When the homeowners of community A express interest in the repairs and replacement of their heating and air conditioning systems the demand and supply, along with prices changes. As prices of needed materials and products fall in the local home improvement stores the demand increases to purchase such products. When the local home improvement retailers realize the increase in sales and demand of their heating and air conditioning products, the price of those products can go up due to bigger supply needs.
The supply by manufacturers and major distributors in the long run will go hand in hand with the demand of the products. This eventually will lead to the equilibrium price or the market price. As the prices drop of the needed products, the quantity demanded will rise and the quantity supplied will fall. This will continue until the equilibrium is established. This could be represented with the demand curve rising up to the left and the supply curve rising up to the right. Such drastic demand could also lead a surplus or a shortage of the needed products. Because the manufacturers may over-predict the demand for heating and air products, a surplus will occur, resulting in exceeding amounts of merchandise. A shortage of those same products may result from the manufacturers, distributors or retailers due to the demanded quantities exceeding the supplied quantities.
In the short run, the demand of these products is higher than in the long run. The homeowners only need to purchase these products or make repairs every 11-15 years. Due to these factors we can predict a shift in demand, resulting in changing in the quantity demanded. With time, following the replacement completion of community A’s air and heating systems, the demand and supply curves will change and stabilize to the typical norm, resulting in prices going up once more.
Situation 2. (Major Airline 2B)
Being a major domestic and international airline,...