Demand and Supply Curves

Topics: Supply and demand, Laptop, Personal computer Pages: 2 (506 words) Published: October 22, 2012
We have a certain commodity, `pure Malaysia Laptop’, whose market we are going to analyze. Assume that exogenous (external) forces are equal in magnitude, while supply–demand curves are unitary elastic. Given a certain event/scenario, (a) analyze the curve/s affected, shifts or movements and the direction, and (b) effect to equilibrium price (P*) and equilibrium quantity (Q*) Scenario 1

a.Prices of optical drives suddenly increase

The production cost has increased so the supply decreases and eventually the price go up. The supply curve shifts to the left.

b.A new market-standard operating system is released to the market but costs at least 50% higher than the previous edition

This issue is considered another production cost so the supply curve shifts to the left. The supply decreases and price goes up.

c.News spread that local laptops were contaminated with melamine

Demand decreases because people buy less due to the news so the demand curve shifts to the left and the Q and P both decrease.

d.Video chatting and internet-on-the-go become fad

New technology makes people buy more of the product so demand increases and as a consequence the demand curve shifts to the right and price and quantity both increases.

Scenario 2
a.China laptop manufacturers were permitted to enter the Malaysian market

Cheaper products attract consumers, so the demand for our product decreases. The shift in the demand curve goes to left and the P and Q both decreases.

b.Average desktop computer prices have plunged to all-time lows

If desktop computers become cheaper the demand for laptops decreases so the demand curve shifts to left and eventually the P and Q decrease.

c.New taxes were imposed to laptops sales (per unit tax)

Imposing...
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