Barks Computer Screens Case: a Market Analysis

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  • Topic: Supply and demand, Economic equilibrium, Partial equilibrium
  • Pages : 3 (767 words )
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  • Published : April 20, 2013
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Running head: BARKS COMPUTER SCREENS CASE

Barks Computer Screens Case: A Market Analysis

Barks Computer Screens Case: A Market Analysis
A market analysis is a key component of a business plan and should be conducted every few years due to market and product changes. One important aspect is identifying the supply and demand of a product in the target market. The supply curve is a positive sloping curve because as the price increases so does the quantity of product. The demand curve is a negative sloping curve because as the price increases the demand for the product decreases (Hirschey, 2012).

Changes can occur to both curves as changes in the market and economy take place. This will cause the curves to shift either to the left or the right. The supply curve is affected by changes in the economy such as an increase in the prices of material or a natural disaster that would prohibit supply of product. The demand curve is affected by changes in population income, economic outlook, government spending, and real interest rates (McBride, 2008).

In the Barks Computer Screens Case, Barks has hired me as a consultant and provides the results of his market analysis. He has found that the functions for supply and demand in his market are: Qd = 157 – 35P + 12.5Pw + 0.1Y and Qs = –120 + 75P – 30Pw + 13PL + 12R. Where: Qd = Demand, Qs = Supply, Pw = Average price of Wides, Y = Income in his market, PL = Price of labor, and R = Is the average humidity level measured in hums.

I have assumed the quantities demanded and supplied are a function of price and applied the following conditions: Pw = $6.00, Y = $1,600.00, PL = $9.00, and R = 25. Demand: Qd = 157 – 35P + 12.5Pw + 0.1Y = 157 – 35P + 12.5(6) + 0.1(1600) = 157 – 35P + 75 + 160 = 392 – 35P. Supply: Qs = –120 + 75P – 30Pw + 13PL + 12R = -120 + 75P – 30(6) + 13(9) + 12(25) = -120 +75P – 180 + 117 + 300 = 117 + 75R.

The following price conditions were used to determine supply and demand market conditions:...
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