Supply and Demand

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  • Topic: Supply and demand, Cost, Caffeine
  • Pages : 2 (422 words )
  • Download(s) : 12
  • Published : May 8, 2013
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Increase in Demand (Tastes, Ads, and Preferences)
New RedBull Energy Tea!
RedBull Energy Drink is introducing a new line of drinks, including the new RedBull Energy Tea. Due to the new line, the demand for the product will increase from past history. As the demand increases, a shortage will occur because more people will have a higher demand for the new line of products. Since the high demands won’t be able to be met, we must raise the prices until the shortage disappears and the new equilibrium price is satisfied.

Increase in Demand (Population)
Summer Time and People Are Vacationing
It’s finally Summer, and RedBull is keeping all the new comers full of energy and life. This causes an increase in population, so the demand of RedBull Energy Drinks will increase. Due to the shortage, caused by the high demand, we will have to increase the prices until the shortage meets a new steady equilibrium price.

Decrease in Demand (Income)
Salaries decrease by 5%
Due to the recent budget cuts in our current state of economy, many people have suffered a significant cut of their salaries. This results in less people buying RedBull, which decreases the demand, this will cause a surplus in merchandise. The outcomes to decreasing prices until the surplus is gone and new equilibrium in established.

Increase in Supply (Technology)
New Machines, More Products
The new discoveries in technology have increased the amount of RedBull Energy Drinks produced in a day. This results in a decrease of costs on the business expenses which leads into making more products at the same cost as before. Therefore, the supply will in increase and cause a surplus until we lower prices to reach a new equilibrium.

Decrease in Supply (Government Intervention)
Taxes on Energy Drinks
A new Government Regulation has caused RedBull Energy Drinks to increase in costs. Due to the new expenses, RedBull is not able to supply the same quantity for the same cost as before. So, the supplies...
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