Changing Supply and Demand Scenarios (part II)
Directions: In each situation below the Supply or Demand for each product is changing. For each situation below write/list the following information:
Is Supply or Demand affected?
How is it affected? (Increase or Decrease?)
Why is it affected? (Which Supply or Demand determinant changed?)
What will happen to the Equilibrium Price? (Show with a shifting Supply or Demand curve.)
1.) An independent research study reveals that Revlon make-up contains a chemical additive that has been linked to an increased likelihood for skin cancer. How will Revlon make-up be affected?
2.) The United States government announces that they will be passing the Gummy Bears No More Bill (HB-1090) which will place an additional tax on all candy, gum, and other sweets containing more than 10g of sugar per serving. How will this affect the Hershey chocolate company?
3.) The TV news reports that over the last 3 months there have been 37 car fatalities involving Volvo cars. Several other people have reported engine and other malfunctions in their Volvo’s while driving at high speeds. Volvo conducts an inquiry into the matter and just yesterday they released their findings from the inquiry. According to Volvo engineers the gas pedal in some models has a tendency to stick when traveling at speeds over 80 M.P.H. Volvo recalls all models that are known to have this defect, but states that their 2016 model cars do not have any problems. How will this impact Volvo, a major car manufacturer?
4.) Amazon introduces a new advertising campaign featuring Demi Lovato, Beyoncé, and Arianna Grande. The ad showcases all of the wonderful features of the Amazon Fire phone, and has each of the celebrities using the product. How will the Amazon Fire phone be affected?
5.) The lone factory where Disney stuffed animals are made is located in Malaysia, and the Malaysian government just passed a minimum wage law for their nation. Now instead of paying its workers $1.00/hour they must pay $3/hour. How will this affect stuffed animals for Disney stores and theme parks worldwide?
6.)Yesterday T-Mobile announced that after months of lagging sales and rising costs that they would be selling their business to Verizon. How will Sprint products and services be affected?
7.) Eastman Chemical Company recently spent $25M on a new state of the art robotic packaging system. The robots package the finished product, wrap each container, and load them onto trucks for shipping all without any need of a human worker. They have calculated that this new system has led to a 20% reduction in shipping time. How will this affect Eastman’s products?
8.) Subway decides that they have grown extensively in the U.S., but they have yet to expand into many other nations of the world. Because of this, Subway has decided to open 25 locations in Haiti, a country in which Subway has never had stores. How will Subway be affected?
9.) Coke decides that it is taking a huge hit on their latest advertising campaign, and they need to raise the prices of their products by 20%. Pepsi does not alter the pricing of their products at all. How will Pepsi products be affected?
