Case Study - Managerial Economics Essay

4923 Words Sep 25th, 2012 20 Pages
Glenn Garrett
3/31/12
Prof. Ogunji
Managerial Economics

Homework - Case Studies

Pg 107 – Sunbest Orange Juice

Spreadsheet Analysis
Endogenous variables = all important demand- and supply-related factors that are within the control of the firm (ex: product pricing, advertising, product design, and so on)

Exogenous variables = consist of all significant demand- and supply-related influences that are beyond the control of the firm (ex: competitor pricing, weather, general economic conditions, and related factors)

It is possible to learn the demand and supply implications of an almost limitless range of operating scenarios * A complete picture of the firm’s operating environment as well as strategies for responding to a
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Spreadsheet Illustrate the effect of changing economic assumptions on the surplus or shortage of Sunbest organge juice that results from each scenario detailed in part A and part B. Which operating scenario results in market equilibrium?
QD: Price = $5.00, Price of Soda = $4.50, Disposable Income = $62,500, Temp = 80.00
QS: Price = $5.00, Price of Labor = $18.00, Cost of Capital = $10.00, Temp = 80.00

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QD = 1,000,000 – 25,000,000 ($6.00) + 10,000,000 ($5.00) + 1,600 (67,500) + 50,000 (81.25)
QD = 13,062,500

QD = 1,000,000 – 25,000,000 ($5.80) + 10,000,000 ($4.90) + 1,600 (66,500) + 50,000 (81.00)
QD =15,450,000

QD = 1,000,000 – 25,000,000 ($5.60) + 10,000,000 ($4.80) + 1,600 (65,500) + 50,000 (80.75)
QD = 17,837,500

QD = 1,000,000 – 25,000,000 ($5.40) + 10,000,000 ($4.70) + 1,600 (64,500) + 50,000 (80.50)
QD = 20,225,000

QD = 1,000,000 – 25,000,000 ($5.20) + 10,000,000 ($4.60) + 1,600 (63,500) + 50,000 (80.25)
QD = 22,612,500

QD = 1,000,000 – 25,000,000 ($5.00) + 10,000,000 ($4.50) + 1,600 (62,500) + 50,000 (80.00)
QD = 25,000,000

QD = 1,000,000 – 25,000,000 ($4.80) + 10,000,000 ($4.40) + 1,600 (61,500) + 50,000 (79.75)
QD = 27,387,500

QD = 1,000,000 – 25,000,000 ($4.60) + 10,000,000 ($4.30) + 1,600 (60,500) + 50,000 (79.50)
QD = 29,775,000

QD = 1,000,000 – 25,000,000 ($4.40) + 10,000,000 ($4.20) + 1,600 (59,500) + 50,000

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