Equilibrium price and equilibrium quantity

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Q1. (4 Points)

Consider an example of the Mars chocolate bar; if the supply and demand curves represented as:

Qs = 2p; Qd = 18 –p

Solve:

a)Equilibrium price and equilibrium quantity and calculate total revenue?

b)If there were a price celling equal to 7 SAR per chocolate bar imposed, calculate the price elasticity of demand? Does this consider elastic, inelastic or unit elastic? Also, calculate the total revenue?

c)Now consider the Bounty chocolate bar market; if the supply and demand is:

i.Qs = 2p ; Qd = 35 – 5p, calculate the equilibrium price and equilibrium quantity. Also, calculate Total Revenue.
ii.If there were a price celling of 6 SAR imposed per each pair of bounty chocolate bar, calculate the price elasticity of demand? Do the shoes consider elastic, inelastic or unit elastic? Also calculate total revenue. Hint; plug the new price on the demand curve formula, then find the new quantity demand after change in prices, after that solve for the elasticity by comparing the percentage changes in P & Qd

d)Compare the total revenue for the Bounty bar and the total revenue for the Mars chocolate bar. Which one of product’s total revenue has been increased after the price have been increase and why? Explain in words and show the difference in numbers as well.

e)Recall part a (the Mars chocolate bar); Calculate the CS & PS. Also, calculate total surplus. Hint; you need to set Qs=0 & Qd=0 to find the intercept and calculate the CS, PS. Where the CS is the area between the intercept for demand and the equilibrium price you found on part a. Do not forget that this area is a triangle so carefully calculate the area. The same thing for PS.

f)Now, if the government impose sales tax equal to 50% which is equal to 3 SAR per Mars chocolate bar; if 2 SAR of the tax bared by the buyer and 1 SAR bared by the seller. calculate the CS, PS, tax revenue, DWL and total surplus. What happened to the total surplus after imposing tax (increase/decrease/does not change)? Hint: PD = 8 and PS = 5. The intercept points for the supply and demand on this part are the same as the ones on part e. To find the quantity, plug either the price for the buyer on the demand curve formula or the price for the seller on supply curve formula. Also, remember CS, PS & DWL have triangle area, whereas tax revenue has rectangular area. Graph this manually so you can easily find the answer.

g)Without calculation, would you expect to have higher/ lower government revenue and DWL on bounty and why?

Sample Solution

ndividual power, and other stressed purposes. In TCC, the politics within the groups of people who are culturally embedded, try to influence the operational actions in accessing the organizational materials. Presence of politics in TCC allow the employees to divert the decision making of the management in their beneficial way which is not productive for organization. Politics in TCC is higher due to different groups of people who are culturally linked. So, cultural background of the employees is the main concern based on which the politics is developed in the TCC influence their operations.

Organizational politics is the use of dedicated and power to touch the areas and guidelines of the organization organizational politics is the behavior of the members that is self-absorbed. Politics always anxious with attaining or obtaining power. It ensues lower employee promise, lower job satisfaction and performance, job anxiety as well as sorrow. Therefore, politics are now a portion of organizational lifecycle. It increases internal struggle as well as generates center fight. Therefore, it has so many negative effects for an organization (Levy, 2011). They should provide high motivate managers to deliver high level of response to their employee for reducing politics and increasing employee confidence and work performing.

Influence of Power:

If managers want to grow employees and to do something, they can follow the power tactics. Power is related with expert and motivational. Power can inspire in an organization both positively and negatively. In TCC the managers apply power to develop flexible working plan so that employees get motivated and work according to their ease.

The management has the power to run the organization according to the company’s objectives. To create a good connection with the employees, managers can positively activity their power. It supports to return the company’s output and revenue. In an organization, different types of power present such as: legitimate power, reward power, expert power, coercive power, and referent power (Markoulli, 2017). All of these powers can be used for an organization not only for favor but also for bad will.

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