Demonstrate the impact of ikeas entry
Course:- Microeconomics
Reference No.:- EM13126963

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For parts a through d of this problem, determine whether supply or demand will change (only one will change in each case). Indicate whether the price and quantity will rise or fall in the indicated market as a result of each change presented. Illustrate each answer graphically. Briefly explain each answer. For part e, follow the separate instructions given.

a. IKEA is a Swedish home furnishings retailer. An official Indian agency supports IKEA opening 25 stores in India. Demonstrate the impact of IKEA's entry into the Indian home furnishings market.

b. Suppose that recent protests by South African vineyard farm workers succeed in securing higher wages for workers. Determine the impact on the South African wine market.

c. In 2006, Pennsylvania could legally open casinos, resulting in new casinos opening in the Philadelphia area. Casinos in Atlantic City, New Jersey were legal prior to this time. Philadelphia is about a one-hour drive from Atlantic City. Determine the impact of the expanded gambling opportunities for customers in Philadelphia on the market for casinos in Atlantic City.

d. Recently, the prices of the Nook and the Kindle, both electronic readers, have fallen. Determine the impact on the market for e-books.

e. For this part of the problem, consider two simultaneous changes affecting the market for orange juice. Suppose that an early freeze in the south this winter negatively impacted the crop yield of oranges. Suppose further that consumers recently learned that drinking more orange juice will improve health, even more so than previous studies have indicated. Indicate which of these changes will impact supply and which will impact demand in this market. In which direction will supply and demand change? Without any further information, are we able to predict the direction of change in equilibrium quantity exchanged? Without any further information, are we able to predict the direction of change in equilibrium price? Illustrate your answer graphically and briefly explain your answer.

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