Predict the possible market price for memory products

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Reference no: EM131203205

Managerial Economics Assignment-

You are the production manager of the Lewis, Inc., which supplies memory products to desktop systems. You recently read an article that reported the projected demand for desktop systems to be (in millions of units):

Q^d_desktop = 1,600 - 2P_desktop + 0.6M

where M is consumer income.

The same article also reported that the incomes of related consumers would increase 4.2% to $61,300 and the selling price of a desktop would decrease to $980. The upcoming year's projected demand for memory products is (in thousands of units)

Q^d_memory = 11,200 - 100 P_memory - 2P_desktop

The report indicated that 5 new start-ups entered the memory module market, bringing the total number of competitors to 100 firms. Your industry-wide study indicates that the industry supply function is (in thousands):

Q^S_memory = 1,000 + 25P_memory + N

where N is the number of memory module producers in the market.

The CEO requests a report containing the possible market price for memory modules and the number of units to manufacture in the upcoming year. As the production manager, you will have to prepare the report to the CEO so that orders of production inputs can be placed this year.

a. Predict the possible market price for memory products in the next year based on the information given to you. How many units should be manufactured?

b. How would your report change if the price of desktops were $1,080? What does this indicate about the relationship between memory modules and desktop systems?

Reference no: EM131203205

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