Question

One of the jams and jellies producer’s most popular products has always been strawberry jam. Recently, however, the demand for the product has stagnated. The product manager for this product, Emily, has been very outspoken about the fact that the product must be modified to reduce the sugar content of the product or to replace sugar with a zero calorie, natural sweetener called “stevia.” Emily requested a study from the firm’s economics team of the quantity of demand at various price points for such a stevia-sweetened strawberry jam product. The following demand schedule transpired from the team’s work:

Hypothetical Prices for Stevia Strawberry Jam	Quantity of Demand at Various Price Points
$2.00	1,000,000 Jars Per Month
$2.50	900,000 Jars Per Month
$3.00	800,000 Jars Per Month
$3.50	700,000 Jars Per Month
$4.00	600,000 Jars Per Month
$4.50	500,000 Jars Per Month
$5.00	400,000 Jars Per Month

In addition, she requested the finance team address profit/margin analysis at similar price points. The team indicated that $2.00 would be the rock-bottom price, as that is the breakeven point for the product, i.e. the product’s cost would be $2.00 per jar. At that price, the team would expect substantial quantity of demand, and that said quantities would decline as prices increased up to $5.00 per jar, which they see as the absolute ceiling for the product. Beyond that, the quantity of demand would be so small that it would not provide the critical mass in the market to pursue it. However, at and above $2.00, the firm would be interested in supplying more and more of the product to the market because of increasing profitability as prices rise. The following is the supply scheduled defined by the finance team:

Hypothetical Prices for Stevia Strawberry Jam	Quantity of Supply at Various Price Points
$2.00	1,000,000 Jars Per Month
$2.50	900,000 Jars Per Month
$3.00	800,000 Jars Per Month
$3.50	700,000 Jars Per Month
$4.00	600,000 Jars Per Month
$4.50	500,000 Jars Per Month
$5.00	400,000 Jars Per Month

Using Excel or similar software, graph the demand curve for the Stevia Strawberry Jam.

Using Excel or similar software, graph the firm’s supply curve for the Stevia Strawberry Jam.

Label the projected Equilibrium point for the product on a graph that shows both the supply and demand curves.

Answer 1

Your supply is incorrect, I plot after doing correction.

B16 4Un Hypothetical prices for Stevia Strawberry Jam Quantity of Demand at Various Price Points 1000000 Chart Title 2.5 9000001200000 8000001000000 700000 600000 800000 500000 400000 3.5 4.5 400000 Hvpothetical prices for Stevia Strawberry Jam Quantity of Demand at Various Price Points Sheet1 Sheet2 Sheet3 Sheet4 Sheets + OType here to search

Formatting Table tonnter Sort FormatRo Book1* B18 Hypothetical prices for Stevia Strawberry Jam Quantity of Supply at Various Price Points)}Ⅲ · Chart Title 400000 500000 600000 700000 800000 900000 1000000 2.5 3 3.5 1000000 800000 600000 4.5 200000 Quantity of Supply at Various Price Points Hypothetical prices for Stevia Strawberry Janm Sheet1 Sheet2 Sheet3 Sheet4 Sheet5Sheet6 + ー 10096 OType here to search

C13 Q fx 2 Hypothetical prices for Stevia Strawberry Jam Quantity of Supply at Various Price Points Quantity of Demand at Various Price Points 400000 500000 600000 700000 800000 900000 1000000 1000000 2.5 6 3.5 700000 4.5 500000 9 10 400000 1200000 13 14 15 16 17 18 19 20 21 1000000 Hypothetical prices for Stevia Strawberry Jam Quantity of Supply at Various Price Points Quantity of Demand at Various Price Points 23
The Price at which quantity demand and quantity supply equal is Equilibrium Price.

Price = $3.5

Q = 700,000