Imagine that you have decided to open a small ice cream stand on campus called \

Question

Imagine that you have decided to open a small ice cream stand on campus called "Ice-Campusades." You are very excited because you love ice cream (delicious!) and this is a fun way for you to apply your business and economics skills! Here is the first month's scenario--you order the same number (and the same variety) of ice creams each day from the ice cream suppliers, and your ice creams are always marked at $1.50 each. However, you notice that there are davs when ice creams remain unsold but other days when there are not enough ice creams for the number of customers. Use vour knowledge of the factors that cause shifts in demand, and in a multi-paragraph essay, provide at least three reasons why ice cream sales fluctuate in this manner. (Apply only the factors you think are applicable to explaining this scenario.) Now assume that a month later, the school allows a competing student the right to sell ice creams on school property. (The number of students on campus remains largely unchanged.) What do you think will happen to the price of ice cream at your campus? Explain in detail. Develop a response that includes examples and evidence to support your ideas, and which clearly communicates the required message to your audience. Organize your response in a clear and logical manner as appropriate for the genre of writing. Use well-structured sentences, audience- appropriate language, and correct conventions of standard American English

Explanation / Answer

This assignment has two parts: Part 1: Fluctuation in demand before entry of competition and Part 2: effect on price when competitor enters in the ice-cream selling market.

Part 1: A student is allowed to open ice-cream stand in the school campus:

Price is $1.5 with no variety offered to customers

Reasons for low sales on certain days:

a) Lack of variety may discourage studentts to repeat consumption.

b) On certain days there may be less availabilty of student in campus due to sports tournaments outside the school or school outing for certaing grades.

c) End of pocket money : Students at the end days of month may feel to save money.

Reasons for high sales:

a) Quality of ice-cream : Better quality goods attract more customers.

b) No competition: When there is a single seller students do not have choice.

c) Weather: During hot weather days propensity to ice cream may increase resulting into higher sales.

d) Initial days: In the initial days of month when students have more money, they can spend on luxury goods like ice-cream which has elastic demand.

Part two:

When competitor enters in the market. then supply curve shifts to right and prices may go down. Both the sellers will like to maximise profit and hence sell at lower price

Also choice and variety will increase for customers which will increase demand for ice creams on campus and may benefit both the sellers.

Related Questions

Navigate

• Browse (All)
• Browse I
• Subjects

---