a. The recent statement given in October 2020 by French President undermined the sentiments of the Muslims all around the world. The Muslims of Pakistan decided to record their protest by boycotting French products. A recent survey shows that the shunning of French products has bought about 35 percent decrease in the sales within a month. Suppose, in September 2020, the market for Garnier hair color a French product was at equilibrium with an equilibrium price 1050 and equilibrium quantity of 12,000 in Pakistan. Analyze the impact of a boycott on the demand of Garnier hair color for the month of October 2020 in Pakistan and illustrate it graphically. Also, explain why or why not the demand has changed? (2 Marks, Maximum, 150 words)
b. Consider a market for Tea a normal good in Karachi. You are supposed to analyze and discuss the effect on the equilibrium output and the price in the Tea market in Karachi for the October, 2020 after the following changes (Other things held constant). In each case, explain your answer using supply and demand diagram.
i. There has been a decrease in people’s income and a rise in the price of sugar (an input for making Tea) in Pakistan during 2020 due to COVID-19 crisis simultaneously. (1.5 Marks, Maximum, 100 words)
ii. Price of the coffee falls in the month of October 2020 in Karachi. (1.5 Marks, Maximum, 100 words)
Answers
a. The recent statement given in October 2020 by French President undermined the sentiments of the Muslims all around the world. The Muslims of Pakistan decided to record their protest by boycotting French products. A recent survey shows that the shunning of French products has bought about 35 percent decrease in the sales within a month. Suppose, in September 2020, the market for Garnier hair color a French product was at equilibrium with an equilibrium price 1050 and equilibrium quantity of 12,000 in Pakistan. Analyze the impact of a boycott on the demand of Garnier hair color for the month of October 2020 in Pakistan and illustrate it graphically. Also, explain why or why not the demand has changed?
b. Consider a market for Tea a normal good in Karachi. You are supposed to analyze and discuss the effect on the equilibrium output and the price in the Tea market in Karachi for the October, 2020 after the following changes (Other things held constant). In each case, explain your answer using supply and demand diagram.
i. There has been a decrease in people’s income and a rise in the price of sugar (an input for making Tea) in Pakistan during 2020 due to COVID-19 crisis simultaneously. (1.5 Marks, Maximum, 100 words)
ii. Price of the coffee falls in the month of October 2020 in Karachi.