ECS1501
ECS1501
Assignment 5
(COMPLETE
ANSWERS) 2024
(654552) - DUE 22
July 2024 ; 100%
TRUSTED
Complete, trusted
solutions and
explanations
, ECS1501 Assignment 5 (COMPLETE ANSWERS) 2024 (654552) -
DUE 22 July 2024 ; 100% TRUSTED Complete, trusted solutions
and explanations.
Question 1 (12 marks) Maximum word count: 100 words Giant, the world’s
leading brand of high-quality bicycles and cycling gear, announced that their
pre-tax profit has decreased by almost 50% while their sales were down by
approximately 16%. Watch the following excerpt from The Wild Ones Podcast
Ep.41produced by Cade Media (attached below) and answer the following
questions. (i) Which of the presenters best describes the market condition that
Giant Bicycles faces and explain why you agree with him or her? (ii) Draw a
diagram of the bicycle market that illustrates the market conditions discussed
in the podcast. (iii) Explain the adjustment process to the new equilibrium
position in the bicycle market.
1. Market Condition for Giant Bicycles:
o The presenter who attributes the decrease in profit and sales to increased
competition is likely correct. The evidence provided—almost a 50% decline
in profit and approximately 16% lower sales—indicates intense
competitive pressure.
o This competition could arise from new entrants or existing competitors
gaining market share. When multiple firms compete, they strive to attract
customers and maximize their own profits.
2. Diagram of the Bicycle Market:
o A bicycle market diagram would typically show the supply and demand
curves intersecting at an equilibrium price and quantity. Changes in
factors like competition, consumer preferences, or costs would shift these
curves.
3. Adjustment Process to New Equilibrium:
o When market conditions change (e.g., increased competition), Giant
Bicycles and other firms must adapt.
o Price Adjustments: Giant Bicycles might lower prices to attract more
buyers or match competitors.
o Production Adjustments: If demand increases due to competitive
pressures, Giant Bicycles may ramp up production.
o Marketing Strategy Adjustments: To stay competitive, they might revise
marketing efforts or target specific customer segments.
o Over time, these adjustments lead to a new equilibrium where supply
equals demand, and firms optimize profits.
4.
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