Krispy Kreme Microeconomic Analysis: Dozen Glazed Donuts
Krispy Kreme Microeconomic Analysis: Dozen Glazed Donuts
Elizabeth Reel
GM 545
Ben Gruszczyk
Introduction
Krispy Kreme's glazed donuts are a tasty treat especially hot out of the oven. Thousands of people enjoy this delectable delight every day. Knowing this I will attempt to analyze the microeconomics of a dozen glazed donuts at a weekly basis. I will be covering terminal course objectives A through D. The TCOs are as follows:
TCO A- Illustrate how the price mechanism, in response to changes in other demand or supply factors leads to a new market equilibrium price and level of output.
TCO B- Given appropriate marketing data, including price elasticity coefficients, demonstrate how to use this information in product pricing in order to maximize profits.
TCO C- Given knowledge of key cost and marginal revenue relationships, use marginal analysis to demonstrate shutdown, break-even and optimal output points, as well as the optimal amount of resource to use.
TCO D- Given relevant price and cost data, discuss optimal output levels for a competitive firm versus a firm operating in am imperfectly competitive environment.
Demand
The demand curve is the curve showing the amount of dozens of glazed donuts that consumers are willing and able to buy at different prices. For example, at the current price of $6.50 consumers are willing and able to purchase 150,000 dozen per week, as opposed to 90,000 dozen at $7.50 each. The graph below shows five possible prices and quantities demanded.
Supply The supply curve is the curve showing the different quantities of dozens of glazed donuts that Krispy Kreme is willing and able to produce at different prices. For example, at the price of $4.50 per dozen, Krispy Kreme is willing and able to produce only 75,000 dozen per week as opposed to 260,000 dozen at $7.50 each. The following graph shows five possible prices and quantities supplied.
Equilibrium Price and Quantity Knowing this information,
Elizabeth Reel
GM 545
Ben Gruszczyk
Introduction
Krispy Kreme's glazed donuts are a tasty treat especially hot out of the oven. Thousands of people enjoy this delectable delight every day. Knowing this I will attempt to analyze the microeconomics of a dozen glazed donuts at a weekly basis. I will be covering terminal course objectives A through D. The TCOs are as follows:
TCO A- Illustrate how the price mechanism, in response to changes in other demand or supply factors leads to a new market equilibrium price and level of output.
TCO B- Given appropriate marketing data, including price elasticity coefficients, demonstrate how to use this information in product pricing in order to maximize profits.
TCO C- Given knowledge of key cost and marginal revenue relationships, use marginal analysis to demonstrate shutdown, break-even and optimal output points, as well as the optimal amount of resource to use.
TCO D- Given relevant price and cost data, discuss optimal output levels for a competitive firm versus a firm operating in am imperfectly competitive environment.
Demand
The demand curve is the curve showing the amount of dozens of glazed donuts that consumers are willing and able to buy at different prices. For example, at the current price of $6.50 consumers are willing and able to purchase 150,000 dozen per week, as opposed to 90,000 dozen at $7.50 each. The graph below shows five possible prices and quantities demanded.
Supply The supply curve is the curve showing the different quantities of dozens of glazed donuts that Krispy Kreme is willing and able to produce at different prices. For example, at the price of $4.50 per dozen, Krispy Kreme is willing and able to produce only 75,000 dozen per week as opposed to 260,000 dozen at $7.50 each. The following graph shows five possible prices and quantities supplied.
Equilibrium Price and Quantity Knowing this information,