Answer to Question #235176 in Microeconomics for Renu

Question

. Ambience Ltd is a fashion company and very concerned about demand and supply 

fluctuations. Continuous change in Market demand and supply affects the price and 

quality of goods in the market. Analyze the following situation for ambiance Ltd. and 

explain your reasons in two or three sentences. 

a) What will happen to the share prices and quantity of the company, if they 

announce good quarterly results?

b) What will happen to the share price if the company gets caught in some 

unethical activity. 

c) If monsoon is good and crop of cotton is good, how it will affect the company

d) During Pandemic, how it will affect the company price and quantity 

demanded.

Answer 1

a) The good quarterly results bring about good image and trust within the company. This will lead to the rise in price of shares as the quantity of the company will increase.

b) Unethical activities make people withdraw trust from an institution. Therefore, the share price will automatically reduce.

c) The good recommendation attracts investors and customers within the market. This will expand the company in terms of income and operations.

d) The pandemic led to shortages of income within people. This contributed to loses within industries.Therefore, the company price will reduce to meet available market as the quantity demanded also decreasing due to income shortages.