To continue with your evaluation for the new vice president position, the president of your company, Mr. Wilson, has asked you to prepare a report for him determining the economic impact of a coffee pushcart that will provide hot coffee and cappuccinos to the public. He explains to you that the cart will operate on sidewalks near the center of town from 6 a.m. to 6 p.m., and it will operate year-round. He also explains that the firm that has come up with the idea has decided to start the coffee pushcart in either Cleveland, Ohio or Houston, Texas.
For this assignment, you must submit a report, for Mr. Wilson, consisting of1250-1500 words in which you address the situation.
For full credit, you must answer the following question in your report:
Utilize the library, Internet, and any other resources available to answer the following questions:
Compare the supply and demand conditions in both locations. How many people live in each place? What is the weather like? What are the industries? How elastic will the price of hot coffee be in both locations? Be sure to consider the impact of climate.
How will consumers behave to maximize their utility? What is the average income in each location?
What are the costs of production both in the short run and long run for operating the pushcart?
Predict changes in the equilibrium price and quantity if there is a bad heat wave in Texas and if the price of coffee must be raised 10% to compensate for rising coffee bean prices.
Give a recommendation to Mr. Wilson of which city to place the coffee pushcart in. Also, explain why you choose this city and how it will impact the economy.
