Demonstrate and explain whatthe profit of this firm might look like using a key economics diagram, as discussed in the economicslectures/videos and tutorials in BLAW1002 S2 2024.

▪ Your answers need to be typed, but diagrams must be hand-drawn (digital inking using astylus is fine) and included in the Word document or in PDF. Q1 – 10 MarksConsider these two scenarios for Nike shoes and how the price elasticity affects its revenue:Scenario 1: Assume Nike increased the price of Air Jordans for sneaker aficionados by 20% in first half of2023. Explain the elasticity of demand based on the (freely-available) articles below:https://news.temple.edu/news/2023-04-03/how-michael-jordan-revolutionized-sneaker-industry-and-our-relationship-shoeshttps://www.ft.com/content/8f2bd259-01cb-4545-b060-f6f631083a81 Scenario 2: Assume Nike increased the price of Air Force 1 shoes by 10% in first half of 2024.Explain the elasticity of demand based on the (freely-available) article below:https://www.bloomberg.com/opinion/articles/2024-06-28/adidas-is-sambaing-all-over-nike-s-high-topsFor each scenario, do the following:a. Draw a single straight-line demand curve and explain the relevant details on the price elasticity ofdemand (PED). b. Show the workings of your calculation of PED. c. Describe and quantify what would happen to revenue in this case. d. In your answer, use hypothetical incremental values (rough guesses from your imagination) for theprices on the y-axis and quantities on the x-axis.500 ± 100 or so words should be sufficient Q2 – 15 MarksAdidas has gained brand momentum and outperformed Nike in the first half of 2024. Consider Addidas’classic shoes, Sambas which are back in vogue (for now).https://www.fastcompany.com/91118038/sneaker-sales-sambas-2023-shoe-year-will-likely-peak-soon-but-adidas-has-planAssume the firm sells the base model of Sambas direct-to-consumers (DTC) from their online store at aprofit-maximising price of $100 USD. Assume the average costs of production is $60 USD per shoe. Thisfigure includes the costs of materials (e.g. soles, synthetic leather, threads, logos/inks, trims etc.),labour, shipping, insurance, marketing, and other expenses/overheads. Demonstrate and explain whatthe profit of this firm might look like using a key economics diagram, as discussed in the economicslectures/videos and tutorials in BLAW1002 S2 2024. In your answer: a. For the incremental quantities of monthly shoe production on the x-axis, use hypothetical values(rough guesses from your imagination). Use intuition for making up the incremental prices/costs onthe y-axis. b. You will hand draw the diagram, including the one (1) isoprofit curve. Be accurate when you drawyour isoprofit curve. To show to the reader that your profit is the same (‘iso’), calculate and show yourworkings of what the (same) iso-profit would be for the price of $200 and for $80. c. At the profit-maximising price, identify the areas of producer and consumer surplus, and calculatethe price markup. d. Finally, analyse and compare the profit and price markup if Adidas discounted the price of shoes by30% for the month of September.500 ± 100 or so words should be sufficient Q3 – 5 Marks‘It is possible in future for Nike to be swept away by the forces of creative destruction’. Critical evaluatethis statement and elaborate on why Nike has had its profits eaten away by 2024 based on the (freely-available) articles below:https://www.modernretail.co/operations/why-nikes-dtc-pivot-didnt-pan-out/https://www.businessoffashion.com/articles/retail/nike-sportswear-market-challenges-john-donahoe/https://underthelaces.com/posts/nike-to-prioritize-budget-friendly-lineup-amid-cost-sensitive-market-01j1g9w8094khttps://www.thetimes.com/business-money/companies/article/how-nike-fell-behind-in-the-race-to-be-the-king-of-trainers-dmq0pfg5khttps://www.telegraph.co.uk/fashion/news/nike-trainers-sales-drop-off/400 ± 100 or so words should be sufficient

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