By reading Cocktail Party Economics, I can explain the key concept in microeconomics. In chapters 6 and 7, the book explained about demand and supply. Supply or supplying means that you provide something to others. When you get products or services from others, you demanding it. Most of the time, money is used to get or sell goods. You can understand the basic theories of microeconomics by examples that published through current news issues. “More Demand, Less
Supply for Student Housing in 2015” (National Real Estate Investor by Bendix Anderson). This statement explains an issue of College/University student housing. To make a maximum profit, every companies should know how to get the exact perfect price of their products. Price is
important
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By calculation, $1 x 400 = $400 is less than $1.5 x 300 = $450. Walmart made a lot of profit by increasing the price. However, sometimes it goes wrong, big companies have separate group of people who records this changes. In general, when supply downs up, the price increases and demand can decrease because it costs more. The relationship between supply and demand results in many decisions. The main factors are the price of product and how many will be produced in order to allocate resources in the most cost-effective and efficient way. There are two laws: law of demand and law of supply. For the law of demand, if all factors stay equally, high price > less quantity demand. Less people are going to buy, and they will try to avoid buying a product that will force them to sacrifice something else they value more. The law of supply demonstrates the same but with positive upward slope. The only difference is that the higher the price, more quantity supplied. The reason to produce more at higher price is to get higher revenue. The Iphone is released for $1000. Because the apple company’s …show more content…
So, next time the owner of Apple will provide more
Iphones which means more supplies. Opposite happens if only 500000 people want to buy
IPhone, which means ½ will it to buy. The price will not be increased because the supply more than demand. First 500000 IPhones will go with original price, and rest will sold by lower price to sell the remaining IPhones. Next year the IPhone Corp. could put lower price to get higher income. Let’s talk about substitutes and complementary. Substitutes is when you can buy a different product. I mentioned above about apples and bananas, they are substitutes. You easily can live without bananas and substituted by apples. Complementary is a good whose use is related to different good. For example:
"A lot of the world population is moving to the middle class and will have more money to spend, in particular in emerging markets and Asia.” Yes, the Chinese are eating twice as much chocolate as 10 years ago, and dark chocolate, which uses much more cocoa than regular chocolate bars, is growing more popular.” (Mark Schatzker at Bloomberg).
Cocoa is the complementary to chocolates. Without cocoa, you cannot get chocolates.
If the price for one good increases, consumers will turn to a different good to satisfy their needs (Substitute Goods, n.d.), thereby decreasing demand for the original good and increasing the demand for the substitute good.
Due to the various options of distribution channels their prices vary. Consumers take that into consideration when purchasing their products.
Once the coded year is put in, the formula can forecast each year’s global iphone sales to include 2015 which is forecasted to be 192.39 Million units. A scatter plot can also be viewed with this information. This is highlighted in figure 1-5.
...ncompetitive compared to other firms. If firms cut price then they would gain a big increase in market share, however it is unlikely that firms allow this. If this occurs, as a result to that, other firms will follow and cut price as well. Demand will only increase by a small amount: demand is inelastic for a price cut.
The law of demand states that if everything remains constant (ceteris paribus) when the price is high the lower the quantity demanded. A demand curve displays quantity demanded as the independent variable (the x-axis) and the price as the dependent variable (the y-axis). http://www.netmba.com/econ/micro/demand/curve/
Personal preference is another factor as some people prefer variety of goods whereas others prefer not having too many choices at all.
A change in quantity supplied is just a movement from one point to another in the supply curve. In opposite, the cause of a change in supply is a change in one the determinants of supply that shifts the curve either to the left or the right. These determinants are the resource prices, technology, taxes and subsidies, producer expectations, and number of sellers. An equilibrium price is required to produce an equilibrium quantity and a price below that amount is referred as quantity supplied of zero no firms that are entering that particular business. If the coefficient of price is greater than zero, as the price of the output goes up, firms wants to produce more of that output. As the price of the output goes up it becomes more appealing for the firms to shift resources into the production of that output. Therefore, the slope of a supply curve is the change in price divided by the change in quantity. The constant in this equation is something less (negative number always) than zero because it requires strictly a positive...
With supply solely, factors involved with regulation of the supply also control some aspects of demand. Things such as production costs and desired net profit can determine whether a business succeeds or not. Having a balance between quantity and price is the greatest control any business can have. Pricing is obviously one of the most beneficial, or destructive, parts of a business. Pricing is the first and most valuable thing an individual will look at, which will overrule most other judgments based off of quality and detail. Balancing the price, however, helps to create a pristine product, with just the right amount of detail that will fuel the market, while still generating a steady net income.
... Also important is the price of complements, or goods that are used together. When the price of gasoline rises, the demand for cars falls.
A major area of concern among economists is opportunity costs. Opportunity costs are the products that are given up for another product. Because we have a limited amount of resources, we must find the most efficient way to use them. Production possibilities are the alternative combinations of all final goods and services that can be produced in a given time period with all available resources and technology. The main objective of economists is to maintain maximum output in production.
When the price of raw material will go up or down, the production coats will rise or fall. Secondly, the price of substitute products also affect the supply curve. Because the relatived products are competitive relationship, when the price of one product goes up, another will goes down. It will affect suppy. Thirdly, production technology will affect the supply curve. When the level of technology is rising or falling , the production costs will go down or up. finally, the government policies will affect the supply curve. Positive policies will make the supply go up, conversely, it will go down. For example, the govenrment limit the amount of cars which people can buy, it will caused the supply curve down. In addition, the price of product in the future and the development of product company will also affect the supply
Generally, the price of a commodity shoots up when its demand exceeds supply and when the reverse occurs. | | Since markets are governed by the law of supply and demand, the market itself will decide the price of goods and services, and this information will be made available to all participants.... ... middle of paper ... ... Merchants will often complain of tax rates being too high for the services provided.
There is increased competition- This is a consequence of capitalism. Increased competition leads to improvement in terms of quality and efficiency of production. It also leads to low prices of products in the market, as producers want to have a larger share of the consumer market. In a capitalistic perspective, businesses that produce high quality products at a low price enjoy a larger market share.
...n the companies will have to decrease the price otherwise the product will not be sold at higher prices and the revenue would not be as large as companies would like to.
What does supply and demand mean? Demand indicates the quantity of a product or service that is aspired by