Supply and Demand
analytical Essay
1363 words
Compute the elasticities for each independent variable. Note: Write down all of your calculations. An independent variable is a variable that is not affected by other variables. F = 4.88 xi = the independent variable in the regression Quantity demand = (3units )/4.88 . (d(4.88))/(d(3))= 3/4.88 . 1/26=0.024 Price of product = $5/4.88 . 1/26=0.039 Price of leading competitor products = $5/4.88 . 1/26=0.047 Per-capita income = $5500/4.88 . 1/26 43.35 Monthly advertising expenditure = $10000/4.88 . 1/26=78.81 Number of Microwaves dinners sold = 5000/4.88 . 1/26=39.40 Determine the implications for each of the computed elasticities for the business in terms of short- term and long-term pricing strategies. Provide a rationale in which you cite your results. Short-term pricing defines a short period of time, usually within a year of which products maturity or returns are expected. Each independent variable calculated has an effect to the short-term pricing strategy for the product. The low demand quantity elasticity will impact short-term pricing by forcing it to reduce with the hopes of boosting demand and thus selling the product fast. The low price of product elasticity will impact short-term pricing strategy to ensure that the pricing is kept at equilibrium in accordance to the demand of the product. In this manner, consumers may develop the need of the product having compared the favorable price. The price of the leading competitor’s elasticity will affect the short term pricing strategy by forcing the company in the scenario to adjust its prices to the leading competitor in order to gain some edge and increase its market share. The mid-sized per-capita income elasticity will determine this pricing strategy by regulating it to the level of affordability to the majority of the population. The high advertising expenditure elasticity would directly affect the short term pricing strategy by given the margins of profits. Finally, the elasticity for the number of microwave dinners sold during that specific period will influence its short time pricing in a way that would boost sales (Nicholson & Snyder, 2007). Long term pricing strategies define the expected price of products sold in a long agreement usually done in multiple deliveries and exceeding a period of one year since short term is typically within a year. The low quantity demand elasticity would mean that little would change with the long time pricing despite the change of demand for the good.
In this essay, the author
- Explains that an independent variable is a variable that is not affected by other variables.
- Analyzes the implications of each of the computed elasticities for the business in terms of short-term and long- term pricing strategies.
- Explains that long-term pricing strategies define the expected price of products sold in multiple deliveries and exceeding a period of one year. the low quantity demand elasticity would ensure that the long term pricing strategy considers not much on this aspect.
- Recommends that the firm should not cut its prices to increase its market share. pricing does little to change the dynamics of products in that category, including the high prices for the leading competitors.
- Calculates the price at 100q = -7909.89 + 79.0989(100) = 0, and the prices at 200q are 15819.78 237.
- Describes the demand and supply curves of the equilibrium price and quantity demand.
- Analyzes factors that could cause changes in demand for the product, such as income, price of related goods, and expected future income.
- Explains that demand rises with a bulging population and vice versa. preferences differ with the market trend and product range.
- Explains that discovery of lower future prices after vast researches could dip the supply of goods to avoid impending losses.
- Explains that short-term changes are changes that are expected not to last for a long duration of time. these changes set in and fade away as immediately as they did appear.
- Explains that long-term changes are slow to be discovered but could adversely affect the demand of goods with reasons ranging from shift of trend, better substitute products or a drop of per-capita income.
- Explains that change in buyers’ planned purchases affects the price, which will result in a change of demand.
- Explains that any change affecting the suppliers’ strategies apart from change of price usually causes a shift of the supply curve to the right.
- Cites mcgraw-hill/irwin, mcconnell, brue, s. l., and flynn.
Related
- explanatory
- analytical
- comparative
- Macroeconomics: Supply And Demandexplanatory essaySupply and Demand Leon Walker Embry Riddle Aeronautical University Macroeconomics We the consumer would rather pay less for any product that is needed or want. Ultimately we are the reason for high prices as well as low prices. Prices of products do not always stay the same and more popular products have higher prices than less popular products. These fluctuations, high prices and low prices are from the idea of supply and demand.
In this essay, the author
- Explains that consumers are the reason for high and low prices. supply and demand defines the effect that the availability of a particular product and the desire or demand for that product has on price.
- Explains that apple releases its ios operating system for free and releases their hand-held devices for $399, which is expensive to the average person. supply and demand are seen in apple's sales tactics.
- Explains that jordan is the second biggest brand in the country with 10.8 percent share of the overall us shoe market.
- Explains that sony's playstation console has a high demand, since it doesn't release every year and sells out on release dates. the demand for the playstation 4 began before the console went on sale.
1062 wordsRead More - Yma Puma Case Studyanalytical essayUrbany, J.E. (2001). Justifying Profitable Pricing, Journal of Product & Brand Management, 10(3), p. 141–159
In this essay, the author
- Explains that yuma puma's business operations seek additional revenue streams to continue growth, which include new vending technologies. chips can adjust prices based off environment or timing factors.
- Explains that yuma puma has the option to employ a new computer chip that would allow its vending machines to change prices at any time of the day.
- Analyzes how yuma puma's marketing strategy is based on customer loyalty and brand reputation. the company has experienced double-digit growth, expanding into 50 countries, and capturing the loyalty of one of the most sought after consumer groups.
- Opines that corporate behavior, even when not acted upon, can have a significant effect of alienation and loyalty among the consumers.
- Argues that yuma puma should not install chip technology in its vending machines that would affect sales, customer loyalty, and the company would take a public relations hit.
- Cites gunnels, g., and urbany, j.e.
1623 wordsRead More - Supply and Demandexplanatory essayOne of the most important concepts of economics is supply and demand, which is the chief support of a market economy. The relationship between these two factors assists in outline the allocation of resources in the most effective way possible.
In this essay, the author
- Explains the relationship between supply and demand, which is the chief support of a market economy, and the allocation of resources in the most effective way.
- Explains the law of demand, which states that the higher the price of a product, the less buyers will demand it. consumer income, tastes and fashions, alternative and/or complementary goods, and sociocultural factors determine the demand relationship.
- Explains that there are two examples of price and demand. the first example shows that, at price p1, the quantity demanded would be equivalent to q1 (bigger quantity).
- Explains that supply refers to the market's capacity to offer the product or service at a given price. the correlation between supply and price is known as the supply relationship.
- Explains that the supply diagram shows an inverse situation to the demand diagram.
- Analyzes how the relationship between supply and demand affects the price of a product.
- Explains the two phenomena that occur in both supply and demand curves, the movements along and the shifts.
- Explains that a movement along the demand curve implies that the supply relationship remains consistent. it occurs when the price of the good changes, so does the quantity supplied.
- Explains that a shift in demand or supply curve takes place when the quantity supplied or demanded changes, but the change is related to anything other than price, as it remains the same.
- Explains that when the supply curve shifts to the right side, it means that there is an increase in the quantity supplied, making p1 q2 the s2 point.
- Explains that when supply and demand function intersect, it can be called market equilibrium or equilibrium price. in the real marketplace, equilibrium does not exist and can only be reached in theory.
- Explains that when the market is not in equilibrium, the cause is either an excess supply or excess demand, also known as surplus and shortage.
1178 wordsRead More - Duopolyexplanatory essayThese situation give duopoly companies an effective motivation to agree to change a 'monopoly' price and share the resulting profit. It is stated that duopoly are most effective when consumer demanded for the product is not greatly affected by price. Furthermore, duoplies are more effective on the short term, as over a long term, prices often become more elastic as consumers finds another alternative for the product. Ho...
In this essay, the author
- Explains that the publication investing answers defines duopoly as a form of 'oligopoliy' occurring when two companies (or countries) control all or most of the market.
- Explains that the competition of prices is direct to other producers such as woolworth and coles offering better prices.
- Explains that 'courtnot duopoly' is defined as the competitions between the two companies are based on the quantity and supply.
- Explains that a duopoly forces each manufactuturer to strategically consider its competitors potential reaction to particular business decisions.
- Explains that woolworth and coles are the most competitive organisations in the supermarket in australia due to their portrayal of the duopoly effect that ensures both companies build a market share against its other competitors.
- Explains that two huge corporations in one market will make it very difficult for smaller firms to gain recognition or a market share. it's competitive environment makes it harder for other companies to develop more products.
699 wordsRead More - Elasticitycomparative essayElasticity is one of the most important theories in economics and it is a measure of responsiveness (Baker, 2006)i. There are mainly two types of elasticity, the elasticity of demand which includes price elasticity of demand, income elasticity of demand, and cross elasticity of demand as well as elasticity of supply (McConnell, Brue, & Flynn, 2009)ii. The degree to which a demand or supply curve reacts to a change in price is the curve's elasticity (Lingham, 2009)iii. Elasticity varies among products because some products may be more essential to the consumer.
In this essay, the author
- Explains that elasticity is one of the most important theories in economics and it is a measure of responsiveness.
- Explains that price elasticity plays an important role in the lives of consumers.
- Explains that price elasticity of demand is important for companies to determine the price of their products and their total sales and revenue.
- Explains that elasticity is crucial to the government, since many goods are subject to taxation, such as cigarettes and liquor.
- Concludes that elasticity is very important to many parties in the society. people should make the right decision in buying or selling, companies should allocate goods efficiently to prevent market failure and maximize profit, and the government should use the tax imposed to ensure the country gets the facilities it deserves.
966 wordsRead More - Essay: The Definition Of Elasticity Of Demandsexplanatory essay5) Time: The elasticity of demand varies with the length of time. In general, demand is more elastic for longer period of time. For instance, if the price of kerosene rises, it may be difficult to substitute it with cooking gas within a very short time. But if sufficient time is given, people will make adjustments and use firewood or cooking gas instead of kerosene.
In this essay, the author
- Explains that elasticity of demand is an important variation on concept of law of demand.
- Explains that perfectly elastic demands are the demands where the slightest rise in price causes the quantity demanded of a commodity to fall to zero and at the present level of price people demand infinitely large quantity of the commodity.
- Explains that inelastic demands are the demands where the change in price results in a small change of quantity demanded.
- Explains that unitary demand is the demands where a certain percentage change in price results in same quantity demanded. the elasticity coefficient is equal to one.
- Explains that perfectly elastic demands are the demands where even substantial changes in price do not change the quantity demanded. the coefficient of elasticity of demand is zero.
- Explains that the elasticity of demand measures the rate of response of quantity demanded due to a variety of factors, especially price.
- Explains that the price elasticity of demand measures the rate of response of quantity demanded due to a price change.
- Explains that as the price falls by 5%, the quantity demanded increases by 20%. the coefficient of elasticity of demand is minus 4.
- Defines the ratio of proportionate change in the quantity demanded of commodity to a given amount of income of the consumer.
- Concludes that the quantity demanded of rice increases by the factor of 0.60, if the income of the consumer rises by one per cent. income elasticity of demand can be divided into following five sub-heads.
- Explains that a given increase in the consumer's money income doesn't result in any increase of the quantity demanded of commodities (ei=0).
- Analyzes the negative income elasticity of a consumer's money income followed by an actual fall in the quantity demanded of the commodity.
- Explains the unitary income elasticity, wherein a given proportionate rise in the consumer’s money income is accompanied by an equally proportional rise of the quantity demanded.
- Explains that income elasticity of demand is greater than unity for a given proportionate rise in the consumer’s money income.
- Explains that income elasticity of demand is less than unity for a given proportionate rise in the consumer’s money income.
- Explains that consumer durables have an elastic demand, where the change in price results in large changes in quantity demanded. purchases are delayed or postponed if the price rises.
- Explains that the elastic nature of the demand for a commodity is determined by the following factors.
- Explains that the price elasticity of demand can be estimated as follows: q is the quantity demanded of a commodity and p is its price.
- Explains that q is quantity demanded of a commodity and y is the income of the consumer.
- Explains that the quantity demanded of a particular good varies according to the price of other goods. cross elasticity of demand measures how much quantity demands of one good responds to price changes.
- Explains that the cross elasticity of demand for substitute goods will always be positive, since the quantity demanded for tea will increase as consumers switch to an alternative.
1760 wordsRead More - Supply And Demandexplanatory essayRecent medical advances have greatly enhanced the ability to successfully transplant organs and tissue. Forty-five years ago the first successful kidney transplant was performed in the United States, followed twenty years later by the first heart transplant. Statistics from the United Network for Organ Sharing (ONOS) indicate that in 1998 a total of 20,961 transplants were performed in the United States. Although the number of transplants has risen sharply in recent years, the demand for organs far outweighs the supply. To date, more than 65,000 people are on the national organ transplant waiting list and about 4,000 of them will die this year- about 11 every day- while waiting for a chance to extend their life through organ donation (Yoakam 1). This figure, when looked at from an economic standpoint, exemplifies a case of supply and demand between organ donors and patients “with a diseased organ”. Just as there is a supply and demand in any given market, there are also complementary and substitute goods. Who decides who gets transplants and who doesn’t? This question implies that the organ market also needs to have various, effective allocation mechanisms. The organ market has complementary and substitute goods and can use various effective allocation mechanisms.
In this essay, the author
- Explains that recent medical advances have greatly enhanced the ability to successfully transplant organs and tissue.
- Explains that a person who receives an organ transplant requires several complementary goods, such as medical care and follow-up doctor's visits.
- Explains that allocation mechanisms in the organ market are frowned upon for their lack of morality. the president of the united states launched the national organ and tissue donation initiative in 1997.
- Opines that although morals can play a part in the organ market, economic principles are definitely present.
- Explains that in the organ market, a substitute good depends on what organ is being considered. people with diseased livers are particularly at risk because there is no medical alternative to transplantation.
991 wordsRead More - Supply and Demandanalytical essayDifferent market decisions determine how an economy is run. There are several different factors that account for how markets make their decisions, which determines how they function. The theory of markets mostly depends on supply and demand. However, it is key to note that there is a difference in demand/supply and quantity demanded/supplied. A demand is how much the buyer plans to purchase at various markets prices and the quantity demanded is what the buyer actually purchases at a particular price. Supply is the producer or the seller’s plan of the amount the seller will make available at different market prices and the quantity supplied is the actual amount that the seller makes available at a particular market price. It is important to differentiate between supply/demand and quantity supplied/demanded and not assume they are the same thing. A surplus is when the quantity supplied is greater than the quantity demanded at a specific price. A shortage is when the quantity demanded exceeds the quantity supplied at a specific price. All of these key terms play a significant role in the theory of markets and how markets make decisions. The features of a market can be seen in real world situations: lab methods to pick gender, opportunity to buy wine online, a shortage of the iPhone 4S, a surplus of chicken for farmers and gluten-free grocery stores, all of which will be discussed in the next few paragraphs.
In this essay, the author
- Explains that different market decisions determine how an economy is run. the theory of markets mostly depends on supply and demand, but there is a difference in demand/demand and quantity demanded/supplied.
- Explains that there has been an increase in demand to pick the gender of a child before pregnancy and people are satisfying that demand by infertility specialists.
- Illustrates how a shift to the right in the demand curve signifies an increase in demand.
- Analyzes how factors such as consumer tastes and preferences, income, consumer expectations, prices of other related products, and the number of buyers contribute to a shift in demand.
- Illustrates how supply has changed for online wine auctions. with the help of the internet, there are companies that help consumers purchase the wine that they desire to buy.
- Explains that the increase in the supply curve can be attributed to technology and the number of producers or sellers.
- Explains that a shortage creates higher prices of products due to low supply. sprint jumps into iphone frenzy and sells out of the new iphone 4s.
- Explains that a surplus is created when the quantity supplied is greater than demand, which affects the supply and demand markets.
- Analyzes how changes in quantity supplied or demanded affect how markets function in a supply and demand market.
- Explains that supply and demand, shortages, surpluses and changes in quantity supply affect the theory of markets.
- Analyzes how stacey delo's "gluten-free grocery targets a niche- wsj.com." business news & financial news.
- States teague, lettie, "click, click, sold! bidding for bottles online-wsj.com." business news & financial news, the wall street journal, accessed october 23, 2011.
- States tomson, bill, "as chicken prices rise for consumers, u.s. steps in to help farmers."
- Analyzes troianovski, anton, "sprint jumps into iphone frenzy- wsj.com." business news & financial news.
1724 wordsRead More - Supply And Demandexplanatory essayLaws of Supply and Demand The market price of a good is determined by both the supply and demand for it. In the world today supply and demand is perhaps one of the most fundamental principles that exists for economics and the backbone of a market economy. Supply is represented by how much the market can offer. The quantity supplied refers to the amount of a certain good that producers are willing to supply for a certain demand price. What determines this interconnection is how much of a good or service is supplied to the market or otherwise known as the supply relationship or supply schedule which is graphically represented by the supply curve.
In this essay, the author
- Explains that supply and demand are fundamental principles in economics and the backbone of a market economy.
- Explains that when a supplier's costs change, the supply curve shifts in the same direction.
- Explains the two types of supply shocks: the negative and the positive.
- Explains the backward bending supply curve of labor, which is observed in non-labor markets such as the market for oil.
- Explains that demand is one of the most important building blocks of economic analysis. the law of demand states that when the price of a good rises, the amount demanded falls.
- Explains that econometric studies show that when the price of a good rises, the amount of it demanded decreases. nobel laureate george stigler said if any economist found an exception, he would be "assured of immortality, professionally speaking, and rapid promotion."
- Explains that economists believe strongly in the law of demand because it is plausible even to non-economists. shoppers buy more strawberries when they are in season and the price is low.
- Explains that consumers didn't judge the quality of a car wax before purchasing it. they opted for cheap products that were more likely to be inferior.
- Explains that non-economists have become skeptical of the law of demand. they think of drinking water, or using it in a household, as the only possible uses.
- Explains how prices affect demand, and how income affects it. the price of substitutes and gasoline also influence demand.
- Concludes that the law of supply states that when the selling price of an item rises there are more people willing to produce the item.
1824 wordsRead More - Supply and Demandanalytical essaySupply 1 The rubber supply in Japan is at an all time low. The article chosen discusses how the low supplies of rubber are not typical for the time of year. Tokyo rubber or TOCOM is the Tokyo Commodity Exchange which regulates the rubber market in Japan. A rally was held recently which was the largest in years because of the concerns about low supplies and historically low rubber stocks.
In this essay, the author
- Explains that rubber supplies have been low due to a delay in shipments from thailand, which is the world's largest manufacturer and exporter of natural rubber.
- Explains that production returns to normal by beginning of may, but buyers are still not getting enough shipments.
- Analyzes how goodyear saves money by switching to natural rubber because the new tire may not hold up as well as the old and consumers get into accidents. the company may face larger expenses with a lawsuit than continuing with synthetic rubber.
- Explains that supply, price and demand (milligan, coulton, york, & register, r.); new york.
- Explains how the low supplies of rubber in japan are not typical for the time of year.
- Explains that rubber stocks in japan have decreased to the lowest level in forty years due to short supply and high oil costs. manufacturers are considering shifting to natural rubber from expensive synthetic rubber.
693 wordsRead More