Supply and Demand It is inside of the human beings nature to trade with each other since their apparition there are million of years. From the middle age to nowadays societies, the use of the currency as mean of trade become popular among societies and more people were able to establish commerce of different articles. Having Decided to open a small ice cream stand on campus called “Ice-Campused” to apply my business and economical skill I noticed that there are days where ice creams remain unsold but other days where there are not enough ice creams for the number of customers. Knowing that Fluctuating Demand corresponds to the demand in the commerce sector, which rises and falls sharply in response to changing economic conditions and consumer spending patterns there are several factors, which cause the shifts in demand. First of all, the shift in demand can be caused by the demographic factor or number of buyer, which correspond in our case to the demographic number mainly represent by students present on the campus. Knowing that the volume of population gives us a very good indication of the market size available, it will be our most important factor causing the fluctuation of the demand because as we decided to install our business on campus the number of potential client will vary from day to day due to their schedule. For example it is obvious that during the post-exam and even exam period our small business will observe a pic of his activity because during that period of semester, the other campus activities such as the library are usually full with a high rate of participation. Therefore we can assume that our business will increase his activity at that time too. However, during the regular session of school where students ... ... middle of paper ... ...ises. Therefore, In the case of competing with another student on the market of ice-cream, it is clear that the price of ice-cream on our campus will falls from 1.50 to the new price and the quantity of ice-cream available will rises while the level of demand will stay unchanged. In conclusion, while the shift in demand curb can result from several sources, the quality of service, the tastes or even the number of buyer as presented here represent the main reason of the shifting price of an activity as the sell of ice-cream on campuses. As a businessman we should take in consideration those factors in order to be successful and trying to anticipate our rise or fall to stabilized our business. On another hand, keep in mind The most famous law in economics: “when the price of a good rises, the amount demanded falls, and when the price falls, the amount demanded rises.”
From classroom to a cocktail party, having knowledge in today’s economics is definitely an asset when it comes surviving in the world of business. Cocktail Party Economics, by Eveline Adomait, and Richard Maranta undeniably satisfies as an economic training book, helping you understand the concepts of basic economics. The book brings to light many theories and thoughts, which are explained in a certain way that help readers easily, compare and relate them to each other. During the first couple chapters of the book, the main theories presented are scarcity, value, opportunity cost, production, and absolute/comparative advantage. Believe it or not, all of these theories are relatable to Supply and Demand; the two concepts introduced in chapters six and seven.
1.To increase prices according to 4th scenario (total line price increase by 5%) and from short-term revenues income use resources for advertising.
The Russian Ice Cream market is worth $ 500 million, with Ice Fili as the market leader. The industry concentration, determined by the market share of the four largest firms in a sector is low for Russian ice-cream industry. It indicates that the industry is highly fragmented and competitive. The industry has experienced a low growth rate of ~ 3.5 % for the last two years and the other factors influencing the overall market size, like the population and the per capita consumption of ice cream have been stagnant over the years. The external factors like the shrinking frozen-foods imports market coupled with low entry barriers caused increase in the number of new entrants into the ice-cream market.
This company is known to be a monopolistically competitive, because there are still many firms and consumers, just as in perfect competition, but they still have control over what price they charge in their company, because Ben and Jerry's ice cream is differentiated from the other ice cream companies and they provide a lot of non price competition which will be mentioned later in the paper.
We also include complementors that work well in the Russian ice cream industry. Ice-Fili faces high threats of new competitions, existing rivalry, and substitutions. With more competition of new or exists it creates more risk in declining profits in investments in competing for ice cream industry. In this ice-cream industry, consumers are available to other substitutions of other chips, soda, and other sugary goods that can lead up to decreasing ice cream productions if substitutions
The availability of the supply itself could impact the demand as well. Since Primark sells by volume and sells standardized models and uses people’s word of mouth as advertisement it is a vital feature that a model is sold in many locations, but how much Primark can supply will be dependent on extra factors as well. The following examples are related to supply factors which may in turn influence demand.
Perfect competition (as shown above) is a market structure characterised by a large number of small firms, a homogenous product, and very easy entry into, or exit from, the market (Layton, Robert & Tucker, 2002, p.173). The characteristic of a large number of small firms is fulfilled when each firm in a market has no significant share of total output and has no ability to affect the product’s market price. Each firms work autonomously, rather than coordinating decisions collectively (Layton, Robert & Tucker, 2002, p. 173). Restaurants in Brisbane do not fit this characteristic as restaurants are more fitted under monopolistic competition; exist under a large number of firms where no single firm can influence the market outcome. For example, Michael’s Riverside in Brisbane serves some of the area’s best seafood (ABC Integra, 2004). Even so, Michael’s unable to influence the market outcome, but is able to set the prices higher than rival restaurants without fear of losing its customers. This is due to product differentiation (Layton, Robert & Tucker, 2002, p.233). Consumer demand for differentiated products is described using two distinct approaches – the heterogenous demand and homogenous demand. The heterogenous demand assumes that each consumer has a demand for multiple varieties of a product over time and the homogenous demand assumes that each product consists of a collection of different characteristics such as in location, atmosphere, quality of food, style, services and price (Suranovic, 1997).
Between 1999 and 2000, there is a Y2K bug with the computers and many other electronic items because of the early setting with the computer program. People set the year with only two digits in the computer program, as the changing of the year 1999 to 2000, the digit will change from “99” to “00” which might cause the confusion of the data storage and might change from “1999” back to “1900” or “19100”(See [1]). As this might have a big influence to the society, the price of the gold also might have a big change. Therefore in the article, Swart gave out the example of the changes of gold’s price between 1999 to 2000 because of the scare from Y2K and the millennium fever. The use of financial concepts and Linear Algebra tells the readers about how the price can be changes at that period of time. The difference of the increasing or reducing the price of gold for $1 will cause the huge difference of profit after 2000. So the business needs to determine a price of gold that fair to both customers and the business. Swart uses the...
When demand is elastic as with Coca Cola products price changes affect total revenue. When the price increases revenue decreases and when the price decreases revenue increases. For Coca Cola if they notice a decrease in revenue they would offer products at a discount to increase revenue. They do this quite often with sales such buy 2 20 oz. bottles for $3 instead of the normal $1.89 each price
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 demand the schedule is depicted graphically as the demand curve which represents the amount of goods that buyers are willing and able to purchase at various prices, assuming all other non-price factors remain the same. The demand curve is almost always represented as downwards-sloping, meaning that as price decreases, consumers will buy more of the good. Just as the supply curves reflect marginal cost curves, demand curves can be described as marginal utility curves. The main determinants of individual demand are the price of the good, level of income, personal tastes, the population, government policies, the price of substitute goods, and the price of complementary goods.
Once the product is accepted the organisation would experience a high growth rate. For example, PAX Yogurt Company which originates on Mount St. Benedict, is a local company which developed seven different flavours of yogurt into the market, they are: almond, guava, passion fruit, pineapple, soursop, strawberry, natural (plain) and vanilla. The primary objective was to meet the customers’ needs with a good quality product at an affordable price in order to return high sales and profitability for the company. It is imperative at this stage, that particular attention should be placed on creating strategies for pricing, place or distribution and promotion so as to establish a market presence and create a suitable demand for the product. Pricing strategies include price skimming and price penetration. It is advisable at this stage to employ the price skimming strategy for example, pricing the product at the highest point possible. Prices can then be lowered when demand starts to
The major factors that determine demand of a particular product or service are a change in price, prices of related products, income, and so on. When there is a change in price this will cause a shift along the demand curve. Generally, when the price of a product increases, quantity demanded will fall due to a satisfaction decrease for consumers. For example, if the price of orange juice increases from $3 to $5, then its quantity demanded will likely fall. Consumers will switch to a cheaper brand, make their own, substitute to another drink choice, or wait for the price to drop again.
ice cream belonging to the premium category. Based on our analysis, we have identified two major
...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.
Globalization and economic slowdown has made businesses subject to a great deal of uncertainty. In this time of rapid change, economies worldwide change rapidly, new markets open up and old ones change, and demand for products is often uncertain. As such, businesses must be flexible and adaptable in the types of methods that they use...