Essays on Demand

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Problem 1
Opportunity Cost
- Define the term “Opportunity Cost”
Opportunity cost is the value of the foregone mutually exclusive alternatives. When choice are to be made between several mutually exclusive alternatives in terms of decision making, opportunity cost is the value of alternative that is forgone due to selection of some other alternatives. Generally, opportunity cost is the value of next best alternative that can be achieved with same input. For example: George had $2 in his pocket which is enough to buy either a cup of tea or a cup of coffee. Among them Continue reading...

The microeconomic theory

The identified microeconomic theory was the consumer demand theory. The consumer demand theory falls under the branch of economics that deals with the study of consumer behaviors applying to decisions related to purchase of goods and services in the market. The theory provides a deep insight into understanding market demand and forms the cornerstone of the modern microeconomics (Salvatore, 2002).

Properties and characteristics of the theory

The consumer demand theory generally analyzes consumer behavior in terms of market purchases that are based on satisfaction of needs and wants achieved after consuming a product. The main property of the theory is utility maximization. Economists are most Continue reading...

Fundamentals of Economics, Globe Business

A)
Elasticity of demand refers to the sensitivity of the demand for a product to a change in price. It is measured as a ratio of the change of the quantity demanded to the change in price (Demand elasticity).

Cross-price elasticity of demand measures the sensitivity of the quantity demanded of one good to the change in price change for another good. Negative cross-price elasticity indicates that the two goods are complements, therefore they are usually consumed together and a decrease/increase in the price for one will increase/decrease the quantity demanded of the other. Positive cross-price elasticity suggests that Continue reading...

A. Define the following three terms:

Elasticity of demand
This refers to the degree to which the demand for a commodity varies with the variation in its price. In normal circumstances, the reduction in price of a good or service results in an increased demand for that particular commodity (Hoxie 2010). It also refers to the responsiveness of demand for a commodity as a result of changes in its price.

Cross-price elasticity

This measures the rate at which the quantity of a product demanded responds to the changes in the price of another related good. For instance, if the price of a product increases, the demand for Continue reading...

Abstract.

The paper discusses the two widely known concepts of economic and how they are of importance to both the consumer and the producer. The various factors that cause them have also been analyzed in a detailed way as well as their effect in the market. Graphical representations have been incorporated in order to enhance clarity of the theoretical discussion.

Introduction.

In economics and particularly microeconomics these two terms are used extensively. Demand refers to the quantity demanded by consumers at one point in the market and they are able and willing to pay for them at a given market price, Continue reading...

Demand refers to the quantity of a commodity a consumer is willing to purchase under different conditions. The demand for a commodity depends on a number of factors like the price of the commodity, income of the consumer, the price of substitute commodities, the price of complements, the preference for the good by the consumers, fashion trends, seasonality, and such others. Therefore, the demand function can be written as:
QD = F(P, Y, PS, PC, T, O)

Where, QD: Quantity demanded

P: Price of the commodity
PS: Price of the Substitute commodity
PC: Price of the complementary commodity
T: Consumers’ tastes and preferences
Continue reading...

Definition of Terms

Elasticity of demand: The elasticity of demand measures the degree of change in the quantity demanded after a change in any one of the factors affecting demand (Gregory, 2011).

Cross-price elasticity: This is the measure of degree of responsiveness of quantity demanded of one good due to change in price of another good (William et.al, 2011). In the case of complimentary goods, the cut in price of one of the goods raises the demand of the other good. For substitutes, an increase in price of one good will lead to an increase in demand of Continue reading...

Summary of the Article

The article discusses the importance of price elasticity of demand level in the economy in determining tax imposed on tobacco. A household survey conducted in the UK reveals that a whopping 10.2 million of the population were cigarette consumers in 2007. Policy makers are showing increasing focus on promoting public health and attempting to discourage tobacco consumption by imposing stringent tax on tobacco. Tax on tobacco has been increased considerably in the last decade in order to reduce the number of tobacco consumers in the country. However, the effectiveness of higher tax on tobacco will be determined by price Continue reading...

BUSINESS BEHAVIOUR AND THE MARKET ENVIRONMENT

Part I

This exercise deals with the analysis of the potential economic impact on the activities of the selected “plant as a present” retailer on the UK market that the case will refer to as the company. Current economic crisis put pressure on the company profitability and the management considers expanding its operation in terms of variety to leverage the challenges of the domestic economy. The aim of this analysis is to outline core scenarios of the company development through basic supply and demand modeling and look at the best options in regards to financing their expansion strategy.

The UK Market Environment and Price Sensitivity

Current Continue reading...

A) Elasticity of demand can be defined as the sensitivity of demand to a change in price and it is calculated as a difference in the quantity demanded divided by the difference in price. Cross-price elasticity is the measure of responsiveness of the quantity demanded of a product to the change in price of another one. Complements, the products that are usually consumed together, have negative cross-price elasticity. Substitute goods, on the other hand, have positive cross-price elasticity, since consumers can easily replace one for the other. Income elasticity is the degree of responsiveness of the quantity demanded to Continue reading...

Introduction

Economists most often use elasticity to measure the variation of variables like price, demand and supply of certain categories of products. By managers having the knowledge about the price elasticity of demand for the company’s products and the factors which influence it, this will offer them a great competitive advantage and this will lead to increased profits and market share (Genchev & Yarkov, 2010). Price elasticity of demand is defined as a measure of the rate of response of the quantity demanded due to a change in price. The formula to calculate this is: give as Price elasticity of Continue reading...

The world has been migrating from the analogue era to the digital era for the last couple of years. In the digital era, electronics are very essential components and hence their demand has increased. The number of electronics manufacturers has consistently increased over the years, and the level of production has surpassed the growing demand. Lenovo has been affected by the situation and therefore the company needs to take keen note on the demand and supply concepts.

Price determination using demand and supply curves

The price of any product should be derived from the demand and supply curves. The place at which the two curves intersect Continue reading...

Introduction

Domino pizza is a well known brand based in United States where it has a wider reach in operations. The business is the subject of this analysis where demand analysis and forecasting is used to evaluate the suitability of the business venturing in Bowie, MD. The analysis is done by collecting market data on the independent and dependent variables, calculating the regression models and the coefficient of determination whose interpretation together with the test for the regression and the variables are used as a basis of the decision. The analysis also forecasts the market demand for pizza in the Continue reading...

Law of Demand and supply

Introduction
In economics, the law of demand and supply is one of the essential theories governing an economy. The theory of demand and supply determines price, accessibility, and the demand for a given service or product. Demand definition is the willingness of consumers to purchase a certain good or service in the market. The cost of the service or good reflects the consumer’s buying decision. The demand for an item is high when its price is lower than other supplementary goods. The curve of demand theory slopes downward due to the inverse relationship.

Alternatively, supply is the willingness Continue reading...

This paper analyzes the effects of certain events on the price and quantity of milk, considering that other factors are constant and equal. The analysis includes information about changes in quantity supplied and quantity demanded, and shifts in the demand curve and the supple curve. Analyzed events appear as subheadings throughout the paper.
- A scientific study shows that consumption of milk is beneficial for healthy bones
First of all, let us analyze the effect that this event would have on the quantity demanded of milk on the market. According the law of demand, quantity demanded of a good Continue reading...

Instituion

According to the findings from the activity given in class, figure 1 shows a curve representing the relationship between price and demand of goods/services. Onces the slider is moved towards the upper side, the price of the the goods/services tend to raise, while the values of the demand tend to go down. On the other hand, once the slider is moved towards the lower ,end, the price of the good/servuces tend to go down, while the values of the demand tends to go upwards.
In the world of economics, this is referred to as the demand curve. It depicts Continue reading...

Introduction

The issue with blood donation in Canada, as well as around the world, is that the supply of blood peaks during times of crisis when the need for blood is at the forefront of the public’s attention. This often outpaces the demand and goes to waste due to the small shelf life of blood. There is a steady demand for blood donation year-round and is often under-supplied. Should Canada use a monetary incentive to improve the supply and demand imbalance for blood donation?Blood Donation In Canada Canadian Blood Services (CBS) looks after the blood donation efforts within all Continue reading...

Demand and Supply

Introduction
The paper aims to answer four questions quoted here pertaining to demand and supply of oil and how it is driving the oil prices.

Question 1: How do changes in supply and demand affect oil prices?

Answer: Changes in supply and demand of oil significantly affect oil prices around the world, which is discussed in this section.

Effect of Demand on Oil Prices:

Oil demand is directly correlated with its price, other things remaining constant. The recent trend is such that increase in world over oil demand is putting upward pressure on its price. Globalisation, trade liberalisation and economic growth have resulted in higher oil demand. To a great extent, this growth is being support by Continue reading...

Question 1:

(a) Suppose the income elasticity of demand for furniture is 3 and the income elasticity for doctors' services is 0.3. Compare the impact on furniture and doctors services of a recession that reduced consumer incomes by 10 per cent. (2 marks)

Change in income = 10% = 0.1

Income elasticity of demand = change in quantity demanded/ change in income

Therefore: change in quantity demanded = Income elasticity of demand × change in income

Impact of recession on furniture:

Change in quantity demanded = 3 × 0.1= 0.3 = 30% Continue reading...

Abstract

The paper dwells on general equilibrium theory by putting into perspective various critical issues. The origin of the concept of general equilibrium theory is illuminated dating back to neoclassical period. Moreover, various models such as Walras model of pricing and modern equilibrium model is also put into consideration. Finally, the importance and application of general equilibrium has also been discussed at length. General equilibrium theory refers to a concept modeled around theoretical economics. The modern general equilibrium takes into consideration three important interpretations which should be taken into consideration. The idea of general equilibrium theory cannot be complete when Continue reading...

Introduction

If it is ask about one single field that has recognition with almost every walk of life, then the name of Economics will be reflecting on the screen. After Adam Smith and Alfred Marshall, who directed the most important definition of the term economics, there are numerous authors who found a clear relationship among the economic based functions, and its core impact over the economic consequences of an economy (Banerjee and Duflo, p.45).
Earning and consuming the money in a best possible manner and with a sigh of effectiveness is the most important aspect of economics, in fact the Continue reading...

Introduction

Food and beverages that sustain humankind are the driving force of human life. All human activities are directed towards getting food to eat and beverages to drink so as to live a healthy and happy life. As human civilization grows and develops, the need for more food and beverages increases and at the same time, the need to know about the quality and content enhances. The need for more food and beverages increases with the constantly growing human population. Hence, the food security is a great concern. Also, the increased awareness about health and happiness, the food security assumes Continue reading...

Introduction

In a market, the price is determined when the forces of supply and demand interact. The market price that results from this interaction remains dependent on supply and demand. Goods or services only change hands once the seller and buyer come to terms on the price. Once they agree on a given price, that price is known as the “equilibrium price.” Changes in supply and demand result in changes of the market equilibrium price for a particular product. This paper presents the concept of demand, supply, equilibrium and four factors that may lead to a change in market equilibrium Continue reading...

Introduction

Economic consequences are extremely essential for the sake of an economy, as it is the only thing through which the power of economics of a country will get appreciation and upper hand in the market (Angermuller, Maingueneau & Wodak, 2014). Escalating stock market recognition, increasing economic power, Gross Domestic Product and Per Capita Income are some of the important aspects that found interactive and effective in the entire field of economics and management (Angermuller, Maingueneau & Wodak, 2014).
In terms of significance, the subject of economics has its diversification in different themes that will be considered accordingly in the picture. The Continue reading...

Introduction

Economy experiences macroeconomic fluctuations over time that affects economic growth. The aggregate output, consumption, investment, net export, and employment may tend to grow over time but then drop suddenly. Economists continue to discern the current condition of the economy and where it is heading so that they can effectively deal with future economic events. Macroeconomic fluctuations mainly involve changes that occur in the demand-side of the economy, which determine the gross domestic product.
GDP= C+I+G+NX
Gross domestic product is never constant, but change due to many reasons like changes in government policies mainly in interest rates Continue reading...

The Cause of Rental Price Increase in San Francisco Bay Area

Rental Price Increase in San Francisco Bay Area
Introduction
Moving to a new place normally means finding the most comfortable yet the most cost friendly apartment in the neighborhood as near as possible to the place of work. However, the first thing that comes into question in the moving-in process is the price of the rent that one should cut from his monthly paycheck. Cost of rent is a major concern in the San Francisco Bay area due to its staggering price. It became an apparent issue when apartment hunters are faced with over-the-top rental rates in the area. Continue reading...

The performance of the economy depends entirely on demand and supply of goods and service in the economy. The economy has a demand side and supplies side. When demand side and supply side are equal the equilibrium is achieved. In some instance, the aggregate demand may be high than the supply. This leads to an increase in price of goods and services. When the supply is higher than demand it leads to surplus of good and service in the market. For us to understand the microeconomics concept of demand and supply, we have to explore demand and supply individually.
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INTRODUCTION

Service organizations face a challenge in terms of managing demand and capacity. Revenue management (also known as yield management) is a technique designed to address that challenge. Mudie and Pirrie, define revenue management as ‘provision of the right service to the right customer at the right time for the right price’ (164). Therefore, revenue management is a technique used to determine the optimal price of products generated by sale. It involves detailed forecasting of demand behavior and sophisticated mathematical modeling. There exists a strong relation between revenue management and marketing. Since, revenue management is Continue reading...

Question 1

Today, the market’s diversity provides numerous low calorie microwavable food options. In addition, increases in the income of individuals, people have the capacity to live easier lifestyles and this has led to increase in demand for certain products of preference.

The quantity demanded equation of the product is given by;

Qd = -5200 – 42P + 20Px + 5.2I + 0.2A + 2.5M

Therefore, the elasticity of P (partial differentiation)

δQdp = -42 Assuming all other independent variables are constant
Hence elasticity of P = (δQdp). (δPQ )
= -42(P-5200-42P+5.2I+0.2A+2.5M)
For the 3-pack unit = -42(5-5200-425+206+5.25500+0.210,000+2.5(5000))
Therefore = -42 (537810) = -212656 = -0.007906

Solving for Px

ΔQdp = 20(637810)=0.010579

Solving for I

QdI=5.2550037810=0.7564

Solving for A

QdI = 0.2(10,00037810) = 0.0528

Solving for M

QdM = 2.5(500037810) = 0.3306

Question 2

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Operations Concept

Concept of operations is basic, yet complicated to any management system in business, the purpose of operation management is how an individual, group or the whole company as a whole, by utilizing operation management to success in the future. It is upon application of these concepts that desired objectives are achieved including a smooth running of a business and good definition of policies and ethics that govern the business. In this case, operations concepts focus much on the transportation network that a company undergoes in the event of running the day to day activities. As indicated in Continue reading...

Abstract

This paper is on the topic of Government Expenditures and Revenues, Budget, National Debt. The first part of this paper will discuss the effect of government purchases on aggregate demand. The second section of this paper will discuss the shift in aggregate demand curve and change in GDP in comparison to aggregate demand curve, on the bases of factors like government purchases, GDP and the multiplier. The Final section of this paper will discuss the issue of crowding out and its implications on fiscal policy changes.

Government Expenditures and Revenues, Budget and National Debt

Yes, all government purchases have the same effect on the aggregate demand curve.
Continue reading...

for Argentina and Hungary
Olomoze’s products would be aggregated in the group or category where tea milk and bubble tea are also classified. From the industry or macroeconomic perspective, while they may be differentiated, these products are considered as alternatives or substitutes to each other . Instead of using dairy or ice cream industry data (which comprise a bigger industry), Taiwan’s aggregated demand for tea milk and similar products are used for demand estimation.
Taiwan’s consumption of or demand for these products is estimated at about 1.5 billion cups a year. Each cup is about 8 ounces, Continue reading...

Introduction

The global usage of gasoline and other sources of energy will continue to increase over the next few decades as populations grow and developing countries expand their consumption of world resources. This implies that energy producers must increase their supply of energy as well as consider alternative sources of energy. There is an ever-growing appetite for crude oil and other sources of energy, with the projection of worldwide energy consumption to increase by more than 40 percent by 2035 (Chevron Corporation, 2013). The growing demand for energy results from the population that is predicted to increase by 25 percent Continue reading...

Operations Concept: Aggregate planning

Planning means the ability to set performance goals and expectations for individuals and groups to direct their efforts in achieving the organization’s objectives (David, 2010). Planning also deals with the standards that are applied in order to determine the outcomes from the set objectives and goals. Employees should be included in planning; this is to enable them gain knowledge on what duties they must undertake. It is also necessary to make the employees aware of the right procedure expected in carrying out their responsibilities. This will ensure that they can then be accountable against Continue reading...

Suggest how an economist would approach the problem of alcohol abuse. Provide two (2) possible solutions to this problem. Include the four (4) elements of the economic way of thinking in your analysis.
Economists classify every activity as either consumption or saving. Consumption means that the individual is depreciating investible capital while saving adds to the available capital for investment. Consumption is health to an economy only up to a given level, after which it deteriorates it. In this case, alcohol abuse is a consumption activity that has negative effect on economic growth. Based on this, an economist will Continue reading...

Introduction

Microeconomics can be defined as the analysis of the decisions made by individuals and groups, the factors that affect those decisions, and how those decisions affect others (Moffatt, n.pag.). Unlike macroeconomics that deals with aggregate level activities, microeconomic deals with individual, household and firm level economic activities. It helps in understanding the dynamics of an industry and microeconomic impact of industries. The industry that has been chosen for this study is automotive industry for two reasons. First, automobile industry significantly contributes to global economy. Second, the industry is dynamic and undergoing a lot of changes in the recent past.
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According to BBC news (2012), it is important for firms planning the volume and production of oil to know the demands determinant for oil products. It is also important for the consumer to know the available offer of oil products in the market. There are three determinants of demand in the market, mainly the price of oil, balancing or substitutable price for goods and income potential consumers. On the other hand, subsidies, taxes and resources for production of oil are the key determinants of value supply. Besides interest being direction, it is also the magnitude of demand and change Continue reading...

Executive Summary

Although Sunset Grill at Blue is experiencing a remarkable growth rate, managing demand during the peak periods such as weekends is still a major challenge. Customers have to wait for long to the extent that some resort to alternative restaurants. The management, therefore, is considering various ways of increasing service efficiency to reduce the queues and maintain its large customer base. After analyzing various options available, this study recommends that Sunset Grill at Blue should adopt a policy of hiring part-time workers and alternative services to help in enhancing service delivery and reducing the queuing time on weekends.

Background
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PART 1

Question 1
If the price elasticity of demand for firm X’s product is -1.75, lowering its price will result in an increase in total revenue. This is because a negative price elasticity of demand implies an inverse relationship between price and quantity demanded. It indicates that an increase in price leads to a decline in quantity demanded and a decline in price leads to an increase in quantity demanded. In addition, the price elasticity of demand is more than 1 in absolute terms hence a change in price leads to a more than proportionate change in quantity demanded. Continue reading...

Executive Summary

Water is an exceedingly crucial resource required for survival. About three quarters of Earth’s surface is covered by water. However, not all of this water is readily usable for human consumption, agricultural production or for industrial use. According to Glover1 “only about 3% of all the surface water is fresh, of which only 0.6% is readily available for use. In fact, only about 0.018% of world’s surface water is readily Continue reading...