Essays on Demand And Supply

Abstract

Using the regression equation and given values of independent variables, we estimated the elasticity of each of them and ascertained that the product is highly elastic to price levels and therefore, the firm can consider to decrease the price levels in order to increase their market share. At the same time, cross elasticity and income elasticity were also significant in relation to the demand of the product, although advertisement expenditure has negligible impact on the product’s demand. Hence, own price, price of related goods and income of consumer are three major factors which the firm should incorporate while ...

The Canadian healthcare and social assistance sector falls under the NAICS classification. The sector entails a publicly funded healthcare system. The sector is guided by the provisions of the Canada Health Act of 1984 (Belchetz). The sector, relative to its peers in most other countries including the U.S and Mexico, is unique. Its uniqueness arises from the fact that despite being predominantly publicly funded, most of the healthcare services at the point of sale are provided for by private practitioners. The Canadian healthcare and social assistance sector has been billed in many quarters as a model to be followed ...

Volatile Prices of Primary Goods Preventing Economic Development in LDCs

Background The primary goods refer to the products that are obtained directly from agricultural activities and are not subjected to the process of manufacturing. The most important primary products in an economy include those that are obtained from the sector, such as the fishing, agricultural, forestry, and mining industries. In terms of the least developed nations, which are mainly located in Africa, Asia, and the Latin America, the trade characteristics of their economies include the dependence on the developed, industrialized nations, and, significantly, the reliance on primary products. Accordingly, in international trade, the least developed nations’ exports are primary ...

Demand function (QD) = -5200 - 42P + 20PX + 5.2I + 0.2A + 0.25M Where; P= 500, PX=600, I=$5,500, A=$10,000 and M=5,000

Replace values in the equation;

QD = -5200 - 42(500) + 20(600) + 5.2(5,500) + 0.2(10,000) + 0.25(5,000) = -5200 – 21,000 + 12,000 + 28,600 + 2,000 + 1,250 = 17,650 Price elasticity of demand = ∂QD∂P×PQD ∂QD = change in quantity demanded, ∂P = change in price; P= price, QD = quantity demanded ∂QD∂P = -42 QD= 17,650 P= 500 Price elasticity of demand = -42 ×50017,650 = -1.1898 The above elasticity indicates that the product’s quantity demanded ...

Determination and interpretation of elasticities

Demand function, QD = -3,500 – 150P + 30A + 75PX + 10 Y P = 300 cents, A = $750, PX = 200 cents and Y = $10,000 QD = -3,500 – (150 × 300) + (30 × 750) + (75 × 200) + (10 × 10,000) = -3,500 – 45,000 + 22,500 + 15,000 + 100,000 = 89,000 units

Price elasticity of demand

Price elasticity of demand = ∂QD∂P × PQD

Change in quantity demanded/change in price, ∂QD∂P is the coefficient of price, P in the demand equation.

∂QD∂P = -150 QD = 89,000 P = 300 cents PED = -150 × 30089,000 = -0.5056 The above price elasticity of demand indicates that the quantity demanded of the low-calorie, microwavable food decreases by 0.5056% for every increase in price by one cent. The elasticity is less ...

American Public University

1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. QD = - 5200 - 42P + 20PX + 5.2I + 0.20A + 0.25M and Q = Quantity demanded of 3-pack units P (in cents) = Price of the product = 500 cents per 3-pack unit PX (in cents) = Price of leading competitor’s product = 600 cents per 3-pack unit I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located = $5,500 A (in dollars) = Monthly advertising expenditures = $10,000 M = Number of microwave ovens sold in the SMSA in which the supermarkets ...

What are the determinants of the Deadweight Loss?

Introduction The deadweight problem happens when the government through an attempt to increase their earnings from the goods in a country increases the taxation on them. It happens when they impose a certain amount of tax on certain commodities in the market and the end consumer as well as the producer in charge of the production process forced to lose the whole or part of their surplus. The loss they both suffer is the deadweight loss. The government has the right to earn some form of income from the trade activities within their borders. However, they also need to ...

American Public University

1. Compute the elasticities for each independent variable. Note: Write down all of your calculations. The demand estimation as follows: QD = -3,500 - 150P + 30A + 75PX + 10Y. When P=300, A=750, PX=200, and Y=10,000. Placing these numbers into equation: QD=-3,500-150(300)+30(750)+75(200)+10(10,000)=QD=-3,500-45,000+22,500+15,000+100,000=89,000. Under given these numbers, we have 89,000 products demanded. Price elasticity of demand is [d(QD)/d(P)]/[QD/P]. Therefore, we take a derivative of the function subject to price, and we assume other variables do not ...

Oil Prices Fluctuating In the Middle East

Introduction Oil being a commodity is subject to high levels of fluctuations as opposed to the stable investments like bonds and stocks. In particular, Organization of Petroleum Exporting Countries (OPEC) plays a significant role in influencing the prices of oil across the globe. As a result, OPEC controls around 40 percent of the global supply of oil by setting the production levels that caters for the world demand and it can determine the prices of gas and oil by reducing or raising the levels of production. At a particular point in time, OPEC vowed to maintain the prices above $ ...

Strategic Analysis Alacer Gold Corp and Gold and Mining Industry

Introduction Gold is a precious metal with high ductility and malleability, and it finds application as jewelry and investment. It is considered to be one of the safest bet for investment, especially during economic instabilities. Consequently, rapid political instabilities in the Middle East and financial crisis led to rapid increase in the price of gold worldwide. Technological innovation is also a major factor that affects the gold and mining industry. Therefore, the strategic analysis narrows on the gold industry, with a specific focus on Alacer Gold Corporation. It looks at the trends in the industry and how Alacer Gold ...

Introduction

The Petrochemical industry in the ministry of energy has been focusing on the oil prices change and how it influences the economy. The oil demand comes from the petrochemical industry whereby energy generation helps in manufacturing and production industries. These industries help in economic transformation through improving country’s GDP. As the source of energy, oil in the petrochemical industry has been influenced by inflation and unemployment, interest rates and exchange rate. These factors influence the government spending, hence affecting the importation of oil from the producing countries such as Saudi Arabia. The oil prices as a result of ...

Introduction

Economic performance is an important aspect that every country needs to consider if it intends to monitor its progress development-wise. Conducting this performance reviews involves reviewing the Gross domestic product values that a country registers every year and formulates a trend upon which certain conclusions can be drawn. The information obtained from this process is very reliable which means that decisions can be made based on this. Therefore, the essence of this paper is to apply various macroeconomic concepts to the economy of Singapore. From the information, it is possible to extract significant information such as unemployment rate in ...

A capitalist depression is that period where the number of those employed drastically reduces simultaneously with the productive capacity associated physical capital. Wage and marginal productivity is a theory dictating that wages are payable at that level that is similar to the marginal revenue. Hunt (1979) notes that Keynes first departure was his insistence that the level of total income was extremely significant in influencing the amount of savings than the interest rates. The second departure was his argument that savings and investments were not determining factors of the interest rates. The consumption function is used in depicting the ...

1) The supply is the amount of goods and services offered for sale on the market at a certain price. It depends on prices: the higher they are, the higher is the offer from the seller, since the latter is interested to get as much money from the sale of goods (services) that makes his economic interest. This is called the law of supply. Quantitative dependence suggestions from a change in the price of goods called "supply elasticity". It is measured as the ratio (in percent) growth of volume of supply to higher prices. 2) The term "demand" in ...

Executive summary

Demand and supply is the basic concept of economics and hence it is the backbone of market economies around the world. Demand implies the willingness and potential on the part of a consumer to purchase a product at a specified price while supply indicates the quantity of the same product available in the market for sale. The price is a major factor determining the demand for a product in the market even though the consumer’s income and preference along with the price of certain other complementary products tend to influence the price. Supply of a product in the ...

Abstract

The US economy thrives on the proper functioning of the monetary policy of the government of the day. Interest rates, inflation and recession are all related and happen to influence proper functions of the government warranting their clear understanding. As a victim of a recent economic recession, a consideration of the role of interest rates on the overall functioning of the economy becomes particularly important. This paper shall seek to understand the concept of interest rates and how they affect the economy of the United States of America. The paper, in doing this, shall consider the causes of the ...

Introduction

Market economies constantly change depending on the demand and supply of goods. The demand and supply of a particular service or good is dependent on the unique characteristics of the product that determines the quantity that individuals in the particular market are willing to consume. Other important determinants include the price of the product, the consumer’s preferences; the price of other related products as well as the demographic and income characteristics of the population (Rittenberg & Tregarthen, 2012). The concepts of supply and demand studied in the course are crucial concepts in economics as they are the backbone of ...

Bullwhip Effect

Supply chain management constitutes of complex tasks and includes companies that transfer goods from initial raw material stage to finished goods to retailers. The most common reasons that supply chain companies stumble is when the customer demands and market conditions fluctuate or shift. The bullwhip effect is caused when supply chain companies are not able to manage their orders . The change in consumer demand and market fluctuations cause different supply chain companies to order more products/goods to achieve or meet the demand. The most common reason for the difference in orders is that companies base the demand for goods ...

Consumer’s choice is the ability of a given person or simply the buyer of a given good or service to determine what to use or purchase concerning products and services (Mankiw, 2014). There are several reasons behind any consumption habit by an individual. These include the prices of a given commodity, the level of income of the consumer and the utility as well as the technology at hand that characterizes the dynamics notable in the individual’s mode of purchase and use of a given commodity (Mankiw, 2014). According to Taylor& Greenlaw (2014), change in the prices of ...

What is a cartel? (5 marks)

The companies in a market might collude to set the prices by making explicit or implicit agreements between them on the market price, sharing the market geographically, or controlling the quantity supplied in the market. The agreement between the companies in a specific market might create an oligopoly behaving like a monopoly. The companies might set the price, and all the agreement partners might obey the agreement. If the companies can create a large market power, they might behave like one monopolist. Cartel is the situation of existence of an explicit or implicit agreement between the companies in a ...

In Economics, it is common to outline general principles that may be used for explanation of development of economy from local to global level as well as behaviour of different stakeholders like private companies, governments, consumers, etc. These principles are usually categorized in three groups: how people make decisions, how people interact with each other and forces/trends that influence the economy. In this paper, they will be briefly presented in order to understand better how companies should act in order to be competitive and responsive to the market changes. How people make decisions. In the free market economy with ...

Cash is the main means of settlement in pricing gold and silver in the future markets. It is however not consistent with the demand and supply situations observed in the actual market. Trade in the current market is done using bullion. Increase in bullion supply in future markets results from the printing of uncovered contracts which represent gold claims. This is temporary and false. The rise in paper bullion supply contracts results in a decrease in the price in future markets regardless of the high bullion demand in the physical market and its reduced supply. Using empirical evidence and ...

Introduction

This paper seeks to conduct an analysis for the financial performance of Lexus in relation to other industry competitors; Jaguar, Mercedes, Porshe and BMW. In order to arrive at objective results, the analysis will compare various financial and performance metrics for the businesses. It is a purely objective analysis that will be based on the figures obtained from the annual reports of the companies.

Return on capital employed (ROCE)

Return on capital employed is a metric for a company’s profitability and the effectiveness of its capital employment. ROCE = Profits before interest and tax/Capital employed. A significantly huge amount of ROCE is a clear ...

Introduction

There is no state decided minimum wage in the state of Tennessee; therefore, they follow the federal minimum wage. Therefore, there is no promised wage law in the state that requires states to pay their wages promptly. Like many other states throughout the United States of America, FLSA (Fair Labor Standards Act) applies to Tennessee workers set according to the Federal Minimum Wage and Labor Law. According to federal minimum wage in 2015, businesses throughout the state of Tennessee need to pay $7.25 per hour. The majority of workers in Tennessee gets $7.25 per hour for their daily labor ...

Introduction

Modern global economic system is a considerably distinct from the dogmatic frameworks of political economy (Mankiw, 2014). Professor Blanchard contests that extreme increase in production and substantial automation of the business processes have seriously changed the global economic landscape (2011). In order to stay competitive the companies have to develop and implement new business solutions, as well as they have to stay socially and environmentally responsible (Goldin, 2014). In addition, Gartner wrote that there is an increasingly important need to stay in line with the perpetually evolving customers’ preferences (2006), and the smallest disharmony with their predilections may result ...

Abstract

Wesco International Inc, which is an American publicly traded company currently, operating in the U.S. The company supplies electrical and repair products and is based in Pittsburgh, Pennsylvania. Most of the company’s business is conducted in the United States. This article provides a microeconomic analysis by reviewing the current demand and supply situation of the company as well as the involved costs of production and recommended strategies that the company could adopt to gain a competitive power.

Introduction

Maintaining successful operations is a hard task for multinational corporations especially in the current market trends and fluctuating customer demands. However, ...

Branding Strategy

The brand name for the company will be “Texas Vegetable Trans-Mobile Stand”. This name has been chosen to encompass the geographical area where the business will operate and the services it will provide. The business will operate within the Northern Texas and the surrounding regions which can easily be accessed. The services will be to provide door to door delivery of vegetable products; hence by using the brand “Texas Vegetable Trans-Mobile Stand”, the prospective customer will be able to predict the products provided by the company and the geographical area within which it will operate (Keller, Parameswaran, & Jacob, 2011). ...

The Qatar Stock Market

Before discussing Qatar’s stock market, let us gain some relevant information about the country itself. Qatar is located in the continent of Asia and covers over 11,000 square kilometers of land which makes the country the 168th largest nation when looking at land area. Qatar became an independent state in 1971 gaining its independence from the United Kingdom with a population of 1,951,591 people in 2012. The currency is the Qatari Rial (World Atlas, 2015). When viewing the stock market, there is information that every investor should know about Qatar before investing in the market ...

Introduction

In economics, a market is an institution or a mechanism that brings together buyers (bearers of demand) and sellers (suppliers) of certain goods and services. At the same time, markets may take various forms, including the form of the labor market. The labor market not only covers employees in all sectors of the economy of various skilled workers, but also working-age people who are not involved in the social production at the moment (for example, temporarily unemployed people). In the most general form, the labor market is the economic relationship between the demand and the supply of labor. The ...

Changes in Market Equilibrium

The interaction of the forces of demand and supply determines the equilibrium price and quantity in a perfectly competitive market. A market is in equilibrium when no buyer or seller has any incentive to the change in the commodity that he or she buys or sells at the given price. The equilibrium price of a commodity is the price at which the quantity demand of a commodity equals the quantity supply and the market clears. The process by which the equilibrium is reached is shown by the intersection of the demand and supply curve of the commodity.

Summary of the Video

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Introduction

There exist multiple factors that influence the level of reward paid to different workers. The wage rates, just like prices of other commodities are greatly determined by the forces of demand and supply. The kind of economic significance attached to wage differentials cannot be overlooked since they have a direct influence on the distribution and allocation of economic resources. Workers with equal abilities in a competitive market receive rewards that are meant to cancel out the non-wage differences between their jobs. These differentials represent the variability and diversity of abilities of different workers both physically and mentally to contribute ...

Introduction

The exchange rate has become an integral component of modern economics. Its role stems from its far-reaching effects on the economy of a country, investments, the profitability of firms, and personal finances. Countries have become even more interdependent due to the rapid advancement in communication technologies and the expansion of global trade, which have significantly reduced the geographical distance between both individuals and countries. However, since nations use a broad range of domestic currencies with different values, trading partners must, therefore, rely on currency conversion methods to facilitate global transactions. This paper explores the importance of exchange rate and ...

Introduction

The electricity industry is facing numerous challenges today including environmental pollution, increased demand, and aging infrastructure. Environmental issues are the primary concern of the power generation industry and have necessitated the inclusion of renewable energy sources in the generation of electricity. Renewable portfolio standard has set forth new requirements in the industry obligating electricity generation companies to generate a certain percentage of generated electricity to come from renewable sources. However, rapid integration of new energy sources on the old transmission and distribution infrastructure will cause quality, security and reliability challenges on the electric power supply. The good thing is ...

The Economic system is a way in which a country allocates the production, distribution, and consumption of goods. Several economic systems are in existence; these are; traditional, command, market and missed economies. The traditional economic system relies on traditions to determine what is done for a living. Industries, shelter, and clothing are similar to those in previous generations. It is therefore not used as there are developments taking place in the world of production and distribution, and the needs and demands are changing in the command system, the government controls all economic activities. In this system, the market plays ...

Introduction

Over the last one year, the global oil price has declined rapidly by approximately 50 percent. The drop in the oil prices may have largely been as a result reduced global growth prospects. Analysts argue that the rise of the U.S dollar in relation to other currencies played a significant role in the oil prices decline (Energy Information Administration, 2014). The decrease in the global oil prices has led to a significant impact on the U.S economy. In essence, the price drop has reduced the cost of living while increasing the real consumers’ incomes. The real income gain has ...

Introduction

The US and global consumers shows different consumer behavior for products. The economy possesses the largest technology companies such as Google Inc. and Apple Inc. in the world.

High consumption of technology products in the US and all over the world.

The mobile phone industry is very innovative and important to the society. Product that I will be looking at is the iPhone and its rising demand in the US market despite the increased competition from Samsung Inc. iPhone has acquired the largest market share in the United States in spite of its price.

The paper discusses about the key players in the industry and their impact on product pricing, demand and supply.

iPhone’s influence in the industry and the forces that drive the demand and supply of the product.

Analysis

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Introduction and background information

The underground market is a precise example of free economic activity at work. The markets are entirely unregulated except by the participants themselves. No taxation takes place, and it is possible to pursue activities in the underground market which are illegal. The market can be very popular. Indeed, the smugglers (the earlier form of underground markets) were sometimes, known as ‘free traders ‘in medieval Europe. The major factor influencing the growth of the underground market is high taxation by governments. The increased tax is because of the ever increasing public expenditure with dwindling resources at the disposal. Reversal is ...

The article primarily concerns the aspirations of Mexico to offer affordable prices regarding both internet, as well as, mobile services. This is because the telecom industry of the country has been considered to be highly inefficient and also overpriced. As a result, the Congress approved a plan by the president i.e. Enrique Pena to overhaul the regulations of industry. The new regulations as proposed by the president will compel the providers of the services to sell their assets if they exude control of over fifty percent of the market share. Carlos Slim, a billionaire from Mexico, who is the ...

Scarcity is the economic problem often experienced by many companies in the world. It is the art of having too many and unlimited wants in a world where there are limited resources to satisfy those wants. The economic problem makes a society deficient of productive resources to fully satisfy the human wants. Wal-Mart as an organization has devised methods to try curbing the problem of scarcity in the society (Ferrell, John, and Linda). Walmart spends approximately $7.6 billion in a year to buy back shares of its own stock. Just as scarcity in the art of having too many ...

Assignment 1: Demand Estimation

Demand and Supply Estimation Based on the given information, we will calculate the elasticities of different variables. For the first demand function, QD = - 5200 - 42P + 20PX + 5.2I + 0.20A + 0.25M Price of the microwave oven, P = 500, Price of leading competitor’s product, PX = 600 Per capita income, I = 5,500 Monthly advertising expenditure, A = 10,000 Substituting the values of P, M, PX, I and A in the above equation, we will get the value of quantity demanded as, QD= - 5200 – 42(500) + 20(600) + 5.2(5500) + 0.20(10000) + 0.25(5000) = 17,650 units Price Elasticity ( ...

Business Cycle Case Study

Introduction Business cycle refers to the unsteadiness in business activities within a given economy over a given time. The business cycles are mainly characterized by periods of recession or expansion. During periods of expansion, the economy is experiencing growth, this is indicated by factors such as; increase in the rate of employment, increase in production processes within industries and increase in sales as well as incomes. The period of recession is when the economy is experiencing a contraction. Indicators of contraction in an economy are; unemployment, decrease in production processes and a decrease in sales and incomes.( Stock, pp ...

There is no doubt that company success depends on firm-specific factors such as company size, which help distinguish them from competitors. However, their survival hinges on their ability to anticipate and respond to foreseen and unforeseen changes in the larger, external environment. These changes have industry-wide and nation-wide implications that necessitate their consideration by firms. The ties between company performance and macroeconomic conditions rest on which macroeconomic factors strongly correlate to the industry in which it operates (Zeitun, Tian, & Keen, 2007). Macroeconomics, therefore, examines the aggregate economic relationships in an economy (Evans, 2004). The basic concepts of aggregate supply ...

The purpose of this memo is to give an overview of the theory of labor economics. Firstly, it will highlight the interaction of supply, demand, and prices of labor/wages. This is followed by a brief explanation of the benefits and costs associated with an increase in the minimum wage. Next, recommendations will be made on the way forward for Michigan State. The recommendations given will be supported by reasons. Finally, policies will be suggested on what the state should do to guide regulation of wages. In labor economic theory, the price of labor affect and is also affected by ...

The key insight for the decrease of commodity prices for products such as crude oil is that such prices decreases occur with respect to economic fundamentals but not ceteris paribus. This paper explicitly explores the general causes and effects of price decreases for crude oil as well as highlighting the aspect of demand and supply behind this. The basic cause of price decreases boils down to the economies of demand and supply. Basically, the price of crude oil is determined by demand and supply curve as indicated below: When supply for oil increases, the supply curve shifts from left ...

Reasons for the severe decline in Chinese Stock market in 2015

Between June 2014 and June 2015, the CSI 300 Index rose by 150%, reaching the peak at 5,166.3 on 12th June 2015. What follows was a severe decline in the stock index. Within just one month, the CSI 300 index had lost 30% to 3,507 on July 8. Several factors caused the fall.

Short selling

In the run-up to the stock market decline, investors were aggressively involved in short selling and margin trading. Short-selling and margin trading allowed investors to purchase shares using borrowed money thereby increasing the demand for stocks. Investors engaged in short-selling sell stocks borrowed from ...

The question of minimum wage introduction for low-skilled workers offers conflicting research findings. Some theorists suggest that the introduction of minimum pay for low-skilled labor may affect the whole employment. However, the general model of competitive market for labor assumes that the introduction of minimum wage will cause job loss among the low-skilled employees. This report is dedicated to the economic analysis of this model.

What Economic Theory Predicts Will Happen

The simplest approach includes the analysis of one separate labor type. In such market, the minimum wage that overshoots the competitive equilibrium in the market causes harm to employment from two standpoints. First of ...

Crude Oil Prices: Market Supply and Market Demand

Abstract The primary purpose of this paper is to understand how supply and demand factors contribute to a consistent decline in crude oil prices across the globe. Furthermore, the paper seeks to understand the impact resulting from the fall in the U.S and the global economy and implications of the same. In the introduction, the paper starts by acknowledging the importance of crude oil to the world economy and the fact that it is an ordinary commodity whose price is influenced by the market forces. Oil prices are renowned for their instability in the market, an aspect that is ...

(A)Principles of increasing/diminishing marginal returns. Principles of economics include returns to scale. Most firms experience increasing returns to scale when at the beginning of the business the costs in the long-run are decreasing this is so because a unit of the available resources produces more returns. On the other hand decreasing returns to scale in most cases occurs when the unit resources produce fewer returns. Organic products on the article exhibit increasing returns to scale, (Arthur, 2003). From the article companies such as wall-mart improved and became big firms this helped them to scale up, and make high ...

Introduction

While at my early level of education I had a compelling drive within that one day I be one of the accommodation service providers in the country. Hospitality entails a lot of dealing with people which even made it more interesting and appealing to me. On completing my university education I was immediately absorbed in one of the leading hotel service providers in the country, Hilton Hotel. I encountered and dealt with several people of different walks. This gave me experience enough, and after working with Hilton Hotel for five years, I decided to quit my job and start my own ...