Aspirin: Gasoline Vs. Electric Automobiles

2. Total revenue falls as the price of a good is raised, if the demand for the good is ( )

The first factor is the availability of substitute goods, which are goods that can be utilized instead of the original good. If there is a substitute good available, the demand is likely to change more because people can buy different products. On the contrary, if an item has few substitute goods, it may not gain or lose customers. In Canada, Nike shoes have lots of substitute goods like Adidas

In the pharmaceutical world, payers have switched to the generic brand over the brand-name drugs (The Commonwealth Fund, 2016). Although efforts to slow down the costs of healthcare might have work a little bit. A recent report shows spending has grew 5.7 percent in the past year (Altarum Institute, 2015).

According to the elasticity of demand law, a change in the quantity demanded leads to a change in price of the product. As such, if there were an increase in demand for pharmaceutical products, there would be an increase in the prices, while a decrease in these prices leads to a decrease in prices of pharmaceutical products. However, goods such as Geffen and Veblen do not obey the law of supply and demand, as

Electric cars impose a serious risk on the oil and gas industry. The extent by which this market succeeds reciprocally defines the extent by which the oil and gas industry deteriorates. As with all forms of technology, there comes a point in time where one form of technology no longer appears to be useful in comparison with an applicable alternative. The current inhibitors of electric car adoption are the price of batteries and vehicle performance. With that being said, battery prices dropped over 30% just last year and are expected to continue dropping. Projections estimate that 35% of cars will have a plug by 20401. However, even in the next few years, companies such as Tesla, Chevrolet, and Nissan plan to offer electric cars on the market at an affordable price. The question then becomes: when the oil and gas market will be displaced by the electric market? If both markets produce a vehicle of similar price and quality, then it is reasonable to assume that a customer will choose the option that is more eco-friendly. The moral issue still remains: should the vehicles of tomorrow be fueled by gasoline or are viable options readily available and acceptable?

Supply and demand lies in the heart and soul of economics. The concept is perhaps the single most driving force in an economy, specifically a capitalist economy. Supply and demand is based on two concepts: The law of demand and the law of supply. The law of demand states that the demand of a product rises as its price falls, therefore the demand of a product falls as its price rises. A good example of this occurs in grocery stores. If the price of a case of Coca-cola drops from $6.99 to $2.99 the demand for the product will rise because more people are willing to pay $2.99 rather than $6.99. Not only will typical consumer of Coca-cola purchase more but consumers who are not normally willing to pay $6.99 will make the purchase. Substitution also plays a role in the equation. Substitution occurs when consumers substitute one good for another based on price levels. In the Coca-cola scenario, some Pepsi drinkers will purchase the Coca-cola given the case of Pepsi is price higher.

Apple juice and orange juice are substitutes for consumers, so the fall in the price of apple juice decreases the demand for orange juice. The demand curve for orange juice shifts leftward. The increase in the wage rate paid to orange grove workers raises the cost of producing orange juice. The supply of orange juice decreases and the supply curve of orange juice shifts leftward. The net effect of these events decreases the equilibrium quantity but has an undetermined effect on equilibrium price. If supply decreases by more than the demand, the shift in the

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

As stated in his article “Why the Gasoline Engine Isn’t Going Away Any Time Soon,” Joseph B. White believes that “an automotive revolution is coming -- but it’s traveling in the slow lane” (White 260). He goes on to state throughout his article that today’s reality is one that prevents this “revolution” from taking place in the way that Americans all hope for. He sites the current inability to design an engine that would run on an energy source other than gasoline or diesel but still have the same power that traditional engines have, as well as the cost of gasoline versus the cost of electricity, as some of the sources of our woes. Some companies do not want to move away from their old factories and workers whose union agreements make dismissing

Increased supply without changes to the demand creates a surplus leading to a lower equilibrium price and decreased supply. Without changes to the demand, our cost structure would lead to a higher equilibrium price due to shortage.

There are many determinants that cause the change in demand of a product (Sayre & Morris, 2015). One example of determinants of change in demand is found in an article on Panera Bread. Taylor explains how Panera Bread competes with its competitors in her Business Insider article (2016). In Taylor’s article, examples of inferior products, substitute products and complementary products are given (2016). Bread is an inferior product, which means the demand of bread goes down with increased income (Morris & Sayre, 2015).

When faced with a supply and demand issue we are faced with a product that is in demand but cannot be supplied or is limited to supply. As we see in the avocado scenario, the demand for avocados was skyrocketing however the supply was limited. Therefore, adjustments need to be made in order to maintain the current supply, or outsource for more. When this occurs the price of the product is bound to increase. The industry feels that price increase justifies what the value of the product is at the particular time. The higher the demand the higher the price. With supply and demand it proves that if people really want something they will pay for it regardless of the cost. Let me use the Samsung Galaxy S5 as an example: the phone has a retail value of $599.99, within a day of the phone being out, every store was sold out. Consumer’s had the demand for the phone and the supply was there. However, that same phone is a few months may only be

This is a perfect example of a change in demand; when the demand increases, at the same or even a higher price, more quantity is demanded. In the figure below, a shift to the right in the demand curve signifies an increase in demand.

In reducing the quantity of pseudoephedrine coming into New Zealand, Customs and the Police are reducing the potential production of P. in effect, officials are increasing the scarcity of P in NZ, although this may seem positive, it may encourage producers of P to increase quantity supplied. This is because the recently increased scarcity causes producers to reduce supply, causing a leftwards shift of the supply curve, hence the equilibrium price increases (as shown on diagram 1). This is due to the inelastic nature of price for demand of P, as well as the elastic nature of price for supply of P. It is this price elasticity for supply of P that results in the producers of P increasing quantity supplied by a greater proportion than the change in price. The perverse incentive for producers of P in this case would be increased equilibrium price, which, according to the law of supply and the supply price elasticity associated with P, would cause producers to increase supply.

Availability of substitutes: If the price of Coca-Cola was to increase, we can say that a lot of consumers would turn to other kind of soft drinks and that bring a result of the quality demanded of Coca-Cola will decline. But if the price of Coca-Cola falls a lot of consumers will change other soft drinks to Coca-Cola