Essay on Economics 213

willingness to pay goes down. When this happens, consumers turn to alternate goods that may not be as efficient or as high in status, but still get the job done. If the price of butter goes up,

Kimberly Amadeo from about.com confirms for us that, “In economics, there are five determinants for individual demand” (Amadeo, K. n.d.). As demonstrated in our module reference materials these determinants are labeled as: income, price of related goods, population, tastes, and consumer price expectations. For the purpose of this essay, in brief I will elaborate upon tastes and income. As, I surmise these are two major factors that could effect change in the demand of the GNC product, let’s first content with the factor of tastes.

According to the Organization of Intelligent Economists, price expectation would be one of reason on the changing prices of goods specifically on loaves. When there is expectation of price change, if people expect the price of the good to increase in the near future, then they are more likely to purchase sooner, which would increase the

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

According to OpenStax, Principles of Economics it can be a change in income, population, tastes, prices of substitutes or complements, or expectations about future prices. All these variables modify the amount of demanded product at all costs. It is possible that the demand curve shifts to the left or the right. The movement to the right happens when the amount of required good is increased at any price compared to the initial position. Conversely, a shift to the left occurs when the amount of demanded good is decreased at all costs compared to the original position.

popularity, one with a working knowledge of economics could explain that the price increase is a

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).

However, the university has now allowed for another ice cream shop to open door in the same campus. In other words there is now going to be more competition for “Ice-Campusades” because students will have a second choice for ice cream as were before they only had a substitutes. The affect of students choosing my store over another has caused some problems with in the numbers in my store because prizes at the new place are different than mines making flavors and styles of ice cream more affordable for consumer. This would affect my sales and for this I have to change mine, this would mean I would have to lower the prizes and values were the costumer believes it to be good and

The change in prices also had an impact on the Italian region’s expected and actual profit because the €7 total sales variance represented an increase of €7 profit for the actual profit. The €7 variance was calculated by the favorable €20 variance for ice cream sales and an unfavorable variance of €13 for specialty sales (€20-€13=€7). This proves that the Italian region can charge slightly more for their ice cream sales given the increase in demand, while the increase in demand of the specialty product could be more attributed to the decrease in price. Overall, the change in pricing came out to make a positive impact on the Italian region’s profit.

Economics is defined as the study of how human beings coordinate their wants and desires, given the decision-making mechanisms, social customs, and political realities of the society. (Colander) Evaluating the trends in consumer consumption will help answer what, and how much, to produce and for whom to produce it. The law of supply and demand is a very important process of economics. The law of supply states that quantity supplied rises as price rises, when all other factors remain constant, and the law of demand states that the quantity of a good demanded is inversely related to the good’s price. (Colander) Therefore, when the price of a good goes down, the quantity of the good demanded will go up, and when the price of a good goes down, the quantity of the good demanded will go up. There are many factors that will affect the changes of consumption patterns like a change in the supply and a change in the demand.

1. Explain how the following changes in aggregate demand or short-run aggregate supply, other things held unchanged, are likely to affect the level of total output and the price level in the short run.

3. As the price of a good increases, the change in the quantity demanded can be shown by

By this the change in price will not necessarily cause a huge change in the quantity of demand by the consumers,

John Hawksworth “Opinion: Economic Trends - Saved by the consumer?”, Accountancy, London, Mar 2002 (with minor editing)