Inelastic Supply And Demand Of Super Bowl Commercials

764 words - 3 pages

Price elasticity of demand (PED) is the responsiveness of quantity demanded in relation to the price. Normally as price increases for an elastic good the quantity demanded will fall. This is affected by how many close substitutes there are for the good and if the good is a luxury good (jewelry) or a necessary good (food). If the price of a certain type of cheese increases, less will be demanded because there are many substitutes available such as other brands of cheese. The inelasticity of demand is applicable when referring to goods which have few if any substitutes, super bowl commercials are an example of an inelastic good. The network airing the super bowl has a fixed amount of commercials they are able to sell which results in a quota of commercials that needs to be filled. The longer the period before the night of the super bowl, the higher the price per commercial is. As super bowl night gets closer the price gets lower in order for the network to fill all available commercial slots. When this happens smaller companies who cannot afford the initial price will find themselves in the middle of a price war nearing the super bowl airing. When there is a fixed supply of a certain good the elasticity of the good is inelastic since no matter how large the demand for super bowl commercials the supply will never increase which results in a vertical supply curve. This type of elasticity of demand is said to be perfectly inelastic where PED = 0.P1 is the highest price the network wishes to charge per commercial. At P1 only Q1 is demanded so neither the large companies (D1) nor the small companies (D2) are willing to meet the network's quota (Q). At P2 the larger companies are willing to purchase a certain amount of air time but the smaller companies are still unwilling. As super bowl night gets closer the demand curve shifts from D1 to D2. Small companies pay P3 (discounted price) and fill the rest of the network's quota.For smaller companies the gamble can be quite substantial. The company needs to do a sufficient cost-benefit analysis of the super bowl commercial. Cost-benefit analysis entails weighing the overall expected cost and overall expected benefit of producing a good. When the expected benefit outweighs...

Find Another Essay On Inelastic supply and demand of super bowl commercials

Causes of Changes in Supply and Demand

588 words - 2 pages Introduction* *A basic economic concept plays a vital part in prices of goods. The prices are set in a market that is supported by the laws of supply and demand. Supply and demand factors determined the wants and desires of people or a group. Supply is the product or service a producer has uncommitted and capable to legal transfer by selling . Demand is the amount of the product or service that buyers want to buy .This means that every

Supply and Demand of Rental Apartments Simulation

800 words - 3 pages This paper examines the economic factor at work in supply and demand of rental apartments in the city of Atlantis. Acting as the property manager for GoodLife Management in Atlantis, the simulation asks the user to make pricing and supply decisions based on changes in the market. Changes in price, population, average salaries, tastes, and government regulations all affect the market in a number of ways.Decisions affected by Changes in Supply and

The Concepts of Supply and Demand

1365 words - 5 pages investment, and the social opposition factor. The biggest factors of all are supply and demand. This paper examines an article on how refineries have impacted the economic reasoning behind the change in supply, demand, and price of gasoline.Insufficient SupplyThe Law of Supply states that the quantity supplied rises as price rises and the quantity supplied falls as price falls. When the price of a good rises, inividuals and firms can rearrange

Supply and Demand Simulator

1089 words - 4 pages to Price elasticity of demand. The demand is the stable change in demand according the adjustments in cost. In most circumstances, the price elasticity could revolve around 0.1 - 0.5 for consumer goods and services. The proportionate change in quantity demanded divided by the proportion change in price revels price elasticity of demand. This is usually greater than negative one. The negative one is known as inelastic, Formally, demand or supply

Supply and Demand

1688 words - 7 pages supply).An event such as September 11th effects on Hot Pepper Market: Hot peppers are an agricultural commodity grown in Trinidad and Tobago. The environment of the supply for hot peppers, as with most agricultural goods is very inelastic. This means that there is a great susceptibility for supply rigidity. If demand increases, there is not much more producers can do in the short run to meet large demand increases.An event with the scale of

Supply and Demand

1954 words - 8 pages inelastic the demand for a product is the greater the change in price is, and vice versa the more elastic the demand curve is the lesser the price change is. This can be seen from the figure 4., D1 is the perfectly inelastic demand curve while D2 is the perfectly elastic. Fig. 4 The price elasticity of supply is the responsiveness of quantity supplied to a change in price. It is measured by dividing the percentage change in quantity supplied

Supply and Demand Simulation

1389 words - 6 pages The University of Phoenix Applying Supply and Demand Concepts Simulation (University of Phoenix, 2009) demonstrated the mechanics of how supply and demand operates in today's market. The simulation used the housing market to show different scenarios and how demand and supply worked in these scenarios. This paper will discuss the simulation and how different environmental factors affect supply and demand and how this affects decision making. Four

Supply and Demand Assignment

507 words - 2 pages Supply and Demand Assignment• Visit and read the material posted about supply and demand. Explore the concepts of supply and demand by using the interactive features on the graphs. Use the questions following the diagrams to guide your exploration. Visit parts 1, 2, & 3 of the Web site.• Fill in the matrix and answer the questions in Appendix C. Describe

Applying Supply and Demand

712 words - 3 pages ���� Applying Supply and Demand Concepts Simulation Welcome to Atlantis The Supply and Demand simulation involves acting as Property Manager for GoodLife Management, a property management firm that manages apartment complexes in Atlantis. This simulation was an exercise in applying the supply and demand concepts based on current market trends. The property manager is required to adjust the monthly rental rate of two

Supply and Demand Simulation

945 words - 4 pages The purpose of the simulation is to familiarize a user with the demand curve, supply curve, equilibrium, and price ceiling. As a property manager for GoodLife Management in Atlantis, the responsibility for maintaining reasonable rental rates and quantity of apartments demanded involves several factors. Personal preferences, economy, income, and rental rates all affect the vacancy and occupancy ratios. Decisions regarding supply, demand, and

Supply and Demand Simulation

1205 words - 5 pages Supply and Demand Simulation Supply and demand plays an intricate role in the amount, price, and availability of products and services. The applying supply and demand concepts simulation guides users through making decisions for Goodlife, a management company for 2 bedroom apartments in Atlantis. The simulation names the user the property manager; responsible for vacation residents, new pricing for units, and advertising. The property manager

Similar Essays

Demand And Supply Of Oil Essay

844 words - 3 pages price of Oil Verses the Demand of Oil by consumers.The effect of increase in demand (excess of demand) for Oil causes the curve to shift inward and leading to an increase in Oil prices. On the other hand Suppliers always tries to follow the demand curve by increasing their supply of Oil to keep the prices of Oil stable.Supply of OilFaced with such an inelastic demand within a certain affordable bad of prices, Oil producers could always increase

Advertising And The Super Bowl Essay

1654 words - 7 pages Super Bowls; networks are able to sell precious seconds of airtime to large companies for millions of dollars. As we move into the 21st century, publicity for the game’s commercials has come to rival that of the game itself. Since it’s beginning, the Super Bowl has drawn top sponsor dollars and high television ratings. But there are two key events that are linked to the phenomenal rise seen in Super Bowl advertising to what it is today. In 1969

Law Of Supply And Demand Essay

2017 words - 8 pages IntroductionIn this paper we are going to examine four different scenarios that demonstrate the laws of supply and demand in our economy. The first section is going to describe the effect of income increases on the computer market. In the second section, we are going to examine the effects that major construction to the tunnels surrounding Manhattan have on the Manhattan apartment market. In the third section, we will look at the elasticity of

History Of The Super Bowl Essay

2140 words - 9 pages The impact of the Super bowl has been a phenomenon. In fact, since January 1967 “it has become part of the American culture, which illustrates that it has become the single-most important event in the sporting world currently” (Johnson, Savidge, pp. 83). The Super bowl had quite humble origins, which is why it is shocking to understand as to why this game became vastly popular and remains that way. In fact, one would notice that it is a county