This website uses cookies to ensure you have the best experience. Learn more

Price Theory And Price Elasticity: Using The Article: "China Sees Shortfall In Grain Output".

884 words - 4 pages

Price Theory and Price Elasticity:Using the article:"China sees shortfall in grain output".In the article which I have chosen that appeared in the Bangkok Post on Wednesday the 5th 2003, regarding the shortfall and rise of price of Chinas grains. The article focuses on various types of grains including Rice, Wheat and Maize and the price increase they have gone through due to the governments attempt to cut down stockpiles, after a record high of 512 million tones, and also to free up farmland for more lucrative crops. Through this article you can see how one decision can affect so many various places in an economy.Grains are one of the most used food products in the world. Take rice for an example, in Asia almost every meal is accompanied by rice and due to this China will soon need to import rice so the country can survive. This has happened due to the Supply of grains lowering which has now caused the price of grains to dramatically rise. The demand of rice is elastic. But how do you figure out all of this? It's all part of elasticity and price theory.The elasticity of both demand and supply are important factors of a countries economy. Elasticity refers to the amount of responsiveness in supply or demand related to the changes of price in a certain good. The most simplistic way to see if something is elastic or inelastic is through either a Demand curve (Ed), which shows the quantity demanded, or a Supply Curve (Es), which shows the quantity supplied (For both see below). If the supply or demand is very elastic the curve would be more horizontal and if the supply or demand would be Inelastic the curve would be more vertical. For the extremes a perfectly elastic curve would be horizontal and a perfectly inelastic curve would be vertical.An example of the Elasticity of Demand:This refers to the degree of responsiveness in demand with the change of price.If a Pencil cost $0.50 and the price was raised to $0.75 and through this small change of price the demand decreased by a lot it would mean that the demand for pencils is very elastic respect to the price. (See graph below)To calculate the Elasticity of demand and supply you use a variety of formulae:Even though you can see if something is elastic or inelastic just by looking at the steepness or flatness of a curve, it is not very accurate. Therefore you use different formulas to work out the exact amount of elasticity of something.To work out...

Find Another Essay On Price Theory and Price Elasticity: Using the article: "China sees shortfall in grain output".

The "Flanking in a Price War" article

3279 words - 13 pages Article Main Points SummaryThe "Flanking in a Price War" article describes a study conducted in the 1980's testing the pattern of price sensitivity for stock-up grocery goods (products that can be stockpiled) and nonstock-up grocery goods (perishables that can not be stockpiled) in the Quebec grocery market. A covariance design within a Bayesian decision framework was used and provided an indicator as a stop rule for the study. The results of

Economics - Price Elasticity of Demand

540 words - 2 pages indicates whether revenue will increase or decrease.SubstituteCross-price elasticity of demand is calculated as the percent change in demand divided by the percent change in price of the substitute and will determine the magnitude of the shift in the demand curve. Price elasticity is always positive for two substitutes.ComplementCross-price elasticity of demand is calculated as the percent change in demand divided by the percent change in price. A

Summary of Michael Curtin's article "Murdoch's Dilemma, or What's the price of TV in China?"

599 words - 2 pages According to Michael Curtin's article "Murdoch's Dilemma, or What's the price of TV in China?" Rupert Murdoch acquired Star TV in attempt to create a Pan-Asian media empire but could not overcome the problems associated with such a broad range of a culturally diverse audience and, says curtain, "the logistical demands of competing with local and national television broadcasters". Also the fact that "global satellite systems are grounded by a set

The Theory of Price Discrimination

769 words - 4 pages The modern theory of price discrimination began with the work of Arthur Cecil Pigou (1877- 1959) and is defined by Machlup (1955): "Price discrimination may be defined as the practice of a firm or group of firms of selling (leasing) at prices disproportionate to the marginal costs of the products sold (leased) or of buying (hiring) at prices disproportionate to the marginal productivities of the factors bought (hired)". But in simpler terms

Flanking in a Price War Article Summary

1614 words - 6 pages that occurred in the late 1970’s. The next point of the article was to discuss a pricing experiment IGA and the author chose to follow to help combat a price war initiated by its competitors. The premise of the experiment was to ascertain if certain goods were reduced in price, while others maintained or increased price, what would happen to overall demand elasticity as well as specific goods’ demand elasticity. The goods were divided into two key

Microeconomic Theory, Price Policy in Oligopoly

1319 words - 5 pages Microeconomic Theory"Price Policy in Oligopoly"Instr.: Dr. Michael ChletsosSubmitted by:Maria SoulimiotiPrice-output behavior in OligopolyThe kinked demand curve: This model was developed in 1939 by the economist Sweezy. It assumes that an oligopolist will expect rival firms to follow any price decrease it makes but not follow any increase. Thus the elasticity of demand for the firm's product is much greater above the ruling price than below it

What do you understand by the own-price elasticity of demand for a good?

922 words - 4 pages their prices to business travellers; for example the Hyatt Hotel group offered discounts of up to 50 per cent off regular room rates. Under what circumstances would this lead to increased revenue for these hotels? Before we define the meaning of the own-price elasticity for a good we must understand elasticity and its concept in general. Elasticity is basically a comparison between the sizes of change in the

Finding the price of a home using regression

3194 words - 13 pages ) which is given on the MegaStat output later in this paper. The MegaStat output shows that there is very strong evidence that these variables are definitely related to the selling price and indeed very important in this model. The results from the data show that the alternate hypothesis should be accepted.Introduction and PurposeThe purpose of this analysis is to find the equation that predicts the selling price of a house. While the focus of

An analysis of the story "The price of Eggs in China" by Don Lee

990 words - 4 pages is an important detail because never before has the author described the wood or Dean's art as pretty. Pretty is a word that so much simplifies and restrains the reaches of any object. This implies that Dean's art work will be limited from further development.The need for analytical details in a story is crucial to the story's success. One of the most all-encompassing metaphors of the story is the title. "The Price of Eggs in China" directly

Discuss the factors, which affect demand: Explain the concept of price elasticity of demand and its significance to governments and producers

699 words - 3 pages price. A shift in the demand curve could be resulting from changes in tastes, real income, population size and composition, consumer expectations or technological progress. These factors often work simultaneously to increase or decrease demand. However these factors do not apply similarly to all goods. The demand for generic brand products decreases as income rises.The price elasticity of demand refers to the responsiveness of quantity demanded


2774 words - 11 pages stable and too price-sensitive for meaningful innovation. The medical devices are basically designed to cater something nurses would love and trust. Whereas, the challenge was to build in durability without giving up emotional appeal or cost. For instance, the team rethought every aspect of a roll stand by modifying the geometry of a conventional chair base for a larger toe envelope, better ergonomics and a more inviting look.In addition, Mindray

Similar Essays

Price Elasticity Essay

617 words - 2 pages Price elasticity of demand is a consumer's receptiveness to the change of a price in a good or service. In essence what this means is that a consumer has certain expectations in regards to goods or services he or she wishes to purchase. There are certain goods or services that a consumer will purchase regardless how much they are. This usually occurs when the item is a necessity and an alternative is not available. This is price elasticity. The

Supply And Demand And Price Elasticity Paper

1041 words - 4 pages Supply and Demand and Price Elasticity PaperPricing, supply, and demand are the foundation of the economic structure. This paper is intended to highlight the affects of each. The changes in supply and demand will be looked at along with how changes in price and quantity influence market equilibrium. It will also look at how the necessity of a good and the availability of substitutions affect price elasticity. Finally, it will compare and

Price, Income And Cross Elasticity Of Demand

1482 words - 6 pages Explain what is meant by the terms price elasticity, income elasticity and cross elasticity of demand and discuss the main determinants of each of these. Discuss the importance of each of these to the decision making process within a typical business.Elasticity is the responsiveness to which one variable responds to a change in another variable Price elasticity of demand (PED) measures the responsiveness of quantity demanded of a product to a

Define And Explain Price Elasticity Of Demand

1316 words - 5 pages the car.      A big increase in rail fare may not have the same effect though. It may be cheaper to hire a coach in the short term, so collectively you may hire a coach, but it may also be that car transport is even cheaper than these in both the long and short run, so you may find yourself driving to work instead of using the train.      The price elasticity of rail transport is fairly inelastic, so it may be cheaper to just use the car from