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 contrast market structures and the role that economics plays within these systems.Supply and DemandSupply and demand are the root concepts of economic analysis since economics is basically concerned with a result and how the result is achieved. The quantities of goods or services demanded satisfy the requirement for the ends. These concepts are relative and are interchangeable. Supply and demand are opposing concepts, in that demand is an inverse or falling function of the price whereas supply is a direct or rising function. Although both supply and demand are important functions, it is necessary to establish equilibrium between them. This would mean reaching a place where there is an equal point or agreement between the consumer and the producers. This can only be attained when the quantities demanded and the quantities supplied are at an equal point, when there is no competition between buy and sell.There are many factors that influence changes in supply and demand. The most prevalent would be pricing. When a product is priced to high, the demand for such product will eventually decrease. Conversely, under pricing could cause the demand to sky rocket and create a problem with maintaining supplies. Other factors would include lifestyles of individuals. This would include religious beliefs and the economics of where an individual lives.Changes in price and quantity influence market equilibriumThe way market equilibrium is influence is basically when the buyer and supplier can come to an agreement on what the right price and quantity are. It influences the market equilibrium by "Any change that measures the quantity demands at every price, it shifts the demand curve to the right and is called an increase in demand" (Mankiw, 2007). If they have changes to price and quantity during anytime, it will shift the curve and increase or decrease the demand which will end up changing the equilibriumPrice ElasticityElasticity is a measure of the responsiveness for quantity demanded or quantity supplied to one of its determinants. Demand or supply of a good is said to be elastic if the quantity demanded or supplied responds substantially to changes in price. Demand or supply is said to be inelastic if the quantity demanded or supplied responds only slightly to changes in price (Mankiw, 2007).Availability of close substitutes will affect the elasticity of a good. If there are many close substitutes goods are called elastic. Tomlinson (2007) uses the example of soda pop. If one supplier of soda raises their prices, people will...

Find Another Essay On Supply and Demand and Price Elasticity Paper

Changes in Supply, Demand, and Price

801 words - 3 pages income is decreasing, so the supply is very low. The demand for more discretionary income is greater than it ever has been and the price for assistance has always been very high, until Primerica Financial Services came into existence. This company provides an opportunity to create supply, fulfill demand, and the price is right; it is complimentary.An article in Success from Home magazine (July 2005) states that many of today’s popular

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

Supply, Demand, Price

886 words - 4 pages industry. This paper will analyze an article based on the 2005 oil outlook and discuss why changes have occurred in the supply, demand, and price in oil.DemandDemand is the amount of a good or service that economic agents are willing and able to buy at alternative prices, other things remaining the same. According to Matthew R. Simmons, Chairman and CEO, Simmons & Company, International, Houston (2004), the biggest oil story in 2004 was the

Summarize an article on supply and demand and explain why changes occurred in supply, demand, and price.

889 words - 4 pages the United States cannot support the levels of oil and gasoline being consumed here puts the U.S. in a risky position. There is always a chance that our imported supply of oil and gas could be disrupted, which would also impact the cost of oil and gas. Therefore, in conclusion there are many volatile factors that impact our supply, demand, and price for oil and gasoline. However, at the end of the day oil and gasoline prices are a big

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

Explain why supply and demand curves shift and how shifts cause changes in the market price

1900 words - 8 pages {Note: all diagrams were drawn by hand. However, there is nothing complex only very simply supply and demand diagrams with straight lines to indicate supply and demand which you can imagine yourself very easily}Prices are set as a result of the price mechanism. The price for a good is the price at which the quantity of the good demanded is the same as the quantity of good supplied: this is the equilibrium price, ceteris paribus, for any given

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

922 words - 4 pages quantity demanded, in the case of the own-price elasticity, of a certain good and in the variable that caused this change. According to Mankiwelasticity is a measure of the responsiveness of quantity demanded or quantity supplied to one of its determinants. The law of demand implies that an increase in a price of a good will subsequently lead to a fall in the quantity demanded for that good. The formulae which calculates this amount is the

Supply and Demand Simulation Paper

1195 words - 5 pages and price is desirable by both parties. The supply and demand model simulation incorporates other factors changing such equilibrium as reflected in a shift of demand or supply.In determining how price elasticity of demand affects the decision making of the consumer and of the organization, one would have to research what type of consumers are in the area that would be interested in the rental of the apartments. For example, what kind of income

explain the terms supply, demand, equilibrium price, and competition. how do these forces interact in the american economy?

1208 words - 5 pages Pengelola: individu atau organisasi yang mencoba untuk mendapatkan keuntungan dengan menyediakan produk yang memenuhi kebutuhan masyarakatProduk: barang atau jasa dengan karakteristik berwujud dan tidak berwujud yang memberikan kepuasan dan manfaatprofit: perbedaan antara berapa biaya untuk membuat dan apa pelanggan membayar untuk ituorganisasi non profit: organisasi yang dapat memberikan pelayanan yang baik atau tapi tidak memiliki tujuan dasar

Supply and Demand Assignment

507 words - 2 pages how changes in price and/or quantity of various goods and services will affect either supply or demand and the equilibrium price. Use the graphs from the interactive activity as a tool to help you visualize the changes in price and quantity.If the price of a good increases, what happens to demand?The demand would decrease. The amount of decrease would be determined by the price elasticity of demand of the good.If the price of a good decreases

Supply and Demand Simulation

945 words - 4 pages changes in supply and demand, shifts in supply and demand affecting decision making, key points from classroom reading assignments emphasized in simulation, and how price elasticity of demand affects the decision making of the consumer and of the organization.GoodLife Management is the only firm in Atlantis managing seven different complexes. The simulation allows the user to play a management role with responsibilities of receiving 30-day

Similar Essays

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 : Percentage Change in Quantity Demanded Percentage Change in Price      One determinant of price elasticity is the number and closeness of substitutes there are available for a good. The closer the goods are, the greater will be the price elasticity of demand of that good. The reason for this being that people will be able to switch to the substitutes when the price of the original good goes up. The greater the number of substitutes and the closer

Supply, Demand, And Price Change Essay

997 words - 4 pages Supply, Demand, and Price ChangeFor the past 30 years, the Federal Trade Commission has investigated nearly all petroleum-related antitrust matters and has held public hearings, conducted economic studies, and prepared extensive reports on relevant issues. Since 2002, the staff of the FTC has monitored weekly average retail gasoline and diesel prices in 360 cities nationwide in order to find pricing inconsistencies that might indicate

Gasoline Supply, Demand And Price Changes

662 words - 3 pages AbstractThis paper will show the association between the supply, demand, and price changes as a result of recent and past events. Hurricane Katrina and the War in Iraq have left our gasoline infrastructure at such a point that it was almost crippled. Political threats, though not direct to the supply can send ripples though gas prices. The need for change in American gasoline consumption will also be discussed as shown during the 4th of July