Hanjin Shipping Case Study
A customer’s choice depend on many factors: price, product, promotion and place. Furthermore, demand curve which generally shows a downward-sloping tendency is be used to analyze and show the relationship between consumers’ decision . The demanded of the consumer will change when the price of a product changed (others equal). It usually based on the law of demand andThis relationship is known as a movement along the demand curve which shows by figure 1 and it can also be explained by two reasons: substitution and income effects.
However, a change in demand occurs when other factors (except price) changed. For example, a fall in the price of complement will rise the demand or when the tastes of customers changed will brings a big impact on demand. The demand curve will shift to right with more demand and shift to left with less demand
The another element of the market is supply which producer shows the respond to the market demand. Supply curve reflects the quantity that producers want to and able to produce during a time. Contrary to the demand curve, at a high price, there will be more supplies which explain that supply curve is usually upward-sloping. And price change causes a movement along the supply …show more content…
They want to know the amount of demanded changed when the price change. In other words, they want to know the elasticity which measures the responsiveness of demand. The two keys to understanding it is the sign and value of the answer. However, the PED tend to be a negative number because the quantity of demand fall when the price rise. So we usually more focus on the value.
Shows in figure 3. When the value of the price elasticity is less than one, the demand is price inelastic. When the value of the price elasticity is more than one, the demand is price elastic. And unitary elastic occurs when the value equals one There are many factors influence the price elasticity of demand: the substitute effect and disposition of income. Besides, demand is always likely to be more elastic in a long term(Sloman,2016:71). Also, the responsiveness of supply to a change in price is measured using the concept named the price elasticity of supply(PES). For supply, the sign of the answer is likely to be positive because more supplied with an increase in price. Shows in figure