• Home Page
  • The Effect Of The Price Elasticity Of Demand

The Effect Of The Price Elasticity Of Demand

Superior Essays
Show More
Demand is the “total quantity customers are willing and able to purchase” (Shah, 2017)1, looking at the price elasticity of demand determines how much a product is priced and how responsive demand is to the change of that price. For example, 500 people will be willing to pay £15 for a concert ticket, however if the price of the ticket was increased to £25, then only 250 people would be willing to pay. This can be shown using a demand curve, which is based upon the principle that if the price of a product increases, then the quantity will decrease and vice versa. This is why a demand curve is a negative slope.

Price elasticity of demand, measures how much a change in price can affect the quantity demanded. This can be calculated using the …show more content…
Over-time people may be able to integrate the extra 7 minutes of travel into their routine, or find other substitutes, causing demand for the bridge to be become elastic. However, this would likely not happen as looking at the average income for Leigh Woods residents (STATS AND REFERENCES) it is higher than the UK average income (STATS AND REFERENCES). This shows that users have more disposable income and would class the £1 toll charge as a necessity as opposed to a luxury. This is another determining factor of price elasticity. Using the toll bridge is a necessity that they would be willing to pay more …show more content…
6 October.
Zhu, Y. (2017) Economics for Events and Marketing Lecture 3: Price Elasticity of Demand [lecture to BSC Business Management with Marketing Year 1], University West of England. 6 October.
University of the West of England (2017) Student and staff numbers. Available from: http://www1.uwe.ac.uk/about/factsandfigures/studentandstaffnumbers.aspx [Accessed 15th October 2017].
University of Bristol (2016) Facts and figures. Available from: http://www.bristol.ac.uk/university/facts/ [Accessed 15th October 2017].
Visit Bristol (No date) Clifton Suspension Bridge. Available from: https://visitbristol.co.uk/things-to-do/clifton-suspension-bridge-p24661 [Accessed 15th October 2017].
South West Business (2013) Clifton Suspension Bridge toll rise inquiry: price will have gone up 400 per cent in 10 years. Available from: http://www.southwestbusiness.co.uk/news/31052013091044-clifton-suspension-bridge-toll-rise-inquiry--price-will-have-gone-up-400-per-cent-in-10-years/ [Accessed 15th October 2017].
Sloman, J. (2014) Price changes for travellers in Bristol. The Sloman Economics News Site. Available from: http://pearsonblog.campaignserver.co.uk/ [Accessed 13 September

Related Documents

  • Improved Essays

    Maurice J Tobin Bridge Case Study
    • 452 Words
    • 2 Pages

    Maurice J Tobin Bridge Case Study

    Then, in the 1990’s, the tolls were increased even larger to help cover the payment for “The Big Dig”. October 26, 2016, the toll payment…

    • 452 Words
    • 2 Pages
    Improved Essays
    Read More
  • Improved Essays

    Fin 511 Week 1 Assignment
    • 634 Words
    • 3 Pages

    Fin 511 Week 1 Assignment

    It indicates small price change leads to large change in quantity demand for cloth. Before price change the total revenue of cloth is $480 and after reduction in price of cloth ,demand goes up to 28 unit from 16 unit which results total revenue to $560.Here price cut increases total revenue, it is called elastic demand. Figure: Inelastic Demand The figure shows that higher deduction in train fare does not result the higher decrement of the demand of travelling by train.…

    • 634 Words
    • 3 Pages
    Improved Essays
    Read More
  • Improved Essays

    Elizabeth River Canal Case Study
    • 711 Words
    • 3 Pages

    Elizabeth River Canal Case Study

    Many people, like my brothers, live in Norfolk and work in Portsmouth(or vice versa), but struggle to pay several more dollars every day on their commute. Virginia's government recognized this when they implemented the Toll Relief Program, which reduced tolls for low-income residents of Norfolk and Portsmouth who make eight or more trips through the tunnel in a month. However, that good effort is not enough. It only reduces the tolls, and it still leaves residents of Virginia Beach, Chesapeake, or other local cities or those who travel the tunnels infrequently out of luck. Local transportation secretary Aubrey Layne recognized the pilot program may need to be altered or expanded in the future (WAVY News).…

    • 711 Words
    • 3 Pages
    Improved Essays
    Read More
  • Superior Essays

    Questions On Elasticity Demand
    • 748 Words
    • 3 Pages

    Questions On Elasticity Demand

    Carlos Brown ECO 550 October 14, 2016 Dr. Bonina 1.Compute all elasticities for each independent variable. Option 1 Quantity Demanded = (-5200) - 42 (500)+20 (600)+ 5.2(5,500)+ .20(10,000)+ .25(5,000) =(-5200) -21000 +12000+28600+2000+1250 is 17650 = 17650 Cross Price Elasticity =…

    • 748 Words
    • 3 Pages
    Superior Essays
    Read More
  • Decent Essays

    Tuna Fish Case Analysis
    • 392 Words
    • 2 Pages

    Tuna Fish Case Analysis

    a. Consumer surplus: Consumers are willing to pay a certain amount for a good or service. The variance in that price is considered consumer surplus. When the price is less than they are willing to pay, the amount (or quantity) of that good or service increase. When the price is higher than they are willing to pay, the amount (or quantity) of that good or service decreases.…

    • 392 Words
    • 2 Pages
    Decent Essays
    Read More
  • Improved Essays

    Cost-Plus Decision Making Case Study Rich Manufacturing By Ghagat
    • 731 Words
    • 3 Pages

    Cost-Plus Decision Making Case Study Rich Manufacturing By Ghagat

    Rich Manufacturing Case Study The cost-plus pricing strategy uses the expenses associated with producing a product and adding an additional amount, called a markup, to generate a profit. Rich Manufacturing’s production manager Gina Picaretto purchases 100,000 machine unit parts from Ghagat Incorporated each year. Ghagat uses cost-plus pricing in their contract with Rich Manufacturing. Ghagat’s costs per part include $10 for labor, $10 for other costs, and a markup of $5.…

    • 731 Words
    • 3 Pages
    Improved Essays
    Read More
  • Improved Essays

    Suburban Sprawl
    • 922 Words
    • 4 Pages

    Suburban Sprawl

    By implementing more of the rideshare stops along each entry and exit point of the new toll lane and encourage more development of these stops in the zip code as a whole, it would greatly reduce the amount of commuting stress Frumkin refers to and in addition would help by lowering the amount cars…

    • 922 Words
    • 4 Pages
    Improved Essays
    Read More
  • Decent Essays

    Cashier Checks Essay
    • 325 Words
    • 2 Pages

    Cashier Checks Essay

    Timico, I agree that the price of purchasing a cashier’s check can be extreme for most budgets. This type of payment is also good when there is a large amount of money that need to transfer from one institution to another one. Cashier checks are guaranteed money and it is drawn from the purchaser’s bank account. This type of checks is more secure for the recipient and is one of the reasons it is requested. Cashier checks are not a product that has a wide variety of substitutes available.…

    • 325 Words
    • 2 Pages
    Decent Essays
    Read More
  • Decent Essays

    Inelastic Consumer Value
    • 321 Words
    • 2 Pages

    Inelastic Consumer Value

    Every consumer is counting the expenses based on his own income, depending on the priorities required to meet certain needs or simply for pleasure. Many people urgently need certain goods or products and they are looking for the right moment to buy them because they are intuited with an upcoming price change that often does not fit the forecasts. At the same time, many others desperately want a certain product, more or less necessary, even if it is an elastic or inelastic product, regardless of the price. I would like to present you, as an inelastic product in my household, the internet, through the price pretended by internet providers. It is proven that whenever supply services have increased, consumer value has not changed as much as expected.…

    • 321 Words
    • 2 Pages
    Decent Essays
    Read More
  • Improved Essays

    Price Elasticity Of Demand For Netflix
    • 752 Words
    • 4 Pages

    Price Elasticity Of Demand For Netflix

    Figure 2 provides a visual of the amount of subscribers for Netflix verse Hulu. Figure 3 shows that despite the price increase of 12.5% in 2015, the amount of subscribers still increased. The figures above are evidence that the price increase did not have a significant impact on consumer responsiveness. This concludes that the price elasticity of demand is not sensitive; meaning that the change in price did not affect the change in demand. The change in price does not affect the demand because the supply Netflix offers is highly competitive.…

    • 752 Words
    • 4 Pages
    Improved Essays
    Read More
  • Improved Essays

    Examples Of Cocktail Party Economics
    • 780 Words
    • 4 Pages

    Examples Of Cocktail Party Economics

    7- demanding Clients (A Venti Chapter) of Cocktail Party Economics, discusses the concept of demand and consumer behavior. Demand is defined as the “relationship between the price of a good and the quantity demanded of it when all other influences on the buyers’ plans remain the…

    • 780 Words
    • 4 Pages
    Improved Essays
    Read More
  • Improved Essays

    Example Of Supply And Demand
    • 776 Words
    • 4 Pages

    Example Of Supply And Demand

    Supply, Demand, and Market Prices are very key to the Economics world. The two, Supply and Demand, impact each other and impact prices of services within an economy and as well as consumer goods. Supply is the amount of a good or service that is obtainable at a certain time to consumers. When we talk about consumers, they reveal attention in buying a good or service, exhaust available supply, the when that happens the demand will certainly rise. Demand is a calculation of consumer wants and consumer spending on a particular good or service at a specific price.…

    • 776 Words
    • 4 Pages
    Improved Essays
    Read More
  • Decent Essays

    Avocado Market Analysis
    • 445 Words
    • 2 Pages

    Avocado Market Analysis

    The article shows an avocado market have a very high demand because customers want to buy it and this is a common product in almost all supermarkets but the market supply is very poor at that time. As we know that, when the price is increasing, quantity demand will decrease and quantity supply will increase. Base on the theory we can analyse how the price go up.…

    • 445 Words
    • 2 Pages
    Decent Essays
    Read More
  • Improved Essays

    Case Study Of Demand And Demand For Starbucks Coffee
    • 1051 Words
    • 4 Pages

    Case Study Of Demand And Demand For Starbucks Coffee

    Price elasticity of demand measures the dimension to which the quantity of demand for a service or good changes when the price of service or good changes. In order to find the price elasticity of demand it has to be compared the change in quantity demanded with the change in price, (Lipsey and Chrystal, 2011). The demand for Starbucks coffee is price elastic, because it is not categorised as a necessity good where the buyers have to buy regardless the price, Starbucks coffee is considerate as a luxury good and the demand for it will decrease if the prices rise due to the huge market of competitors selling the same products as Starbuck.…

    • 1051 Words
    • 4 Pages
    Improved Essays
    Read More
  • Improved Essays

    Internal And External Factors Affecting Pricing Strategy
    • 1072 Words
    • 5 Pages

    Internal And External Factors Affecting Pricing Strategy

    This is done to maintain sales since demand for products and services reduces due to decrease in purchasing power of people. On the other hand, during an economic boom, the prices of goods and services increases because the purchasing power of people is high and there is greater demand for products. Marketers follow various pricing techniques in order to meet the changes occurring due to change in demand and price. • Marketers increase the price of products in order to protect their profits during rising cost of production • Marketers develop a price protection systems to link the price of the finished good to the prevailing cost of production • Marketers shift their focus from sales volume to reducing cost and increasing profit…

    • 1072 Words
    • 5 Pages
    Improved Essays
    Read More

Related Topics

Ready To Get Started?
Discover
Company
Follow
©2024 Cram.com
Privacy Policy |  About Ads |  Site Map |  Advertise  | 
  • Cookie Settings