Income elasticity of demand

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    Each tier of customers have different price sensitivity and the cut-off points should, therefore, be distinctive. It is unknown how the system arrives at a decision but it should analyze price elasticity of demand by each customer segment to optimize the cut-off point. This is further complicated when we consider the types of hotel rooms as it alters customers sensitivity to price and…

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    INVOLVED (a) (b) (c) FIGURE 2.6. (a) Demand Relationship (b) Supply Relationship (c) Demand and Supply Relationship Therefore, it can be said that price is the reflection of demand and supply. It is believed that behind the allocation of various resources underlies the relationship between these two (demand and supply). For example, if there is a shortage of oranges in the market, their price would increase. This reason behind this is the reduced supply and increased demand for the fruit. It…

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    Price elasticity refers to the change in the amount of a product demand due to change in its price. In other words, how much in quantity demand will change due to a single unit change in price. The Supervisors of microwavable food company should make the clients feel like they cannot live without their food, in case the supervisors are planning on increasing the prices for their products. This is because the company is operating in a very competitive market meaning that a slight increase in the…

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    if there is an increase in price or decrease in income, consumers will substitute high-priced items with less expensive alternatives. Substitution effects shows the change in the consumption of goods due to the change in the prices of the products. Consumers tends to replace/substitute luxury goods with cheaper items when income decreases or price rises. However, the consumers also tend to substitute cheaper items with luxury goods when their income increases and price of the luxury goods…

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    Candy Bar Case Study

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    1) Assume that the demand curve for an imported candy bar can be expressed as € PD = 4.60 − 0.0001Q, and the supply curve can be expressed as € PS = 0.2 + 0.0003Q. a) What is the price and quantity at which the market clears? The price and quantity at which the market clears is $3.50 and 11,000 respectively. b) What is the value of the consumer surplus and the producer surplus in this market? The consumer and producer surplus are $6,050 and $18,150 respectively. The overall benefit to society…

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    information that how the average demand for pizza can change with the change in the price of Pizza changes. The Coefficient is -100P where P is the price of Pizza. If there is increase in one unit price of Pizza then the demand for pizza decrease by 100 units. Because -100 X 1 will result in decrease by 100 and if P is 2 then decrease will be -100 X 2 = -200. Coefficient of the Price of hot dogs: This coefficient provides information that how on average the demand for pizza can change with…

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    the supply and demand principles. As the change in price of a good or services, it will change in quantity supplied (movement along a supply curve) (text book ). When change in income, preferences or prices of other goods or services, it will change supply (shift of a curve). (text book ) The following example illustrates the simple idea on the affect of behavior for the individual firms/household in the market. Assuming as the demands of iPhone increase. Figure 1 Supply and Demand diagram…

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    The advanced pricing technique that would be most appropriate for a Sam’s Club or Costco would be second degree price discrimination. Second degree price discrimination is defined by Thomas and Maurice (2010, p. 583) as, “When a firm offers lower prices for larger quantities and lets buyers self-select the price they pay by choosing how much to buy.” Therefore, when the same consumer buys more than one unit of a good or service at a time the marginal value placed on consuming additional units…

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    are able to provide in the consumer market. On the other hand, demand refers to the amount of goods that consumers are willing and are able to purchase in the market. Elasticity refers to the responsiveness of changes in demand or supply due to the changes of the factors that influence them such as the price of the product. Finally, dead Weight loss refers to the loss that occurs when the equilibrium between the supply and the demand in the consumer…

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    Minimum Price Policy

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    could be an effective solution to reduce alcohol consumption. Substitutes are products which can replace the goods (Tribe,J 2011). When price of a good is increased, the demand of substitutes is increased. Minimum price policy makes the alcohol’s price higher, the demand of alcohol’s substitutes will be higher, whilst the demand of alcohol will going down. Concretely, professor David Nutt has developed a drug to substitute alcohol and does not damage human’s health (Meredith.C 2013), this drug…

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