ECON312 Course Discussions Week 2

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ECON312 Course Discussions Week 2
Explain how the law of demand affected your purchase…

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ECON312 Course Discussions Week 2

ECON312 Course Discussions Week 2

All Students Posts – 95 Pages 

Demand, Supply, and Market Equilibrium – 47 Pages 

Think about a product that you have purchased recently (e.g. soda, diapers, takeout meals, milk, shoes, manicure/pedicure, video game, etc.). Explain how the law of demand affected your purchase. Give specific examples of how the determinants of demand and supply affect this product (T-I-P-E-N and P-R-E-S-T). What happens to the demand curve and the supply curve when any of these determinants change? Give examples of scenarios that would cause a change in demand versus a movement along the same demand curve and supply curve for this product. Discuss the new equilibrium price and quantity that result from these changes. Can you demonstrate some of these changes graphically?

All department stores have periodic sale days during which prices are reduced substantially. The purpose of this price reduction is to get rid of old merchandise and stimulate the buying by customers (who may purchase many other items as well). Thus, stores take advantage of the law of demand: merchandise which would otherwise be hard to sell, is sold because customers are willing to pay a lower price. When a housewife goes to the supermarket to buy groceries and finds that one of the products she intended to buy, was reduced in price because of a special sale, it makes her feel wealthier. Indeed, she can buy more with the money she started with. This is the income effect…

Price Elasticity of Demand – 40 Pages 

Think of another good that you have purchased recently (or you could continue with the good you selected in TDA I). Be specific (e.g. is it breakfast cereal in general or Cheerios cereal specifically). If the price of this item increases, how would this affect the quantity of the good that you consume? Is the Demand for this good Price elastic or Price inelastic? Justify your classification by talking about the determinants of elasticity as they apply to this product. Say price is on the rise for this product and you are the manager of a store, would you be thrilled to be selling this product? Under what circumstances would you want to own a business that sells this product? In other words, how does an increase in price for this good affect your Total Revenue? Using specific examples, relate the concepts of Cross Elasticity and Income Elasticity to this product.

When Coke is no longer on sale at any market in my surrounding area, I will still purchase it but in a much smaller quantity and I tend to hide it more at home so that my family does not consume it too quickly.  Then when the stores place it back on sale, I will tend to try to stock up on it, although in my home that is futile because we just end up drinking more of it.  For me I would consider this item to be elastic.  I could always purchase something else that is on sale or cheaper for my family to drink, or just drink water.  Therefore if I was the manager of a store, I would do what my local stores appear to be doing, which is making me (the consumer) feel like I am getting a great deal on the product because it is on sale and the price points for the same product with different packaging is higher priced.  Even though the store appears to be offering a “sale”, in fact they are charging the regular price for the item, while making it appear to be discounted.

Again referring to the article in Time that talks about this same method but in this article they are talking about the new smaller quantity cans that are priced at a higher per unit amount than the larger size.  Consumers are falling for these marketing tricks because of apparent sale prices and the consumers not doing their research or checking and comparing the per unit pricing…