ECON312 Price Elasticity of Demand

$4.50

ECON312 Price Elasticity of Demand
Think of another good that you have purchased recently (or you could continue with the good…

SKU: ECON 312 Price Elasticity of Demand Categories: , Tags: , , ,

Description

ECON312 Price Elasticity of Demand

ECON312 Price Elasticity of Demand

Discussions Week 2 All Students Posts – 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…