...Factors That Will Be Affecting the Demand And Supply For Products Introduction: Demand is described as the ability and the willingness to buy a specific quantity of a product at a given price (Grant, 2002). The demand curve is downward sloping and varies inversely with price. Price changes cause a movement along the demand curve while changes in the factors that influence demand cause a movement of the curve itself. Supply is described as the ability and willingness to supply a specific quantity of a product at a given price (Grant, 2002). The supply curve is upward sloping and varies directly with price. Price changes cause a movement along the demand curve while changes in the factors that influence supply cause a movement of the curve itself. A dynamic global economic environment with continued innovation leading to new and improved technologies entails ever changing demand and supply situations for a large number of goods and services on offer to consumers presently. This paper examines the changing demand and supply considerations for 10 such products with a synthesis as to whether demand/supply for/of them will increase/decrease in the years to come. Before we proceed, it is important to understand what is meant by demand and supply in economic terms. FACTORS THAT WILL BE AFFECTING the DEMAND FOR CONVENIENCE FOODS IN the NEXT SEVERAL YEARS Demand for convenience foods (like those manufactured by the...
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...the computed elasticities for the business in terms of short-term and long-term pricing strategies. Provide a rationale in which you cite your results. Price Elasticity is -1.19, a 1% increase in price reduces quantity by 1.19%. The demand for this product is elastic and higher revenue may discourage consumers. Cross-price elasticity is 0.68, a 1% increase in the price of the competitor’s product will result in an increase in the quantity demand of the product by .68%. This shows inelastic conditions between the product and the price of the competitors therefore the competitors is not an issue because their price will not affect sales Advertisement-elasticity is 0.11, a 1% increase in advertising expenditures increases the quantity of good sold by 11%. Therefore, demand is rather inelastic to advertising. Advertisement is not always a sure thing to increase revenue. It could have an adverse action and to lose customers Income-elasticity is 1.62, with a 1% increase in income the demand will rise 1.62%. The firm can decide to increase price if cost of living increases. In regard to the microwave oven the elasticity is 0.07, a 1% increase in the number of microwave ovens would increase the quantity of demand by 0.07%. Therefore, the demand is inelastic in this case Recommend whether you believe that this firm should or should not cut its...
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...percent of the total domestic demand of Pakistan. Paper Industry in Pakistan is important as it has emerged and survived well over the years. About 70% of the paper units are in Punjab, 10% are in NWFP and the rest 20% are in Sindh. Punjab has the greater proportion as it has the higher availability of underground water as well as wheat straw which is the prime raw material in paper production. At present there are around 100 organized and unorganized paper production sectors in the country (Anon., 2014). Paper Production involves process innovation which compels the companies to constantly improve their production technologies involved in the manufacturing processes. The big companies in the country like Packages and Century Paper & Board Mills are well involved in improving their product through spending great...
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...Economic Factors affecting the demand, Supply and Price of a commodity Introduction: Supply and demand are two important concepts in economics and supply and demand are considered to be the backbone of a nation’s economy. Demand is generally referred to as the quantity of product or services required by the consumers. The quantity of product or services referred to and the volume of product the consumers are ready to buy at a specific price. The demand relationship is generally referred to as the relationship between the price and quantity of products or services demanded nu the consumers. Supply generally represents the how much product or services a market can offer to the consumers. The product or services supplied refers to the amount...
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...Demand Estimation Stacy D. Lucero Strayer University April 28, 2015 Abstract By using data from the month of April from 26 supermarkets around the country that sells our low-calorie, frozen microwavable dinners we are going to discover which independent variables have the greatest effect on the demand of our products. We are also going to graph a demand and supply curve in order to more accurately forecast our demand. Demand Estimation As an analyst for the leading brand of low-calorie, frozen microwavable dinners my boss has asked me to produce a demand estimation using existing data. We are trying to forecast how to price our products to increase our sales by taking independent variables and estimating how elastic they are in relation to our products. We are also going to determine our demand and supply curve to further our knowledge for more accurate forecasting. Elasticity for Independent Variables We wanted to see how elastic the demand for our product is by using data from 26 supermarkets around the country for the month of April. When referring to the elasticity of demand we are trying to determine if prices changes to our product will help us to sell more of our dinners. To do this we used a regression equation. We then computed the elasticity’s of several independent variables that would have an impact on our sales. The independent variables that we used were the price of the competitor’s product, the per capita income of the area nearest the supermarkets...
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...shipments, which increased supply; but conversely they where spending even more when it came down to the unplanned advertising. This spending even led them to overcompensate the budget and extreme reduction in sales in unsuccessful quarters. This all stems from their use of the sales forecast. The overall problem with Harmon was not only its misspent money in advertising but also its dependency in the sales forecast. Their business was basing future sales on past sales and not quantity demanded. Demand forecasting is a way they could determine what the demand is for the product they are trying to sell. They should focus on the demand they are not obtaining from their competitors. Using demand to dictate supply for the company could be useful for predicting the sales price, but they also have to acknowledge that supply and demand may be cyclical. There might be erroneous reasons for why sales may decrease that they will not be able to predict. The company already acknowledges events when the supply of Harmon food is reduced. They should focus on reducing their advertising costs when they know that the product is not in high demand at that time. They have focus highly on the supply of their product with little acknowledgement of the demand for their product. Even when observing the factors that affect sales, they focused on internal factors that affected supply. This seams to be a consumer driven market, and they are focused on the supply side. 2. What factors do you think affect...
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...that are fully furnished and offered for sale in various parts of the world (Starting a Plastic Manufacturing Plant, 2013). They cater to a wide variety of plastic products (Starting a Plastic Manufacturing Plant, 2013). Once you are knowledgeable of your desired product, the scientific and technical way to manufacture it and the type of business venture you are planning, as well as the location of your plant, you can start looking into the license and permit requirements of the government (Starting a Plastic Manufacturing Plant, 2013). Any transaction has two dimensions, namely a demand and a supply (http://www.buzzle.com/, 2013). In any market, the number of units of a commodity that a consumer has the will and ability to pay for becomes the demand for that particular commodity in the market and any producer that has the will and ability to produce those units, becomes the supply (http://www.buzzle.com/, 2013). It is not necessary that the demand and supply volumes will match (http://www.buzzle.com/, 2013). The aggregate demand and supply analysis is based on this difference between the demand and supply forces (http://www.buzzle.com/, 2013) The demand for a good or service is defined as Quantities of a good or service that people are ready to buy at various prices within some given time period, other factors besides...
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...DEMAND Demand: the quantity of a product that consumers are able and willing to purchase at various prices over a period of time Market: where or when buyers and sellers meet to trade or exchange products. It is important to remember that a want and demand are entirely different what consumer’s want they may not actually purchase. Notional Demand: The desire for a product Effective Demand: The willingness and ability to buy a product The definition of demand assumes that the only factor affecting demand is price, economists refer to this as ceteris paribus Ceteris Paribus: Assuming other variables remain unchanged The relationship between demand and quantity is INVERSE CONSUMER SURPLUS: In every market there are always people who are willing to pay above what they actually pay. Consumer Surplus: the extra amount that a consumer is willing to pay for a product above the price that is actually paid! Diagram: The determinants of Demand Consumer Income Real disposable Income: income after taxes on income have been deducted, state benefits have been and added AND the result is adjusted to account for changes in prices! For Example: If the money I receive from my job increases by 5% but prices also increase by 3% then my real income only increases by 2% Therefore if consumer income increases then so does demand but if it falls demand falls because they lose the ability to pay for the good. Normal Goods: goods for which an increase in income leads to an...
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...Assignment 1 Demand Estimation COURSE: ECO 550 – Managerial Economics and Globalization Assignment 1: Demand Estimation I work for a leading brand of low-calorie frozen microwavable dinners, called Nukims. My supervisor has asked me to compute the elasticity of each independent variable, in a demand model for our product, which uses data from 26 supermarkets around the country in the month of April. The following is the regression equation, with the standard errors in the parentheses for the demand of the dinners: The following are the independent variables assumed: * Q = Quantity demanded of 3-pack units * P (in cents) = Price of the product = 500 cents per 3-pack unit * PX (in cents) = Price of leading competitor’s product = 600 cents per 3-pack unit * I (in dollars) = Per capita income of the standard metropolitan statistical area (SMSA) in which the supermarkets are located = $5,500 * A (in dollars) = Monthly advertising expenditures = $10,000 * M = Number of microwave ovens sold in the SMSA in which the supermarkets are located = 5,000 My supervisor wants me to find the elasticity of demand for each independent value, but first we must find out the value of Q, by inserting the values in the demand regression equation as follows: The elastisities are calculated as follows: To determine the implications of each of these independent variable’s elasticity, you must first understand what elasticity in economics...
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...Current Market Conditions Competitive Analysis Principles of Microeconomics ECO 365 David Norcross April 13, 2015 Current Market Conditions Competitive Analysis In this paper, Team A is participating in a strategic planning group creating a new product at General Motors. The following is a competitive market analysis on the potential of our new 2016 Chevy Volt’s success. We will be focusing on our competitor Toyota and their Prius lineup. Additionally, we will summarize our target consumer and current market conditions. Then we will cover variables that weigh on supply, demand, and equilibrium prices. Next, we will consider the pros and cons our firm faces while identifying the effect on our competitiveness and long-term profitability. Then, we will evaluate factors that influence fixed and variable costs. Lastly, we will provide recommendations on how GM can grow their profits and increase their competiveness. The Product The Chevy Volt was a concept designed by Bob Lutz Jon Lauckner of General Motors ‘GM’ in 2006 to overcome many of the limitations of pure electric vehicles while retaining many of the beneficial elements. The purpose of this car was to leap-frog the technology of the Prius hybrid. The theory of this concept was a car that would be able to drive on electricity for the first forty miles, and then a generator would run gasoline to extend the range of the car. In 2010, the production version was able to achieve 35 miles on electric and average 37 miles...
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...survived technological advances, and economic hardship researched the market to develop sustainable marketing strategies. One company managing to stay afloat is Texas Instruments. The organization managed to revolutionize its industry, and its market research enables it to develop competitive products that consumers buy. Consumers across the world prefer companies that offer high quality products and services in a responsible manner at an affordable price. Texas Instruments invests time and money researching consumer behavior to discover what consumers want, and compares this data with other companies to remain competitive. The organization focuses mostly on technological advances and research. The following discussion details an analysis of the current market conditions for the development of a new product by Texas Instruments. History Texas Instruments is best known for its calculators, most people use these calculators in school. The company, established in Dallas, Texas, has 80 years vested in its industry. The organization experienced technological advances including touch-screen and wireless devices. Such advancement contributes to the research and development of new products. The organization works with educators to develop appropriate tools (calculators) to enable students to maximize their educational experience. Texas Instruments specializes in semiconductor manufacturing, and has contracts around the world. According to Texas Instruments (2013),...
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...caffeine addiction has a part in why soda is consumed”. Because several million people drink Coca Cola the corporation is considering developing a new proposed product. Coca Cola thought since an estimate of 130.6 million people drink alcohol, Coca Cola will be teaming up with Crown to make a pre-made mix Coca Cola and Crown alcoholic beverage. Crown has already agreed to the conditions that Coca Cola has thought of and what is in stake for them. Coca cola has to take into consideration what factors affect demand, supply, and equilibrium prices. Coca Cola also has to discover who are their competitors, potential customers, and buyers. The next step Coca Cola has to figure out what issues or opportunities they may face from the effects of long-term profitability with this new product such as price elasticity of demand, technological innovation, relationship between the amount t of labor and capital of the law of diminishing marginal productivity, and cost structure. The third step is to find the factors affecting variable costs that include productivity and others that change the supply of and demand of labor, and fixed cost. Finally Coca Cola has to make any recommendation of how their corporation can maximize their profit – making potential and how to compete in the new market. History of Coca Cola Factors that affect demand,...
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...The Microeconomic Effects of Change in Demand and Supply Factors: Wal-Mart Raina Devoid Southern New Hampshire University Introduction The following research study of Wal-Mart Stores Inc. (Wal-Mart) examines the effects of non-price factors as they relate to the graphical representations of demand and supply curves. After describing the industry itself and the services/ products it provides and an understanding of how the organization operates as a market has been established, this study will give insight on the effects of four non-price demand factors have on the demand function. The non-price demand factors include consumer income, seasonal products, availability of substitutes, and population. Once this has been defined, the study will discuss the effects of the following non-price determinants on supply: technological progress, government regulation, seller expectations, and alternative products and related goods. The explanation of these changes will be as it relates to the change in the graphical representation of the supply function. Organizational Profile Wal-Mart Stores, Inc. is a publicly-traded company that offer consumers discounted prices on everyday items. It is the world’s largest retailer and is known not only for its discount stores, but also its super-centers, neighborhood markets, and club stores. “The company operates approximately 10,130 retail units under 69 different banners across 27 countries,” (Wal-Mart Stores, Inc., 2013). Whether a customer...
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...Assignment 1: Demand Estimation Student’s Name Course Tutor Date Assignment 1: Demand Estimation Compute the elasticities for each independent variable. Note: Write down all of your calculations Elasticity refers to the degree of responsiveness in quantity demanded in relation to the changes in factors that affect demand, for instance, price (McGuigan, 2014). The independent variables in the equation include price of the product, price of competitor’s product, income in the area, and advertising expenditure. Therefore, the elasticities include price elasticity, cross elasticity, income elasticity, and advertising elasticity respectively. The values below indicate the equation and formula that will be used to compute the elasticities of each of the independent variable. Equation: QD = -5200 – 42P + 20PX + 5.2I + 0.20A + 0.25M Elasticity = (% Change in Quantity)/ (% Change in Price) N/B: % Change = (Amount of Change)/ (Initial Level) Price Elasticity (Ep) = ΔQd/ ΔP * P/Qd ΔQd/ ΔP = - 42 P/Qd = 500/5000 = 0.1 Ep = - 42 * 0.1 = - 4.2 Cross Elasticity (Epx) = ΔQd/ ΔPX * PX/Qd ΔQd/ ΔPX = 20 PX/Qd = 600/5000 = 0.12 Epx = 20 * 0.12 = 2.4 Income Elasticity (EI) = ΔQd/ ΔI * I/Qd ΔQd/ ΔI = 5.2 PX/Qd = 5,500/5000 = 1.1 EI = 5.2 * 1.1 = 5.72 Advertising Elasticity (EA) = ΔQd/ ΔA * A/Qd ΔQd/ ΔA = 0.20 A/Qd = 10,000/5000 = 2 EA = 2 * 0.20 = 0.4 Determine the implications for each of the computed elasticities for the business in terms of short-term and...
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...Supply and demand 1. Demand and factors influencing it. The law of demand Demand is an economic category, which characterizes the requirement of buyers for a particular product, provided with sufficient means of payment that allows you to purchase the goods at a certain price in a given time period for a particular market or in a particular country. Distinguish individual and aggregate demand. Individual demand is the demand of a specific buyer on a specific product, and in this market. Aggregate demand is the total demand for goods and services in any country. Also there are primary and secondary demand. Primary demand is demand for the product or services a specific category of goods in General. For example, it may be the demand for coffee or the demand for insurance services. Secondary (or selective) demand is the demand for goods of a certain brand or company for services of a certain type. Additionally, the demand is negative, the absent, the latent (potential), full, over, falling (falling), the fluctuating, irrational, rush (avalanche). Negative demand is the demand that occurs in cases when consumers "dislike" the product and avoid its purchase. The missing demand is the demand for the goods that are unnecessary in the market or obsolete. Latent demand is the demand expected in the future, the demand of potential buyers. Full demand is the desired demand exactly the relevant production possibilities and policy of the manufacturer of the product or service. Excessive demand...
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