Question #1: Using a product of your choice, along with prices and quantities yo
ID: 1165312 • Letter: Q
Question
Question #1: Using a product of your choice, along with prices and quantities you select, create an original tutorial that will teach somebody how to draw a supply curve, a demand curve, and determine the equilibrium point. Also explain the factors that could cause the supply and demand curves to shift up or down and the equilibrium point to change.
Question #2: Create a tutorial that teaches readers how to calculate elasticity of demand. Include specific examples (with numbers) of inelastic and elastic demand, then explain what each means and how they are used in decision making when the goal is to maximize revenues.
Question #3: Suppose you are operating an online exercise program that customers pay a monthly fee for. The first few months your business grew rapidly, but now a steady stream of customers leaves each month.
A) Use the concept of diminishing marginal utility to explain why customers might be leaving.
B) Present a strategy of economic measures for keeping customers and getting the business to grow again.
Explanation / Answer
1. Demand alludes to the amount of an item buyers will buy, at various value focuses, amid a specific era. We as a whole have restricted assets, and we need to choose what we're eager and ready to purchase. For instance, how about we take a gander at a basic model of the interest for gas. In the event that the cost of gas is $2.00 per liter, individuals might will and ready to buy 50 liters for every week, by and large. In the event that the value drops to $1.75 per liter, they may purchase 60 liters for each week. At $1.50 per liter, they may purchase 75 liters. As the cost of gas falls, the demand increments – individuals may make more unimportant trips in their recreation time, for instance, or simply top up their tanks on the off chance that they foresee an unavoidable cost increment. Be that as it may, cost is an impediment to obtaining, so if the value rises once more, less will be demanded.
While demand clarifies the purchaser side of obtaining choices, supply identifies with the vender's longing to make a benefit. A supply plan demonstrates the measure of item that a provider is ready and ready to offer to the market, at particular value focuses, amid a specific era. In our case, the calendar underneath demonstrates that gas providers will give 50 liters for each buyer every week at the low cost of $1.20 per liter. Be that as it may, if shoppers will pay $2.15 per liter, providers will give 120 liters for each week. As the value rises, the amount provided rises, as well. As the value falls, so supplies. This is an "immediate" relationship, and the supply bend has an upward slant.
Equilibrium is where interest for an item measures up to the amount provided. This implies there's no surplus and no deficiency of products. A lack happens when demand surpasses supply – at the end of the day, when the cost is too low. Be that as it may, deficiencies tend to drive up the cost, since customers contend to buy the item. Accordingly, organizations may keep down supply to animate demand. This empowers them to raise the cost. A surplus happens when the cost is too high, and demand diminishes, despite the fact that the supply is accessible. Shoppers may begin to utilize less of the item, or buy substitute items. To dispense with the excess, providers lessen their costs and purchasers begin purchasing once more. In our gas illustration, the market equilibrium cost is $1.50, with a supply of 75 liters for each buyer every week.
2. Price elasticity of demand is a measure of the adjustment in the amount demanded or obtained of an item in connection to its price change. Communicated scientifically, it is:
Price Elasticity of Demand = % Change in Quantity Demanded/% Change in Price
On the off chance that the amount demanded of an item shows a substantial change because of its price change, it is named "versatile," that is, amount extended a long way from its earlier point. In the event that the amount bought has a little change in light of its price, it is named "inelastic"; amount didn't extend much from its earlier point.
The all the more effortlessly a customer can substitute one item with a rising cost at another, the more the cost will fall – be "versatile." The more optional a buy, the greater amount will fall because of price rises – the higher the elasticity. The less optional, the fewer amounts will fall. Inelastic cases incorporate extravagances where customers "pay for the benefit" of purchasing a brand name, addictive items and required extra items. Addictive items incorporate tobacco and liquor. Sin assesses on these items are conceivable in light of the fact that the lost duty income from less units sold is surpassed by the higher expenses on units still sold.
On the off chance that the amount bought changes more than price change (say, 10%/5%), the item is named flexible. On the off chance that the adjustment in amount obtained is the same as the price change (say, 10%/10% = 1), the item is said to have unit (or unitary) price elasticity. In the event that the amount obtained changes not as much as the price (say, 5%/10%), at that point the item is named inelastic.