Group items tagged

This article relates directly to the concept of income elasticity of demand and cross elasticity of demand . McDonald's monthly sales fall for the first time in almost 10 years. Its revenue fell by 1.8% last month. This happens because of the various reasons. One results from the unstable economy. People are more cautious about spending their money. A lot of people choose to "eat in", simply because they cannot afford it. This applies a lot to the younger consumers, who have been facing unemployment. The company has also been affected by Europe's economy since the market of Europe counts for 40% of the company's revenue. European economy has been facing recession. There has been a tremendous amount of unemployment, which means a decrease in the general population's income. This directly relates to income elasticity of demand. As income falls, the quantity demanded for products fall as well. In this case, people choose to eat at home to be more frugal. I believe this contradicts a little to the idea of inferior goods. McDonald's may be considered as "inferior goods" to the majority. It is often said that as income decreases, inferior goods will likely benefit from it. However, in this case, McDonald's do not. People choose other alternatives instead, which is eating in. So it is just not McDonald's that has been affected, but a lot of other restaurants and fast food chains too. Furthermore, fierce rivals have also came up with strategies to out compete its competitors. For example, Wendy's Co. has decided to upgrade their menus and offer discounts. This relates to cross elasticity of demand. Obviously, as other rivals offer discounts and as well as an upgrade on their menus, consumers will shift to consuming those products that are slightly cheaper.

Apple, in the past, has been notorious for setting high prices for its products. Its beautiful, expensive products were, however, sought after by many, yet with it's new product, the iPad mini, Apple is starting to make products that are not only highly-desirable, but at the same time, less-expensive. Apple products are price elastic because it is not a necessity and there are a myriad of substitutes. Apple is well aware of this information, and as a result, is lowering its prices to take advantage of price elasticity and the law of demand. As the title states, "Its all about price elasticity" and the iPad mini, with its reduced price will be competitive in the tablet market.

This article is very simple. It talks about books and how author can change elasticity of the book by using different ways of writing books. There is one interesting example of the change in price and its consequences. So the author of the book decided to make an experiment and increse the price for the book from 0.99$ to 2.99$ (302% change in price). Usually we would expect demand to go down, but in this case demand for the book rised from 9 to 17 (189% change in demand). So 189/302 = 0.62, shows that demand is inelastic, what makes more sense. This article shows us that elasticity of demand depends on a lot of different factors.

This article presents a very good explanation what is income elasticity and how it may affect producers choices and sales. The article includes four main parts: types of products, types of customers, product life cycle and determing income elasticity. In the section "Types of products" author points how small businessses and luxury items' producers are affected by people's income, and how can they improve sales. Second section talks about targeting of the customers, for example some companies may focus on people with high-income, so consumers are not sensitive to the changes in price. Product Life Cycle section talks about aging of the product and appearing of the substitutes, and the ways of overcoming that problems, attracting consumers. And the last part of an article describes how to determine an income elasticity of demand. It is a good article that helps to increase understanding.

Royal Mail has recently spiked their prices. This has resulted in a large decrease in number of stamps bought. A fall of 9% of mails have been sent with Royal Mail. They are certainly testing the elasticity of demand curve, but are they just putting themselves out of business? This article relates perfectly to price elasticity because this company, Royal Mail, is testing the elasticity of the market. They are taking a big risk, because if the elasticity is high, they may go right out of business. There are many free substitutes for sending mail, like E-Mail, Texting, and Social Networking. In my opinion, I think it is quite bizarre of Royal Mail to spike their price knowing that their demand has gone down. It will be interesting to see if they lower the prices again!

The article discusses that oil, which was previously too expensive to exploit is what cause the increase in prices. Now, new oil reserves are not only more expensive to develop, but they also take much longer between the time the first well is drilled and when the first oil is produced. This means it takes longer for oil supply to respond to changes in price.In economic terms, the oil supply is becoming less elastic as new oil supplies come increasingly from unconventional oil. These statements are supported by data and charts found within the rest of the article.

I know that oil is important for our daily needs, and I think the oil company knew that too. That why the price of oil is so expensive, and I think it too much. People go to work and then spend their income on oil. If there is plenty of oil as they said we wouldn't have to spend that much money anymore.

this articles about the elasticity of demand and supply concerning the oil industry.

This article clearly shows the way price and taxes changes the demand on tobacco. It gives us a good description of that products. So after that article we can conclude that tobacco is not that price sensitive. And attempts of the government to reduce the number of consumers by increasing taxes did not really work. The conclusion of the article makes it really clear and easy to understand: "From the above discussion it is evident that the price of elasticity of value is an important measure of the changes that will occur when a tax is imposed on tobacco products, this value is important in that it can help in determining the appropriate tax value that should be imposed in order to reduce tobacco consumption. Taxes on the other hand should be fair and depending on the price elasticity value of tobacco products certain groups in the economy may be unfairly taxed whereby poor individuals in the economy may have a greater tax burden than higher income individuals."

The article is written about a survey that was consucted in Australia to study the elasticity of food items. 15 food groups were surveyed and compared to each other. Milk, bread, fresh fruit and vegeatbles were seen as the most inelastic. Even when prices were increased people bought these items and could absorb the price increase easily. Normally sales would have increased with a drop in prices and decreased with a hike in prices but not in these cases. This clearly shows what we studied this week about how essential products are inelastic. The article also discusses how Aussies in comparison with the American and Canadian are more likely to give up meat in case of a price increase.

Earlier this week the U.S. Department of Energy announced that the average national price for regular gasoline in the U.S. was now $3.96 a gallon. Last week the Kremlin banned gasoline and diesel exports from Russia to alleviate domestic shortages sending gasoline prices in Germany to a record $9.10 a gallon. Although price increases, people are still going to buy it due to it's elasticity, which is so small. The reason is gasoline is definitely a necesity.

This article indicates how economists measure demand and supply changes in prices or income. It also points out two extreme cases where the price will get the extreme values. They are Perfectly price elastic and Perfectly price inelastic. I think these are pretty interesting informations that we can go further in order to understand more about economics and its systems.

This article describes the effect of raising taxes on the people. Tax payed by the rich can be used by the government for man reasons such as implementing new policies, improving public amenities, and to benefit the poor. The article says that raising taxes has two main effects, one that people work less since work is now less rewarding. It also may cause people to feel the need to work longer hours because the might need to make some more money to keep the household running. One important determinant of the effect of tax rates is the relative position compared to other countries. Another is the international mobility. This mobility occurs because people believe that in other countries with lower taxes their pay will be greater and they can live a better life. The greater the mobility, the greater the elasticity of supply with respect to changes in taxes.

This article talks about the change in supply of oil in different regions.

This article talk about the supply elasticity and try to answer the question: "Should scarce resources go to those who are willing and able to pay the most for them, or should they go to those who manage to get in line soonest?" It explain us that the mayor part of oil is going to the military use because the priority is to win the war, and civilians are making due with a fixed supply. With the hurricane the good where supply is inelastic is probably hotel rooms because they can build more hotels and rooms it is impossible. The hotels will increase the price because the demand for the hotel room is increasing, as a result there will be a movement along the demand curve. It try to explain that there should be a fixed price for the emergency products because with the huracane the transport is more difficult and the prices rises. That results in an overall more brittle system in which local supplies aren't very resilient to disruptions in transportation.

This article explains the elasticity of cigarettes and its demand. It also tells how the government tries to tackle this demerit good by putting taxes on them and thus higher their prices.

Income Elasticity of Demand This article explains about pet burial business suffering because of economic recession. The business' revenue dropped from "$47.7 billion" to "$45.5 billion" within one year in the United States. The article claims, its' revenue dropped because of recession. This article is good example of how knowing Income Elasticity of Demand (YED) can be used to predict the economy of the country. Considering pet burial is luxury good, it has very high YED. The decrease in quantity demanded of the product indicates the general income of the country decreased.

Samsung and Apple are the most popular companies producing highly desired products, but it seems that Samsung has took the lead. The cross elasticity value of each respective smartphone is high and positive, making them close substitutes for one another. With the high cross elasticity value, the sales for each product is sensitive to one another, making the market fierce.

This article is very interesting, Andy. I find it amazing how blackberry has almost completely dropped off the face of this planet! Its all about samsung and apple now. Since the Iphone 5 came out, I am guessing that the demand for Samsung phones has dropped!

This article kind of surprised me, because I thought meat would be more inelastic, but actually vegetables. For me i would prefer meat better than any vegetables, but it seems like others don't think like that. If the price wasn't the main reason that made people buy them so the reason for this would because it healthy and have no fat. Nowadays a lot of people care much about how they look. Skinny is one of our fashion too, so that shifted demand of no fat food to the right (increased). They are willing to pay more for in order to keep them as a part of their diet.

Me gusta the article! It also surprised me, but it also makes sense though. A lot of people prefer healthy food, which a lot of people consider vegetables. So therefore the demand of vegetables for would likely to be inelastic.

Because of the world's population is keep increasing, and absolutely everyone needs food. That means we have increased on demand, but we might don't have enough food. That led to increasing the price of food, and the result might increases the price of everything because when the price of food increased, everyone who bought foods would want to increase their own product.

Benjamin Diokno of Malaya Business Insight believes that taxes on cigarettes, liquor, gambling, and oil should be taxed much more heavily. He believes they should account for one third of all taxes. Price elasticity is about 0.6 for cigarettes and about 0.23 for liquor. I do not agree with Benjamin on this one. Firstly, because I do not believe that drinking or smoking is a sin. Some people have lots of pain and trouble in this world and maybe drinking is the only way for them to experience peace. And what if someone has just come off drugs, so instead uses cigarettes instead of Cocaine. Would you still think its a sin to smoke cigarettes? These should be taxed just as equally as other products. Im interested on your views. Comment and let me know !

In this article you can learn something about the copper, for example the market of copper was growing during the last years because the demand for copper was constantly growing but this year the situation has changed. The main reason is the depression of the market and the public deficit. Indeed, although exchange inventory is down by some 100,000 tons this year, much of this has simply shifted to higher inventories in China. HSBC estimates this year to show a 200,000-ton surplus, although this is down from an early estimate of 340,000, but is in stark contrast to the World Bureau of Metal Statistics which recently reported the January-to-August-2012 deficit as 299,000 tons. However the future situation of the copper seems to be good because the market of copper will grow across 2013.The bank believes the market is likely to remain in surplus through the middle of the decade, with a peak of some 600,000 tons reached by 2015.