Wait a second!
More handpicked essays just for you.
More handpicked essays just for you.
Role of government in business specifically in the manufacturing sector
Don’t take our word for it - see why 10 million students trust us with their essay needs.
There are four main factors influence the demand of cars. Firstly, the price of cars will affect the demand of cars. Secondly, the citizens’ income has the effect for the demand of cars. Thirdly, the government’s macroeconomic control policies will also effect the demand. Finally, the price of gasoline will affect the demand. The price of cars will caused movements along the demand curve. In addition, shifts of the demand curve for cars will be caused by the price of complement goods, the appearance of substitute products, citizens’ income and the government policies. (b) 1). Horizontal axes stands for the quantity of cars Vertical axes stand for the price of cars 2). the demand curve would slope down. Because when the price of cars is so high, people will buy less cars. However, when the price of cars is low, people will buy more cars than before. According to the diagram,when the price of cars is 30,000, the quantity of cars are five. In addition, when the price of cars is 20,000, the quantity od cars are ten. So we can know clearly that the demand curve is sloping down. (c). …show more content…
When the price of raw material will go up or down, the production coats will rise or fall. Secondly, the price of substitute products also affect the supply curve. Because the relatived products are competitive relationship, when the price of one product goes up, another will goes down. It will affect suppy. Thirdly, production technology will affect the supply curve. When the level of technology is rising or falling , the production costs will go down or up. finally, the government policies will affect the supply curve. Positive policies will make the supply go up, conversely, it will go down. For example, the govenrment limit the amount of cars which people can buy, it will caused the supply curve down. In addition, the price of product in the future and the development of product company will also affect the supply
There are a couple reasons why the aggregate-demand curve slopes downward. The first is the wealth effect. If the prices are higher, the money one has is worth less. It can be put into perspective by looking at it on a microeconomic level. For example, if you have a $20 bill, and the price for a ham sandwich rises from $5 to $10, you can only buy two sandwiches, rather than four. This shows that lower wealth leads to lower consumption, lower consumption leads to lower production, which means less workers will be need, leading to layoffs. The second reason is the interest-rate effect. As the prices rise, so do the interest rates. Higher interest rates hold down thing...
The figure 4 shows the demand curve for a good with numerous close alternatives in consumption such as soft drinks or colas. To calculate the price elasticity of demand, first analyze the result when the price of a six-pack of sodas moves from $2 to $2.20, a 10% increase in price. However, the quantity demanded falls from 1,000 to 850, a 15% decrease in the quantity demanded. The price elasticity of demand of 1.5 measured here ensures that for every 1% change in the price of cola, quantity demand changes by 1.5% and it is clearly a relatively elastic
Aggregate supply and aggregate demand is the total supply and total demand of all goods and services in an economy. Consumer demand for goods and service affect how companies will meet that demand with products. This allows the companies to determine which product will be most profitable to produce. The aggregate supply curve depicts the quantity of real GDP that is supplied by the economy at different price levels. The reasoning used to construct the aggregate supply curve differs from the reasoning used to construct the supply curves for individual goods and services. The supply curve for an individual good is drawn under the assumption that input prices remain constant. As the price of good X rises, sellers' per unit costs of providing good X do not change, and so sellers are willing to supply more of good X hence, the upward slope of the supply curve for good X. The aggregate supply curve, however, is defined in terms of the price level. Increases in the price level will increase the price that producers can get for their products and thus induce more output. But an i...
Supply and demand is a basic economic principal in which a product’s price is either positively or negatively affected by the availability of the product. Consequently, if there is a high demand for a product that is in low supply, the price of this product will escalate due to market conditions that will support a higher price. However, if there is low demand for a product that is in high supply, the price of this product will decrease due to market conditions that are influenced by the high availability of this product.
The demand curve follows a distinct line unless some other factor causes the line to shift. The demand curve operates under the principle if the demand goes up the price goes down, and likewise if the demand goes down the price goes up as long as all other things are constant. A shift in the demand curve indicates something is not constant. In the simulation, a company named Lintech expanded its operations to Atlantis. The expansion increased the population of Atlantis changes the demand for apartments, but does not change the supply of apartments in the area. The sudden shortage of apartments created a demand curve shift. The shift permits Goodlife to offer a higher price for their 2 bedroom apartments, and still be able to fill the same number of units. By increasing the price, Goodlife brought the price and quantity available back into equilibrium (University of Phoenix, 2014).
The law of demand states that if everything remains constant (ceteris paribus) when the price is high the lower the quantity demanded. A demand curve displays quantity demanded as the independent variable (the x-axis) and the price as the dependent variable (the y-axis). http://www.netmba.com/econ/micro/demand/curve/
Examining the relationship between price and quantity demanded is part of the study of economics. According to the textbook demand is the amount of goods or services that consumers are both willing and able to buy at each possible price during a specified time period with other things being constant. The law of demand indicates that quantity demand varies inversely with price and the slope of demand curve is downward and negative. In other word, when the price of a certain commodity goes up, people buy less of it and vice versa (Miller, 49). For example, when the price of six-pack of Pepsi is rise from $3 to $4, people will buy (or demand) less for Pepsi and the amount of sale will want down.
From this graph we can determine how many rolls of toilet paper will be purchased at what price. As can be seen from looking at this graph, it is negatively sloping. As one variable gets larger the other will become smaller, or when the price drops more is purchased. The whole demand curve "theory" is based on human behavior. It is logical to say that people will purchase more of a product when the price is cheaper.
For the independent variable of fuel price, it also does not granger cause the dependent variable of demand for Proton car. It means that the fuel price variable is no significant to the demand for Proton car. However, many studies discovered that the fuel price is a significant response to Proton demand. According to the Johansson and Schipper (1997), the vehicle types and distance driven were affected by the hike of fuel price. This means that the consumers still purchasing the vehicles when the fuel price increased.
In the case of a vertical demand curve, Increase in price does not affect the quantity demanded. This is complete inelastic demand, consumers pay any price to get the quantity. Elasticities of demand obey the law of demand meaning that elasticities of demand for goods and services ie between these two extremes in real life. The slope indicates the rate of change in units along the curve. At the upper end of the demand curve, where the price is high and the quantity demanded is low, a small change in the quantity demanded even in, say, one unit, is pretty big in percentage
In conclusion, generally speaking the Law of Supply states that when the selling price of an item rises there are more people willing to produce the item. Since a higher price means more profit for the producer and as the price rises more people will be willing to produce the item when they see that there is more money to be earned. Meanwhile the Law of Demand states that when the price of an item goes down, the demand for it will go up. When the price drops people who could not afford the item can now buy it, and people who are not willing to buy it before will now buy it at the lower price as well. Also, if the price of an item drops enough people will buy more of the product and even find alternative uses for the product.
However, their susceptibility or elasticity greatly depends on time frame. In the short-run, buyers tend to be more price elastic because they can opt to delay purchasing a vehicle. As a result, in the long-run these consumers are less elastic. Furthermore, buyers enjoy a plethora of choices, or substitutes, and therefore can easily switch firms. Therefore, buyers have substantial leverage over automotive manufacturers and exert a downward pressure on prices, as well as demanding better service and quality. However, it is important to note that automobiles are both a need and a want, depending on the situation of individual buyers. For instance, for a rural Canadian, public transportation may be difficult to acquire and therefore might constitute personal vehicles as a need; conversely, for someone residing in a metropolis like Toronto, a vehicle may be deemed
The scale to which a supply or demand curve reacts to an alteration in the price is the elasticity curve, which may be different between products, as some goods are more essential to people than others. When the product is a necessity, it is considered more likely to have its price changed, as people would continue buying it despite price increases. However, when the good or service is not considered necessary, a price increase will discourage people to buy it, as the opportunity cost will become too high.
Types of goods will help us determine whether demand for cars is elastic or inelastic. If a good is considered to be a luxury rather than a necessity, the greater is the price elasticity of demand (McConnell & Brue, 2004). Cars can be deemed as necessary due to a need for transportation. Other types of cars can be classified as luxury. A person who needs to be able to get from one place to another will have the need for a car. An old vehicle may suffice. In such a scenario, buying a brand new car is more likely to be a luxury rather than a necessity. If car prices go up, people are more inclined to just keep driving their old vehicles. In essence, the cars already on the road would serve as substitutes for new cars. However, over a longer period of time, old cars tend to wear out and the elasticity of demand for vehicles is less.
Taste and preferences of the shoppers additionally influence the demand to larger extent. just in case of Coke, if there square measure clique shoppers preferring the style of Coke, notwithstanding the value of Coke will increase, the demand can stay identical. however if the shoppers haven't any style or preference of Coke, then if the value will increase the demand