Application Of Consumer Choice Theory And Marginal Analysis

896 Words2 Pages
bulb-icon

Recommended: Factors affecting price elasticity of demand essay

By applying consumer choice theory and marginal analysis to business problems all relate the income of the consumer as well the price of the product of service. When one considers the purchase for a pair of tickets to a sporting or cultural event one needs to consider family budget, timing, and availability of alternatives. Take for instance tickets to the Denver Broncos game. Substitutes do exist but not at this level of play (high school and college) and not on a Sunday. As a result, as there are alternatives available with the price elasticity of demand measures the responsiveness of quantity demanded to changes in price; it is calculated by dividing the percentage change in quantity demanded by the percentage change in price. (Rittenberg, L. &Tregarthen, T. , 2012). Pricing and consumer behavior rely on the performance of a football team and its overall record. As the team continues to win, demand increases. The opposite happens when the team registers a lower performing season where you would see a decline in …show more content…

To the consumer purchasing a can of common table salt, it is small expense with limited consumption. The demand will not increase much with increase in income. If price of salt decreased the quantity demanded would not drastically increase as a person can only consume only so much salt. This suggests inelastic demand. Applying consumer choice theory and marginal analysis to a college class – a number of alternatives are available to the student. These are based on degree programs, location, size and cost. Pricing of this final product (college education) is inelastic in nature due to the high cost to consumer. Low-income consumers are limited to selection and alternatives. Again, this suggests inelastic demand. (Gobry, P. E.

Show More
Related

  • Cocktail Party Economics Summary

    735 Words  | 2 Pages

    From classroom to a cocktail party, having knowledge in today’s economics is definitely an asset when it comes surviving in the world of business. Cocktail Party Economics, by Eveline Adomait, and Richard Maranta undeniably satisfies as an economic training book, helping you understand the concepts of basic economics. The book brings to light many theories and thoughts, which are explained in a certain way that help readers easily, compare and relate them to each other. During the first couple chapters of the book, the main theories presented are scarcity, value, opportunity cost, production, and absolute/comparative advantage. Believe it or not, all of these theories are relatable to Supply and Demand; the two concepts introduced in chapters six and seven.

    Read More

  • Analysis Of College Consumerism Run Amok

    704 Words  | 2 Pages

    In the essay, “College Consumerism Run Amok” authored by Kevin Carey describe how colleges are careless with their money. Throughout the essay, Kevin Carey explains why normal people think the average price of college tuition has risen across the United States. People believe college tuition is rising because students demand colleges to have “creature comforts”, such as luxury dorms, a fully operational gym, and a climbing wall. Also, that the creation for “creature comforts” in colleges has caused academic standards to decline. Yet, colleges market to students with these amenities instead of showing students comparable statistics: the quality of teaching, scholarships, and academic environment. Kevin Carey, in the end, sums up his idea with

    Read More

  • International Students and the Right of Working While Studying in USA

    1102 Words  | 3 Pages

    In all colleges in the United States, students are required to pay for their classes’ tuition either by themselves, their parents, guardians or a scholarship that they may have. The average tuition fee for an individu...

    Read More

  • Are Colleges Worth the Price of Admission?

    4200 Words  | 9 Pages

    Community colleges and vocational tracks are not wrong about the high cost of traditional higher education. According to the U.S. Department of Education’s National Center for Education Statistics, one year at a public, four-year institution costs upwards of $23,000 on average, while private institutions will cost nearly $10,000 more on average. Coupled with the fact that prices at public institutions rose 42 percent and private institutions rose 31 percent between 2001 and 2011, it’s not a shock that parents and students alike worry about paying for college. However, this won’t always be the case, as this rise in prices simply cannot continue the way it has. Eventually, people will be unable to pay the price that colleges charge. They will either settle for com...

    Read More

  • Why College Should be Cheaper

    1910 Words  | 4 Pages

    College is one of the most fundamental institutions in our modern world. It is a place where most of our future politicians, doctors, scientists, and leaders are made. Though, it seems that the price tag that comes with a college education is something that is too hefty for some students. Countless debates go on about whether the price of college should be abolished or whether the cost still is on the students to pay for.

    Read More

  • Ticket Prices In Professional Sports

    2653 Words  | 6 Pages

    ... ticket packaging, (c) money-back guarantees, and (d) web-based ticketing. There are benefits to using each tactic, but it depends on the professional sport organizations needs. In addition, professional sports ticket prices are price inelastic, which means the price for the ticket changes based on demand for that event. As stated previously, there were several different factors that can affect ticket prices in professional sports teams in America. Since there are many factors that can affect ticket prices, it would be beneficial to focus on the core factor that affects ticket prices and analyze it. Take pricing strategies for example. With two main types of pricing strategies, it would be valuable to identify which strategy would work best for each professional sports league. This study would help every sports league improve ticket prices and maximize revenue.

    Read More

  • Rising Cost of College Textbooks

    1982 Words  | 4 Pages

    In order to best understand why implementing such a loan program would be most beneficial to the students one must understand why textbook prices have spiraled out of control. The problem lies with textbook pub...

    Read More

  • Rising Tuition Prices

    1394 Words  | 3 Pages

    From conducting this survey, I learned that many students,whether they attend a public or a private school are unsatisfied with the rising tuition prices. The findings support my hypothesis. The next step in this research would to ask more college students about their thoughts and opinions about rising tuition prices. I would ask more students from different types of college and students taking on different types of degree. An implication this research could have for other research is that rising tuition prices are hurting students financially.

    Read More

  • Consumer Behavior Analysis

    1474 Words  | 3 Pages

    Introduction This paper presents a dynamic model on the consumer behaviour in the real world marketing issue. It will further discuss the marketing and industrial experiences encountered daily in everyday business life, in addition to the consumer behavioural issues and consumer analysis and recommendations. Research studies have argued that industries or companies experience lots of issues in awe of the logistics of their daily routine, giving them the knowledge that can be used to anticipate incoming situations with the way of tackling problems. However, with the familiarity and repeated external occurrences in the marketing scope of an industry, there are many implementations carried out in solving such problems without complexity.

    Read More

  • Essay On College Tuition

    1005 Words  | 3 Pages

    With the rapid growth of college tuition, it has become an important issue in higher education. College Tuition is simply defined as the charge or fee for instruction, at a private school or a college or a university. Most people agree today that college tuition is too high or that it needs to be completely dismissed. There are some however, that may disagree with the claim about college tuition and state that college tuition is necessary for college growth, and it’s primary purpose is to pay for college expenses to support the institution financially. Research shows that college tuition is too high and that debt has become a standard in America after attending post-secondary school.

    Read More

  • What Is The Cross Elasticity Of Demand

    1300 Words  | 3 Pages

    The elasticity, in absolute terms, is 0.5 making it a relative inelasticity of demand. Since it is inelastic, total revenue would decrease as the price decreases.

    Read More

  • Consumer Decision Making Process

    1445 Words  | 3 Pages

    Consumer Decision Making Process A key factor in successfully marketing new/existing products or implementing a product Extension is a thorough understanding of the motivation, learning, memory, and decision Processes that influence consumers purchasing behavior. Consumer purchasing behavior theories have found their way into managerial decision making to help companies more effectively develop and launch new products, segment the market, determine market entrance and in brand management. Therefore, a better understanding of how consumers decide what to purchase is critical to the success of a product. There are numerous theories and models describing the consumer purchasing decision process.

    Read More

  • Coca Cola Price Elasticity Of Demand Analysis

    1580 Words  | 4 Pages

    When demand is elastic as with Coca Cola products price changes affect total revenue. When the price increases revenue decreases and when the price decreases revenue increases. For Coca Cola if they notice a decrease in revenue they would offer products at a discount to increase revenue. They do this quite often with sales such buy 2 20 oz. bottles for $3 instead of the normal $1.89 each price

    Read More

  • The bandwagon, Snob, and Veblen Effects

    1107 Words  | 3 Pages

    That is, it is sensitive to price change, and also to the quantity demanded. This means that if many people are consuming a good, the demand is greater than if less people are consuming the good. To further clarify, take the example of attending college. In an environment where most of an individual's peers are going to attend college, the individual will see college as the right thing to do, and also attend college to be like his peers. However, in an environment where most of an individual's peers are not going to attend college, the individual will have a decreased demand for college, and is unlikely to attend.

    Read More

  • Toyota Products, Services, and Prices

    1088 Words  | 3 Pages

    One method that Toyota can consider is using the price elasticity of demand to determine whether to increase or decrease the sale price of their automobiles. The responsiveness or sensitivity of consumers to a price change is measured by a product's price elasticity of demand (McConnell & Brue, 2004). Market goods can be described as elastic or inelastic goods as change in quantity demanded for that good. If demand is elastic, a decrease in price will increase total revenue. Even though a lower price would generate lower sales revenue per unit, more than enough additional units would be sold to offset lower price (McConnell & Brue, 2004). In a normal market condition, a price increase leads to a decreased demand, and a price decrease leads to increased demand. However, a change in income affecting demand is more complex.

    Read More

More about Application Of Consumer Choice Theory And Marginal Analysis

Open Document