...Explain how changes in supply and demand impact on equilibrium price and quantity Market equilibrium is the situation where at a certain price, the quantity supplied and the quantity demanded are equal. Markets always tend towards equilibrium and, if excess demand or excess supply exists, the market will bid the price up or down until the equilibrium price is reached. The price mechanism determines the equilibrium in the market and consists of the relationship of supply and demand. The equilibrium price and quantity will be changed if there is a shift in either or both of the supply or demand curve. Market equilibrium occurs when the demand and supply curves intersect with each other. As shown in Figure 1, this is when the quantity demanded is exactly the quantity supplied. Figure 1 – Market Equilibrium Supply can be defined as the quantity of a good or service that all firms in a particular industry are willing and are able to offer for sale at different price levels at a given point in time. An increase in supply can be impacted by a range of factors. One of these factors is advantages in technology. If the technology that a firm uses develops, they will be able to make more of the good and therefore the supply will increase. An example of this is iPhones, their technology is constantly improving and therefore their supply will also increase. Another factor is having a good season. For example, if a firm produced mango and the weather was good, the firm would get a good crop...
Words: 1157 - Pages: 5
..."Customer-Facing Supply Chain Practices -- The Impact of Demand and Distribution Management on Supply Chain Success." Journal of Operations Management 30.4 (2012): 269-81. Print. Research Classification: The authors of this research performed an empirical based study and outlined three objectives to their study: 1. …to provide empirical evidence of whether or not demand management (DeM) does indeed have such a substantial positive impact on supply chain performance; 2. …the simultaneous evaluation of the impact of customer-facing SCM practices related to both DeM and distribution management (DiM); 3. …the analysis of a potentially existing relationship between DeM and DiM, (p270 et al. 1-3). To meet the objectives of their study, the authors “identif[ied] relevant practices to DeM and DiM” through literature reviews and expert interviews, and from here, the authors created a conceptual model and utilized the partial least squares to test their hypothesis, (p269 -70). Statement of Problem: This journal article aims to examine the “relative impact of relative practices associated with demand and distribution management,” (p 269). Defined by the authors as “…the ability of a company to understand customer demand and requirements and balance them against the capabilities of the supply chain,” demand management (DeM) is becoming more and more popular in the operations management field; however, DeM has not been comprehensively analyzed in terms of supply chain performance...
Words: 1399 - Pages: 6
...viewing the issue of health insurance and how insurance rates are directly related to the amount of alcohol consumed. Here, we can consider how economists “think at the margin”. The change in health rates would have to be more than marginal to affect a change in a life style such as alcohol consumption. Similarly, if one thinks rationally, the higher the insurance rates are for alcohol consumers, the less these consumers will drink. Finally, “rational people respond to incentives”. If insurance companies offer price incentives to drink less, a rational person would respond by drinking less. Cooksey, J. A., Knapp, K. K., Walton, S. M., & Cultice, J. M. (2002). Challenges To The Pharmacist Profession From Escalating Pharmaceutical Demand. Health Affairs, 21(5), 182. Cook, P.J., & Moore, M.J. (2002). The Economics of Alcohol Abuse and Alcohol-Control Policies. Health Affairs, 21(2),...
Words: 303 - Pages: 2
...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...
Words: 2078 - Pages: 9
...products can have a major impact on that company’s market position, social image, product demand, and resulting market value (price). Some markets are more sensitive to these issues than others, such as healthcare. Abbott Laboratories has been in the news in the past few weeks due to an ethical issue reported to the government. It was reported that Abbott was marketing their popular medication Depakote for health conditions that it was not approved for by the FDA. “Depakote is an anti-seizure and mood-stabilizing drug prescribed for bipolar disorder. However, the company admitted that it marketed the drug for unapproved uses, including treatment of schizophrenia, agitated dementia, and autism.” (Yost, 2012). This admission will cost Abbott $1.5 billion in fines and settlement costs. More importantly, this admission may cost Abbott far more than the money. It may cost them market share and a damaged public image. Depakote is a very popular medication, but poor press around the company’s behavior around the marketing of the product can change the company image in not only the public, but with their direct customers such as hospitals and physicians. This can greatly impact demand for their product, impacting market price and profit for the company. Abbott does have a very large market share compared to their competitors and have diversified to include hospital equipment from IV poles to feeding pumps and heart monitors, so this issue may not impact Abbott financially like...
Words: 895 - Pages: 4
...Zeeshan Suleman 94495289 zsuleman@umich.edu INTRODUCTION This memo analyzes the impact of the proposed safeguard tariff on imported bicycles, as recommended by the Canadian International Trade Tribunal (CITT). The proposed tariff is in response to an increase in imports of lower-‐cost bicycles, which was determined to have caused serious injury to domestic bicycle producers. From 2000 to 2004, bicycle imports increased nearly 98%, accounting for nearly 69% of all bicycles sold in Canada in 2004, up from 42% in 2000. This analysis incorporates sensitivities in estimated elasticities of demand and supply to predict impact on the bicycle market, paying particular attention to welfare effects. POLICY ANALYSIS MECHANICS The tariff is proposed to be levied over three years, starting...
Words: 2249 - Pages: 9
...situation, current budget or future outcome. You have to ask yourself if the purchases you want are ideal and are you in a financial position to make such a significantly large purchase. There are so many factors to consider than just personal obligations or wants, but is it economically sound in today’s market as well. In this paper, I will talk about and try to explain some of the economic indicators such as interest rates and inflation rate as well as job market for the area. While considering if any of these indicators impact the supply for what I will demand over a two year period. Also in this paper, I have to answer how I might apply my understanding product, and how I am considering purchasing versus the supply and demand. Also I need to describe the impact on the price of the home and whether making the purchase should or should not occur or possibly be beneficial to me. Lastly, I will see if there are any macroeconomic shifts in supply or demand affecting the price of the Home. Thus, leading to the final decision of whether to purchase a new house or not. Economic Indicators With every large purchase, there is cost associated, especially with the purchase of a house. Two economic indicators, which play a major role in the final decision to purchase or not to purchase a home, are inflation and interest rate. Inflation is regularly characterized as a constant increase in prices of goods and...
Words: 1228 - Pages: 5
...Supply 1 Supply and Demand Simulation Erika M. Sample Eco 360 Patrick Deveraux 8-07-07 Supply 2 The concepts of supply and demand are fundamental to understanding many real-world occurrences. The demand curve is downward sloping, and that quantity demanded increases as the price decreases – that is, as you move down the demand curve. GoodLife could increase the quantity demanded of its rented apartments only by reducing the rental rate. The supply curve is upward sloping, and quantity supplied increases with an increase in price - that is, as you move up the supply curve. An increase in rental rate would cause GoodLife to lease out more apartments. Quantity demanded equals quantity supplied only at the equilibrium point. At prices below equilibrium, the quantity demanded exceeds quantity supplied, and there is a shortage in the market. That is, consumers are willing to buy more than producers are willing to sell at this price. This causes price to increase. As price increases, quantity demanded decreases and quantity supplied increases. This adjustment process continues until equilibrium is attained. Similarly, at prices above equilibrium, quantity supplied exceeds quantity demanded, and there is a surplus in the market. Producers are willing to sell more than consumers are willing to buy, which exerts...
Words: 640 - Pages: 3
...Final Project Part I Milestone One: Supply, Demand, and Market Equilibrium Click Link Below To Buy: http://hwaid.com/shop/final-project-part-i-milestone-one-supply-demand-and-market-equilibrium/ Apple is the Company and the product is IPhone 6 3-2 Final Project Part I Milestone One: Supply, Demand, and Market Equilibrium This milestone, which covers Section II of Final Project Part I, should be a paper structured as follows: 1. Describe the price elasticity of supply or demand for your product or service. 2. Explain how two nonprice factors impact the demand of your chosen product or service. 3. Explain how two nonprice factors impact the supply of your chosen product or service. 4. Define the industry and the market equilibrium associated with the product or service. 5. Predict the effect of changes in supply and demand on the market equilibrium. 6. Describe the decisions related to supply and demand for the product or service that you would make based on the predicted changes in supply and demand on the market equilibrium. 5-2 Final Project Part I Milestone Two: Production and Costs This milestone, which covers Section III of Final Project Part I, should be a paper structured as follows: 1. Describe three key inputs (or factors of production) and fixed and variable costs involved in the production of your chosen product or service. 2. Analyze the factors that impact your choice of inputs to produce the chosen product or service. 3. Examine the production...
Words: 851 - Pages: 4
...In this study provides the demand and supply determinants of the significant premium wine grapes in the warm inland regions of Australia by an econometric investigation. The Australian wine grape sector was considerable growth in recent decades because the wine consumption was increased in the alcohol market. As a result, the demand of wine grape increases in the domestic area. Moreover, the increasing demand in export makes Australia as the fourth largest wine exporter in the world (OIV, 2012). The purpose of this study is to illustrate and estimate the impact of demand and supply that can be on Australian wine grape market. The interesting issue about wine grape is an over-supply of wine grape because the export booming in 1990s and early...
Words: 966 - Pages: 4
...Demand Estimation Doris Ard Dr. Muhammad Islam Economics 550 7/19/2014 Imagine that you work for the maker of a leading brand of low-calorie, frozen microwavable food that estimates the following demand equation for its product using data from 26 supermarkets around the country for the month of April. Note: The following is a regression equation. Standard errors are in parentheses for the demand for widgets. QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M (2.002) (17.5) (6.2) (2.5) (0.09) (0.21) R2 = 0.55 n = 26 F = 4.88 Your supervisor has asked you to compute the elasticity for each independent variable. Assume the following values for the independent variables: 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 1. Compute the elasticity for each independent variable. Note: Write down all of your calculations. QD = - 5200 - 42P + 20PX + 5.2I + .20A + .25M QD = -5200 - 42(500) + 20(600) + 5.2(5500) + .20(10,000) + .25(5,000) QD = -5,200 - 21,000 + 12,000 + 28,600 + 2,000 + 1,250 = 17,650 P =...
Words: 1338 - Pages: 6
...Supply Chain Management Name of Student Roll # University Submitted to: Topic: What are different options available to mitigate different risks in a global supply chain? Risks in global supply chain Risk * Exposure to chance of injury or loss * Hazard or dangerous chance * Chance of loss * Degree of probability of such a loss Global supply chains can increase efficiency, but they can also increase risk. For example the Japanese earthquake and tsunami, the floods in Thailand and the ash clouds caused by the Icelandic volcano—have demonstrated how far the consequences of such risks can extend. The Japanese earthquake, for example, severely affected global electronics production and led to extended business disruptions for the automotive industry. These are some of the risks that can affect the global supply chain: * Supply Risks. Impacts elements of inbound supply, implying that a supply chain is unable to meet the demand in terms of quantity and quality of parts and finished goods. The outcome is labeled as a supply disruption. * Demand Risks. Impacts elements...
Words: 1311 - Pages: 6
...does this happen? Research the recent history of gasoline pricing in your area, and attempt to relate any fluctuations you observe to documented supply and demand factors outlined in our book. Be sure to cite any references used. Fluctuating gas prices are caused by a number of factors. The combination of the price of crude oil and the cost of producing and marketing gasoline have greatly impacted the fluctuation of gas prices that we experience on a daily basis. Crude oil prices are determined by worldwide supply and demand, with significant influence by the Oil Producing and Exporting Countries (OPEC) as they determine how much oil to produce and sell to other countries. The more crude oil OPEC chooses to produce and release, the lower the price. With an increase in worldwide demand for oil, including unexpected demand growth in China, India, and other fast developing nations. These nations have experienced a tremendous growth in the number of citizens who have access to automobiles, and their billion-person populations have a strong impact on the amount of crude oil needed in those parts of the world. Seasonal changes can have a serious impact on gas prices as well. Gas prices increase greatly during the summer and holiday seasons because American’s travel increases during these times. For example, the American gas demand increases by 5% in the summer season, resulting in higher gas prices during these times. The decline in the value of the U.S. dollar which is the...
Words: 1160 - Pages: 5
...ROUNDTREE MARCH 22, 2012 GREG KROPKOWSKI What was the impact on the supply and demand of labor on one sector of the labor market? The impact on supply and demand was critical in the Luddite revolt. It all begins in 1779 when the failure of a Bill to regulate the frame-knitting industry had resulted in 300 frames being smashed and thrown into the streets. This is where the shortage of the supply begins. Then, by 1810 the Orders in Council and a change in fashion had led to deterioration in the standard of craftsmanship required in stocking making and a consequent cheapening of the trade. It was the attempt to intimidate some masters who brought in the new machines that caused Nottingham stocking knitters to smash the machines. (http://www.victorianweb.org/history/riots/luddites.html) Then the impact on the demand of Stocking knitting became predominantly a domestic industry, the stockier renting his frame from the Master and working in his own 'shop' using thread given to him by the Master; the finished items were handed back to the Master to sell. The frames were therefore scattered round the villages; this cause the demand to increase it then became easy for the Luddites to smash a frame and then disappear. Between March 1811 and February 1812 the supply of frames had been affected. About a thousand machines at the cost of between 6,000 and 10,000 were smashed. This had a damaging impact on the supply and demand (http://www.victorianweb.org/history/riots/luddites.html) ...
Words: 400 - Pages: 2
...the laws of supply demand ECO/365 Supply and Demand Simulation Since the early years of commerce, supply and demand have been a huge factor in the capitalist business system. For this assignment I was asked to take part in a simulation as a source for my paper. In the simulation I had to take part of a series of important financial decisions for a fictitious apartment management company named GoodLife and see how each decision would be impacted by different economic factors. In this simulation, I was able to see that the microeconomics concepts could be labeled in the changes of supply and demand as well as the equilibrium in the apartment market. That is because the factors would only affect a small part of the apartment market in which the company on this scenario operates. The macroeconomics concept could be labeled with the price elasticity and the price ceiling. This is because it has a broad impact bigger than the local apartment market. The simulation taught me that any shift on the supply curve or demand can impact significantly the economics status of a company. For example, if the demand curve shifts to the left, it will show me that there is a decrease in the demand of people looking for apartments and in turn will cause that less apartments be rented. When this happens it forces GoodLife to reduce their prices to make up for the income gap. This means that the equilibrium price is lower because the demand decreased even though the supply (quantity of...
Words: 574 - Pages: 3
