Essay on price elasticity of demand

In this case, the monopsonists is said to be exploiting the workers by paying less than the MRP — i. It can achieve this because it does not have to pay the full value of the MRP. However, if there are several hair salons in the town, each salon will have to bid up the wage rate in order to attract sufficient hairdressers so that they can maximise their individual profits. What if a union fixes a minimum wage?

Essay on price elasticity of demand

To analyse the change in demand due to some forces in the market. The Coca-Cola Company claims that the beverage is sold in more than countries. Being a bookkeeper, Frank Robinson also had excellent penmanship. About nine servings of the soft drink were sold each day.

Untilthe soft drink, marketed as a tonic, contained extracts of cocaine as well as the caffeine-rich kola nut. The company produces concentrate, which is then sold to licensed Coca-Cola bottlers throughout the world.

The bottlers, who hold territorially exclusive contracts with the company, produce finished product in cans and bottles from the concentrate in combination with filtered water and sweeteners. The bottlers then sell, distribute and merchandise Coca-Cola to retail stores and vending machines. The Coca-Cola Company also sells concentrate for soda fountains to major restaurants and food service distributors.

The Coca-Cola Company has, on occasion, introduced other cola drinks under the Coke brand name. In response to consumer insistence on a more natural product, the company is in the process of phasing out E, or sodium benzoate, the controversial additive used in Diet Coke and linked to DNA damage in yeast cells and hyperactivity in children.

The company has stated that it plans to remove E from its other products, including Sprite and Oasis, as soon as a satisfactory alternative is found.

Supply and Demand and Coca Cola Increases - New York Essays

Demand for coca cola is also influenced by the change in price of relative goods. In case of coca cola there are number of substitute goods available in the market, we have Pepsi, Miranda, limca, spirit, etc.

In case of coca cola, if there are hard core consumers who prefer the taste of coca cola, even if the price of coca cola increases, the demand will remain the same.

But if the consumers have no taste or preference of coca cola, then if the price increases the demand decreases. As a result consumer was shifting from coca cola to other natural drinks so therefore the demand for coca cola decreased. TIME Time is an important factor that affects the demand of coca cola e.

From this figure we can see that when the income of the consumer increase in the future then the demand for coca cola increases.

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It states that if the price of a product increases, quantity supply will increase as the supplier will be willing to supply more to earn more profit. The law shows that there is a positive relationship between price and quantity supply.

This show as the prices increases the producers are willing to supply more to earn more profit. In case of coca cola this holds true as the price of coca cola increases there will be increase in supply upto a certain level as there are other constrain like easy availability of closed substitute.

In the long run if the producer continuously increases the price of coca cola then the demand for coca cola will fall down because of various substitutes available in the market. As stated in the law of supply, the price is positively related with quantity supplied for coca cola, in short run if there is an increase in the price of coca cola, the producers will be willing to produce more of the product.

Essay on price elasticity of demand

In the case of coca cola there are large number of consumer, as a result the supplier are willing to supply more to cater the needs for the large number of customer.

Includes labour cost, machinery etc. Shift in supply curve means change in quantity supplied due to others factors while price remains the same. Upward shift takes place when the supplier is able to supply at less at a same price.

Downward shift takes place when the suppliers are willing to supply at same price. Price elasticity is found to be relatively elastic.

This means if there is small change in price lead to the big change in quantity demanded. Therefore we can say that coca cola is elastic in nature and its elasticity for demand is more than 1.

In the case of coca cola substitutes are easily available in the market. The market is already flooded with many aerated drinks.

So even if there is a increase in the price of coca cola, the consumers will shift their consumption from coca cola to aerated drinks because of easy availability of related substitutes. The demand for coca cola is always related to a time factor.

This implies that elasticity of demand varies with the length of time period.

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In case of long run elasticity of demand is elastic because the period is long enough for the people to shift their taste and preference and in case of the short run the demand remain inelastic. The demand for coca cola is elastic for middle income group.

The middle income group is sensitive to the change in price.ADVERTISEMENTS: In this essay we will discuss about Price Elasticity of Demand. After reading this essay you will learn about: 1.

Meaning of Price Elasticity 2. Methods of Measuring Price Elasticity of Demand 3. Importance of the Concept of Price Elasticity 4. Cross Elasticity of Demand 5. Concept of Income Elasticity of Demand 6.

Factors [ ]. Price Elasticity of Demand is the quantitative measure of consumer behavior whereby there is indication of response of quantity demanded for a product or service to change in price of the good or service (Mankiw,).

Scarcity is the limited availability of a commodity, which may be in demand in the alphabetnyc.comty also includes an individual's lack of resources to buy commodities. Genius, Jacque Fresco argues that Scarcity is the fundamental core of Humanity's problems.

He offers a achievable solution to the world's true root issue, Resource Management. The Venus Project is his mission and he has designed.

Elasticity tells us how much quantity demanded changes when price changes. The elasticity of demand is a measure of how responsive quantity demanded is to a change in price.

A demand curve is elastic when a change in price causes a big change in the quantity demanded. The opposite is . Published: Mon, 5 Dec The determinants of price elasticity of supply are the existence of stocks.

In fact, price elasticity of supply depends on the size of production of a firm supplying the market. At Chicago, Milton Friedman, Henry Simons, Lloyd Mints, Frank Knight and Jacob Viner taught and developed ‘a more subtle and relevant version’ of the quantity theory of money in its theoretical form “in which the quantity theory was connected and integrated with general price theory.”.

Supply and demand - Wikipedia