Wednesday, November 21, 2012

Demand

1. Bernie sells more hamburgers when they are priced at $1 than 5 because it is cheaper. People and consumer want to save money and spend less. The demand for the burgers is higher because the price is less, therefore it leads to more people buying more burgers as it is cheaper.

2. Bernie sells more hamburgers when they are priced at $5 than sally's salads at the same time, because people prefer it. This can be seen with preferences. The taste and quality of the Bernie's hamburgers is much better then the quality of sally's which leads consumers to buy Bernie's as it is in the favor of preferences for the average consumer.

3. A demand factor that can lead to more entree sales for both Bernie and Sally is if the economy was good and the income rate for people was high. This will allow consumers to spend more money on other products and pleasures such as food and restaurants pertaining to Bernie and Sally sales. Additionally if there were expectations that the economy would get better people will also be spending more money on products and businesses which will benefit Bernie's and Sally's sales.

Extra Credit: If demands is elastic and there was a raise in price on a particular good the total revenue would go down because there would be less consumers as the it is price sensitive. Meaning if the price is raised there would be less demand, which leads to a smaller total revenue. One factor that could affect  elasticity, can be price related good and competition which will lead to prices changing for different products. Most of all necessities can change elasticity as it is in demand and people need it.

1 comment:

  1. Your response to #1,2, and 3 show a solid understanding of the nature of demand. I had difficulty understanding your discussion of elasticity.
    10/10

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