Archive for the ‘2.2 Elasticities’ Category
Happy Thanksgiving!
Posted by: 11cresma on: November 23, 2009
Thanksgiving in one day in the entire year. During this day, people are expected to eat turkey. To add to this tradition, it is a national holiday. As we can imagine, the demand for turkey increases drastically before Thanksgiving. Before and after Thanksgiving (D1), people who demanded turkey wanted it for a normal meal. The [...]
Plastic bag or cloth bag?
Posted by: 11cresma on: November 23, 2009
Taxing plastic bags in order stop people from wasting them is a great idea. Too many bags are thrown away everywhere. The problem with the free plastic bag is that people tend to use more than necessary, “after all, it’s free!” But then, not all of them are thrown away properly, and many end up [...]
Brazil takes off
Posted by: 11cresma on: November 17, 2009
Brazil, in the economic crisis, “did not avoid the downturn, but was among the last in and the first out.” Its economy is based upon the exportation of oil. Both demand and supply for oil are inelastic (it is a necessity but difficult to extract from the ground). As more people entered the market [...]
Oprah on sale!
Posted by: 11cresma on: November 16, 2009
Oprah Winfrey is an American media personality, actress, television producer, literary critic and magazine publisher. Well known throughout America and the whole world, people would pay enormous amount of money to see her on her show. This can be seen on the diagram below. EP1 on the diagram was the equilibrium point before Oprah [...]
Free coffees in McDonalds!
Posted by: 11cresma on: November 10, 2009
As people’s income decreases because of the economic recession, the demand for McDonalds decreases as well. To bring demand back up again, McDonalds used advertisement. It now offers free coffees to consumers. This shifted demand to the right; more people are willing to eat McDonalds food to have a free cafe latte cup. Demand decreased [...]
Bread war: the lost of Hovis
Posted by: 11cresma on: November 9, 2009
The increase in price of wheat and raw materials forced bread companies to increase the price of bread. However, out of the three comanies competing, Hovis, Warbutons and Kingsmill, only Hovis increased their prices in September. The other two companies waited till December to do so. Nervertheless, the demand for Hovis bread was too elastic, [...]
Advice to JAL: how to make more profit
Posted by: 11cresma on: November 8, 2009
There is an economic recession in the world today. People’s income decreased, and so did demand, as shown on the diagram below. People are more willing to travel with low-cost companies because it takes a small proportion of their income. If we assume that revenue increases as demand is inelastic, then that is what JAL [...]
Rice in Thailand
Posted by: 11cresma on: October 20, 2009
Related article The price of exported jasmine rice is very volatile. To regulate the price, the government set subsidies: the price cannot exceed a top price and cannot go lower than a bottom price. But these prices (also called mortgage) have been set too high, and therefore no matter what the price was, there [...]
The iPod and the iPhone markets
Posted by: 11cresma on: September 29, 2009
The iPod market is mostly a monopoly: it occupies more than 80 per cent of the market (the 20 other percents being owned by Sony, Creative and Samsung), but with the iPhone, the Apple company was scared that this new product (that combines a phone, an iPod, an internet access, and other useful functions) will [...]
