Describe a business that you might like to own and the major product that the business would produce. Next, use the determinates of demand elasticity to predict and explain the elasticity of demand for that product. Describe the pricing policy you would use to get consumers to maximize their expenditures on that product. Word count: 200-250
If I could have any business, I would have a computer company, and my major product would obviously be a computer. Because a computer is a luxury item, the demand for it will be relatively elastic. Not only this, but due to the vast majority of other substitute brands, my product will become even more elastic. With this knowledge, I will have to set my prices in a way which will allow me to collect the most I possibly can from the consumers of my product. An elastic product such as mine must stay in a competitively low price range in order to prevent consumers from taking their money elsewhere; so, I will set my price as low as possible. Even though I will make significantly less money per product than other companies, the elasticity of computers will cause the most amounts of people to purchase my brand, and therefore I will make more money in the long run. Furthermore, since I am sticking to computers being an elastic product, I will want to keep it that way or otherwise my strategies will not work. I will do this by not wasting money on putting out new products very often. The reason for this is over time products become more elastic, and if I were to frequently put out new ones, they would become slightly more inelastic. This pricing policy for my company will maximize consumer expenditures on my product.
ReplyDeleteOne business that I would like to own would be a TV company. Like the title says, my main product would be TV’s. Since TV’s are a luxury good, it would be very elastic. That’s means I would need to make sure my price was at equilibrium with quantity my buyers would be willing to pay. If my price was too high, then less people would buy my product because it is elastic with many alternatives. But, if my prices were too low, my income would go down, even though more people would buy my TV’s. Another reason I would make TV’s is because they are a normal good. That means if people’s wages go up, so would my quantity demanded. TV’s have been around for around 60 years. That means because of that time period my elasticity would be higher. As televisions get older, they will only get more elastic. That means I would need to make sure my income is maximized by keeping my prices at equilibrium with the quantity demanded. I would also need to produce new products that utilize new technology. That would keep my company from succumbing to creative destruction. If that happened, my product would become so elastic, because of alternative products with higher demand, that I would not be able to make a profit.
ReplyDeleteI would open a coffee shop, which sold coffee, tea, and assorted pastries. Many people would say they need their cup of coffee in the morning, and since they pay Starbucks prices coffee seems to be an inelastic item. But, there are so many different brands of coffee that can be substituted it also can be called elastic. I would strive to make my coffee taste better than Starbucks. Since people already pay Starbucks prices, they most likely wouldn’t care if my coffee cost more but tasted better. Once I got my coffee to taste better, I could start bringing in the profits. If coffee is indeed inelastic I could keep charging higher prices and still sell the same amount of coffee. Along as coffee stays inelastic, I could keep selling my coffee to all the business workers that grab their coffee on the way to work. And even if coffee became elastic, I could find ways to beat the competition in price too, use machines to blend coffee instead of workers. My coffee would be priced higher than other brands because it tastes better, but not high enough to cause people to stop drinking mine and go back to their old ways.
ReplyDeleteI am the owner of Crayola and we are majorly producing crayons. Crayola crayons would be pretty elastic in the business world. The demand curve for this would be almost horizontal as a result and any change in price would drastically change the quantity demanded. As crayons are not the only way of coloring something, there are several close alternatives such as markers or colored pencils. Crayons are also considered a luxury as they are not considered as necessary to live. If crayons are becoming increasingly more expensive, they are taking up more of a proportion of total expenditures. Therefore, people will quit buying crayons in an effort to save money. As crayola crayons are held at a greater price for longer, people will stop buying that brand and other firms will enter the market selling similar products at a better price that will slowly push Crayola out of business. I’d say that Crayola crayons have an elasticity of about 3.3. In order to maximize expenditures on my product, I would find the price equilibrium of my supply and demand curve and produce with efficiency. This would create an even consumer surplus and producer surplus that makes everyone benefit. Producing at the equilibrium would ensure that my company makes the greatest total revenue.
ReplyDeleteIf I could own a shop, I would own a candy store. I would sell Snickers, Butterfingers, Blow Pops, Lemon Heads, and other assorted candies. Candy is an elastic good; people can find other substitutes to get their sweet fix with, such as cookies. Also it is a luxury not a necessity because people do not need candy to live. Due to the fact that candy is sold all over, I would have to make my prices low to try and attract people to my store instead of buying it at a checkout line in Jewel. If I raised my price to six dollars for a Snickers bar no one would come to my store for a Snickers bar. People would be very sensitive to a price change with my candy because there are so many other places people could buy it. But if I made my candy at a super low price, like 25 cents for a Hershey bar, I would be losing money. In order to maximize all my profits I would need to stay at my equilibrium. By making my candy at a better price that will keep me making maximum income, and a price that will insure that my demand and price will stay at the equilibrium, both the buyer and my business will benefit.
ReplyDeleteI would like to own a company that produces cell phones. Cell phones are an elastic good because they continue to respond substantially to changes in price. I would make sure my company released a new cell phone every month to top my competitors and maximize the demand for the ‘best’ cell phone. A cell phone is a luxury good therefore it has many substitutes and different models. The problem with cell phone companies is how close their sales are like the buy one get one free sale on phones or add a line for $9.99. All the companies strive to be the most used cell service so they always have new sales. The narrow market keeps the producers trying to create the best products and efficient customer satisfaction. My company will have two sales going at once buying phones and adding lines. Consumers are always looking to save money so my company will be the right choice. The portion of income will be on my side because cell phones are an inferior good, so the higher income of consumers will make them want the most high tech and reliable phone. Working people are becoming more dependent on cell phones because if blackberries where you can do just about anything on them, hopefully my demand would stay high for those working people so they keep buying my products.
ReplyDeleteI would like to own a cell phone company that (obviously) creates cell phones and cellular accessories. Cell phones, though, are relatively elastic. They can be seen as a luxury item, and have some close substitutes, e.g. home phones and pay phones. Also, plenty of substitutes for my brand of cell phones are definitely out there. Knowing this, I will strive to come up with the next new thing for the mobile phone market. I will start my prices just lower than the expected equilibrium to encourage more people to buy my cheaper phones. Eventually, though, I will raise the price to equilibrium and let people buy my product at the same rate I am producing them. When my “next new thing” product is ready, I will put the price for that higher than the expected equilibrium, then eventually lower the price below equilibrium, the consumers will be excited about the price drop and hopefully purchase the surplus created by the high price. Before the surplus is gone, I will start to raise prices slowly and unnoticeably back to equilibrium and reduce the quantity demanded for it so that it will not be in shortage before I can raise the price to equilibrium.
ReplyDeleteIf I were to start my own company then I would start an alternative energy company. In this company I will produce wind energy, solar energy and research alternative energy that can be used in homes, factories, businesses etc. In the case of alternative energy it would have to be elastic due to the idea of alternative. It is the secondary choice to cheaper fossil fuels. Also including the competition among other fossil fuels, alternative energy companies and new scientific advancement in the alternative energy field will make my product even more elastic. My pricing policy will be based on best production and latest scientific techniques to produce products that will be good in quality and affordable to the costumers. My research division will look for ways to improve quality and productivity of my companies’ product. My pricing policy will also be based on brand. My brand will be known for high quality affordable products that costumers will want to buy. At the beginning I will use a good amount of profit for research and development of my product. Although short term I will not make a large profit, in the long term it will help my company with improved productivity and quality.
ReplyDeleteIf I could own any business I would own an ice cream parlor and sell vanilla, chocolate, strawberry and other flavors of ice cream. Ice cream is an elastic product because there are substitutes for it such as, gelato or frozen yogurt. Also, ice cream is a luxury because it is not a necessity for our diet. Ice cream is also elastic because it responds to price change so I would sell it at a lower price than the other businesses so that customers would come to mine. If my price was too high such as four dollars per scoop then the marginal cost exceeds the marginal benefit. Consumers would go to a cheaper ice cream shop or buy gelato or frozen yogurt, but if my price was too low such as one dollar per scoop then the marginal benefit would be higher than the marginal cost. My business would receive less money because my income decreased. Therefore, I would sell my ice cream at two dollars and fifty cents per scoop so that the marginal benefit equals the marginal cost and consumers and producers are at equilibrium. The customer would receive a tasty, reasonably priced treat and I would receive a higher income and a greater total revenue for, overall, a better business.
ReplyDeleteIf I could own my own business, I would open up a bookstore. Obvious enough, my business would be selling books, of all kinds. Now depending on the use of each product(textbooks, leisure books, etc.) the elasticity of my products will differ. Now books are a luxury, as books do not need to be read in order to continue living. But textbooks are a necessity in schools, and books are desired by many for the enrichment they bring to their lives. I predict that books would not be subject to much price change, unless they were new popular releases, and customers would not respond much to a small price fluctuation. My goal would be to keep my price at the point where I am producing a price at which their quantity demanded is meeting around the amount of which I am producing. My desired price is around equilibrium, or a little below, and as such I plan to offer books at lower prices than competitors, to keep consumers coming. Books would not be considered a very elastic good, especially books like textbooks where schools must purchase them regardless of price, but I must remain at a lower price comparitively to other bookstores in the area to attract more buyers, and more overall revenue.
ReplyDeleteIf I could own any business, I would want to own a business like Apple. Our main product would also be a music player like an i-pod. The elasticity of music players is relatively elastic so the ones that my business would make would have to be way better than all the other ones. The substitutes of music players are cds, tapes, and the radio. Music players are considered a necessity, so it is a normal good. Also, as peoples’ incomes go up, the more elastic my music players would become. In order for the quantity demanded of the music players to go up, I’d have to make the price pretty reasonable. According to the law of demand, as price goes down, the quantity demanded for that product goes up, so that is the only way for more people to buy them. The music players would also have to be better than all the other ones out there for expenditures to go up. With the money the music players would make, it would be used for better and more technologically advanced music players. In a competitive market, it is necessary to keep improving the item and making it a little more inelastic each time. When an item is inelastic, it forces buyers to buy it at any price and that would maximize both expenditures and funds greatly.
ReplyDeleteIf I could own any business, I would own a bakery. My shop would consist of cakes, cookies, candies, and other baked goods. The elasticity of these goods is extremely elastic. If the price goes up too high, people can go to a supermarket and get it for cheaper. Just because my good may be better than the supermarket, if the price rises too much it is not worth it because my good is considered an elastic good. Substitutes in supermarkets are also more easily accessible if not more than my goods. Because of this factor, I would be forced to make my prices relatively low. With low prices, my product may not be at its best quality but will be better than others and I will make my greatest revenue. Or, I could simply make my product undeniable yet a little pricier and start my business in a more rich community. If people have money to spend, then they won’t care how much it costs as long as it tastes good. So, although there may be easy substitutes for my product, there are many options I could take to make sure I have a successful business even though it consists of elastic goods.
ReplyDeleteIf I could own any business I would own a clothing store. I would produce and sell a variety of clothing. Clothing, in general, is inelastic because it is definitely a necessity in our society. But there are different types of clothes, from pajamas to formal wear. Zip-up fleece jackets are elastic because you could buy a hoodie instead. Wedding dresses are inelastic because it is custom to wear that specific article of clothing on your wedding day, and there are no close substitutes. I would attract customers by keeping track of trends and producing the clothes that people want to buy. This also goes the same for seasonal items, like winter coats, swimwear, or homecoming dresses. Because some clothing is more inelastic or desired, like blue jeans for example, I could raise the price of blue jeans, but not by much, and make a bigger profit without losing customers. I would make clothes similar to the competitions, but better quality or lower priced. My clothes would be cheaper than the competing price but I would still maintain the equilibrium price where marginal benefit and cost are the same. The result is a win win situation where the customer receives trendy, affordable clothes and I receive a profit, an income, and a greater total revenue.
ReplyDeleteIf I could own my own business, I would run a shoe store. I would produce and sell a variety of styles of shoes. I consider shoes to be an inelastic product because they are a necessity. However, the inelasticity or elasticity of shoes depends on the type. For example, athletic shoes are more inelastic than, say, high heels. If a person is looking for shoes for walking around town or to take their morning jog, they will most likely be looking for running shoes. In this case, there aren’t really any close substitutes to running shoes, so these are pretty much a necessity because we need something on our feet to get around. But if a woman comes into the store looking for shoes to wear for her night out on the town, she has a few options; she could wear high heels, nice flats, dressy boots, or sandals, depending on her preferences. She could go designer or retail brands for each of these choices as well. She has many options now, and these shoes are a luxury because it isn’t necessary to buy a new pair of shoes just for one specific night out. I would price my shoes just above equilibrium to make more revenue, but I would make sure my staff was excellent in customer service to make up for it. I would price more inelastic shoes, like running shoes, higher because no matter what, people need these types of shoes. But more elastic shoes will be priced lower because no one absolutely needs Christian Louboutin heels or Giorgio Armani loafers to wear to work because there are alternatives, such as retail brands or other types of formal shoes. I would also open a loyal customer program and offer benefits to members of said program through discounts, exclusive sales, and previews of new arrivals. With these strategies, consumers would want to buy from my store to get the maximum benefit from their shoe shopping experiences, and I would gain a lot of revenue, resulting in profit, and then, finally, income.
ReplyDeleteIf I were to start a business, I would choose a fruit stand. My primary product would most likely be apples. Although some may disagree, there truly is no close substitute for a high quality apple. For this reason, apples can be considered relatively inelastic. Apples can also be considered a necessity because they satisfy one of our basic needs: hunger. In addition, apples have a rather low price relative to an individual’s income, so a price change would spark only a slight response from consumers. As an intelligent fruit stand owner specializing in the sale of apples and enriching the lives of apple-eaters globally, I would price my apples as close to the equilibrium price as possible. This strategy would maximize the efficiency of my business since marginal benefit and cost would be equal. In addition, allocative efficiency would be attained at this point, meaning that combined consumer and producer surplus is at a maximum. In order to beat out neighboring fruit stands in the incredibly competitive Grayslake fruit stand market, I might occasionally lower prices as part of a sale. According to the law of demand, as the price of a good decreases, the quantity demanded of that good increases. So every once in awhile, it would be useful to lower prices and boost sales, especially if I have a surplus one week that I need to sell (since apples are perishable). It would be more beneficial to accept a lower price for a few apples towards the end of their ripeness, then let them go bad and receive no profit for them. In general, though, I would follow the philosophy of pricing based on the equilibrium price.
ReplyDeleteIf I could own any business that I wanted I would own a pen company. Pens are more inelastic than elastic due to the fact that official papers and contracts must be signed and filled out in pen. The factor that lowers a pen’s inelasticity is the close substitute of pencils. Pencils can be substituted for pens in the case of students or general use around homes. My main target market for my pens would by businesses, organizations, and students. My pens would become more inelastic at the start of the school year because the students are going back to school and need supplies. Also most teachers require pens for papers or other homework adding to the inelasticity. I would maximize the consumer’s expenditures on my pens by making them of high quality and a high variety. I will cover most of the preferences from dry pens to inky pens, and colored to black. Adding a variety to my pens will give the consumers more of an option and will cover more of their preferences thus increasing the number of people interested in my pens. In relationship to my competitors I will drive to always have better quality pens for slightly higher prices. The higher prices won’t drive away the consumers due to the higher quality of my pens.
ReplyDeleteIf I owned a company, I would like to own a bookstore. Using the elasticity laws, I don't think books are inelastic because people can either look up the information they need on the internet, decide not to buy the book, or in some cases, just decide to see the movie! But also sometimes you must buy a book for school or work which would make it, in some cases, inelastic. In order to maximize my revenue, I would have to make people buy from my store and not download it or put off the purchase. I would probably sell most my books at a lower price than the competitors to attract business in the beginning. With some of my books, like the ones that schools will make the students buy, I will charge a higher price because the elasticity of those certain items are lower than the rest. The rest of the books that I would sell I would have to sell them at below equilibrium price until I got more customers. I would then slowly start increasing the price until I got back up to the equilibrium price. All together, I think that the price elasticity of books in general is around 1.7.
ReplyDeleteIf I could own any business, I would own a pet store. I would sell pets supplies and animals like dogs, cats, birds, and certain rodents. I thinks pets as perfectly inelastic, but only the type of pet would be considered elastic. Whether its a dog or cat and whether its a labador retriever or german shepherd. Pets don't have substitutes other stores may have just as many dogs as me, but that doesn't mean they have the same breed. Income is a large affect on animals. The lower an individuals income the harder it is for them to take care of their pets. Pets are not luxuries nor necessities they bring joy, but also need attention and are huge responsibilities. My prices would not be as outrageous as other stores prices being as high as they are. I would manage my pet supplies as demand request, but for the animals my prices would be much lower. I keep my prices way below $800 and I'd offer a small payment return if they got their animals spade or nudered. Revenue would not be my main objective but the well being of our pets.
ReplyDeleteIf i could own any kind of business, I would choose to own a bike shop that sells and maintains bikes. The demand for my bikes and service would be very elastic since you could buy any bike from walmart for less than 100 bucks. As far as service, that is elastic but also a little inelastic since anyone could work on their bikes with simple tools. The inelastic part comes in when some one doesn't know what they're doing and needs expert help. I would rather take it in for a tune up than trash it and buy a new bike. I would, however, focus on the quality of my bikes also rather than how cheaply I can sell them. This would attract a different crowd of bike enthusiasts that are willing to pay more to get more. Based on prices I've seen, I could get away with taking a few bucks of aluminum, form it into a bike, and sell it for a couple hundred bucks creating huge profits. This way I'd need to sell less to make a decent amount of money.
ReplyDeleteIf I could own a business I would own a makeup company. My business would obviously sell makeup items like eyeliner, mascara, foundation, blush, etc. Makeup products like these are elastic since they are not a necessity, also consumers can buy substitute goods like makeup from the drugstore. Seeing as consumers can purchase makeup products at many other locations I must keep my prices competitive. In order to maximize consumer expenditure I would send a coupon for my store to target customers in the mail, encouraging new consumers to come into my store. Once they are in the store it is all about getting them to spend as much money as possible. To do this I would bring in makeup artists to do clients makeup and suggest products for them. Furthermore I would have special offers on complementary goods such as “If you buy a lipstick you can get a lip liner half off”. My business would also provide luxury high cost, high value skincare products like specialty cleansers, moisturizers or anti-aging products which are inelastic. The anti-aging products are inelastic since there is no close substitute, so for these products I can charge any reasonable price, since the consumers cannot get the exact product anywhere else.
ReplyDeleteIf I could own any store, I would own a shoe store. This shoe store would sell shoes of various types, colors, and sizes. The product I would produce would be relatively inelastic because people need shoes. The only substitute to shoes is walking around barefoot, and someone can only do that until the tolerance of taking shards of glass to the foot has run out. Another reason that this product would be relatively inelastic is that there are no close substitutes for shoes. This is why I would choose to sell a variety of shoes. If I were to sell only one type of shoes, there would be a lot of substitutes which would make business unsuccessful because the customers would be overly responsive to a price change. Also, because the demand of shoes is relatively inelastic, even if there is a tax placed on the good, people still need to buy shoes, and this makes them willing to pay the price including the tax, and they will also bear a good portion of the burden of the tax. This will make my profits higher because my business will not have to pay the brunt of the tax. In the end, my business would become overall more successful in the long run if my product was inelastic and there was more of a “cushion” so to speak to allow for any change in price.
ReplyDeleteIf i could own any business I would own a children's toy company. My business will create and sell toys for children. In a child's mind the new dora the explorer toy is the most inelastic thing they can this of. They must have this new toy no matter what no other toy can replace this toy in their mind, by having to substitute. Because the toys are inelastic i will charge a fairly high up reasonable price But, to an adult a children's toy is pretty much useless and can have multiple substitutes. If a child bugs a parent long enough the parent will eventually come to my store and buy the toy. There are many other children's toy stores I will need to advertise smartly. Instead of spending money to advertise on the newspaper or TV channels like the food net work or CBS I would advertise on Disney Channel, Cartoon Network and Nickelodeon. The more frequently the children see their toy the more they will annoy their parents and will eventually come to my store. In conclusion I will sell Toys to children's which are fairly inelastic. In order to attract children i will advertise on child friendly media.
ReplyDeleteIf I could own a business I would own a sports store. I would sell all kinds of equipment and stuff need for all sports like shoes, balls, goals, and so on. I would say sports are elastic because you don't have to play a sport. Each individual sport is elastic too. Equipment is hard to afford even if you have a high income. Shoes range from anywhere from cheap $20 shoes to really good $200 shoes. I would sell shoes under $90 so it is easier to afford. Baseball bats and gloves would stay around the $100 range. Basketball hoops would stay under $1000 and lacrosse would stay under $200. I would also add a warranty on every item so people don't keep spending a lot of money to replace the item they originally bought.
ReplyDeleteIf I could own a business I would own a smoothie shop. This smoothie shop would sell a large variety of smoothies with all sorts of fruits. I would advertise the health benefits of my shop by using frozen fruits and low fat yogurts and bases for the smoothies instead of sugary concentrates. This will persuade customers to buy from my shop instead of, lets say, an ice cream shop because smoothies are healthier but can have a similar taste. Smoothies are considered elastic goods because they have many close substitutes (such as yogurt, ice cream, shakes, slushies, etc.) and they are a luxury (not a necessity for living). Also, with a relatively low price of $3.25 for a 24-ounce smoothie, customers will tend to be more wiling to buy smoothies from my business. This does not mean, however, that customers are completely insensitive to a price change. For example, if I charged around $4.00 for a 16-ounce smoothie (such as businesses like Jamba Juice) customers are less inclined to make that health conscious decision of purchasing a smoothie for breakfast on the go than an item off the McDonalds dollar menu or Starbucks menu. On the other hand, if i sold the smoothies for a mere dollar or two for a 24 ounce, or even 16 ounce smoothie, for that matter my business would be losing money because the inputs cost more than the price I am selling the smoothies. This balance between the two extremes keeps both me (the producer) and my customers (the consumers) happy at an equilibrium. By functioning at an equilibrium both parties benefit.
ReplyDeleteEveryone knows the best way to spread Christmas cheer is singing loud for all to hear. But a lot fewer people know that the second best way is to wear tricked out Christmas socks. Thus, society is in dire need of a designer Christmas sock store, which is where I come in. I would make red socks, green socks, Santa socks, elf socks, light up socks, full body socks (AKA footie pajamas), or any other kind of sock you want. Now, people are desperate to have their Christmas socks (Just look at that freak whose name rhymes with Yam Florence) because singing isn't appropriate in all situations. Furthermore, there isn't a Christmas sock store popping up on every corner and they are a small portion of your income. So, my demand would be mostly inelastic, probably around 0.6. To maximize profit, I would lower the prices during the summer when people aren't willing to pay full price and then the prices would skyrocket during December when Christmas is on everyone's mind. If my Christmas sock business is a success, it would also be very easy to make socks for the rest of the holidays because I would already have the equipment and blueprints necessary to branch off. Holiday socks are clearly an untapped gold mine in society.
ReplyDeleteP.S. Matt-You do realize Crayola also makes markers and colored pencils so if someone buys markers instead of crayons it really wouldn't make a difference, right?
If I were to open up my own company, I would probably produce diapers. I know this may sound a little strange, but let me explain myself. The reason I would produce diapers is because diapers are a fairly inelastic good. Babies will always need to go to the bathroom, and the population is currently on the rise. The only close substitute for disposable diapers (which I would be selling) would be cloth diapers, but in that market, I could introduce a line of cloth diapers fairly quickly if I noticed that consumer tastes are switching from disposable diapers to cloth diapers. My challenge as a diaper producer would be to make myself known. I would have to compete with the already know and trusted companies such as Pampers, Huggies, or Luvs. And I would also need to make sure the price isn’t too expensive, but enough so that I would make a worthwhile profit. In order to do this, I would charge a higher price for my package of diapers, but I would offer an incentive to buying my diapers. This incentive would be something along the lines of a small toy, a bottle, or even a pacifier, something that these other companies don’t already offer. I can charge a higher price but stay competitive by offering an incentive. This way I can maximize my revenue, and my consumer expenditures on my product.
ReplyDeleteIf I owned a company, it would be Baskin-Robbins. We would produce mostly ice cream. Since there are a lot of other brands of ice cream out there, my ice cream would be fairly elastic. Sure, it might be a little closer to home than Oberweiss, but if the prices go up even a little, consumers would just go to Oberweiss. On the other hand, if my prices went down even a little, more consumers would come to Baskin-Robbins. For my pricing, if I set too high of a price on the ice cream, then cost would exceed the consumers benefit, and nobody would buy my brand. If I set my prices too low, then the consumers benefit would exceed their cost and I wouldn’t have enough income or supply of ice cream. Therefore, I would set my price at the supply and demand equilibrium, and I would earn enough income to keep my store going, and the consumers would be happy. If I wanted more consumers, I could also put up a sale on ice cream. It could be like buy one scoop, get the second half off or something like that. Because then it makes it worth it to the consumers to buy the second scoop.
ReplyDeleteIf I could own a business, I would own a clothing store. My main thing I would sell would be clothing, obviously, but I would sell things like scarves, handbags, and other accessories as well. What would set my business apart from other clothing stores would be my originality and reasonable prices. Almost every clothing store you walk into these days you can pretty much expect what you’re going to find, and everything seems to look more or less the same as the clothes in all of the other stores. Although clothing is inelastic, and the demand is high, there are also tons of producers in the market. At the end of the day, everybody needs a shirt on their back, but the difference is the brand name on the tag. Some people are more interested in pocketing an extra dollar than looking more fashionable, so why not give consumers what they want, trendy clothes at affordable prices. So to maximize profits, I would make sure everything was fairly, if not cheaply, priced; such as a shirt for fifteen dollars or a nice sweater for thirty-five dollars. By selling inexpensive yet chic attire, consumers would be drawn towards the lower prices, but we would still be able to maximize our profits because consumers would be buying more because at lower prices.
ReplyDeleteI would like to own a business selling Popsicles. Popsicles would be a very elastic product to sell. There are many substitutes available for Popsicles. You could get ice cream, frozen yogurt, a slushy or some other type of dessert. Popsicles are a very narrow market to be in. If I were in the dessert market, they'd be more inelastic. Also, Popsicles are not a necessity to people. No one needs a Popsicle. It's more of a luxury. You need food to survive, but there are many other types of food that could be eaten. It also has to do with people's preferences. If people find that Popsicles are very unnutritious or it is extremely cold outside, people would rather buy a substitute. And if the minimum wage drops or money inflates, people are less likely to spend their money on a luxury than a necessity. This product would be very elastic. If the prices increased or weren't low enough, the demand for Popsicles would go down. I would price these as low as I could while still making a profit. There are many other brands of Popsicles that I'd have to compete with, but by pricing them very low, and making good quality Popsicles, I'd sell more than other companies, therefore making a larger profit.
ReplyDeleteIf I could own a company, it would be a american car company. We would produce cars, of course. With there being many other major car companies, my product would be elastic. It also would be elastic because there are other ways of getting around, like using the train or riding a bike. Yay, I might have a an ameican made veichle, but if the price goes up, people will scramble for foreign cars. Also as my prices go down they will be more willing to purchase an american made car. So I will set my price at the equilibrium of the supply and demand curves. This is the price area will allow me to keep my company running and the consumer happy. Also giving deals on some of the veichle will want people to buy american made veichle.
ReplyDeleteIf I could own a company, it would defiantly be a soccer shoe company. With many other brands of shoes out there my product would be elastic. Also soccer shoes are more of a luxury, and their are many substitutes for them because there are many other brands out there. Although I would make my top shoe a lower price then any other brand because that way more people will buy my product which will help me in the long run because things become more elastic as they get older. Therefore I would constantly have new shoes coming out which would make them slightly more inelastic and at a lower price I will have many more buyers for my product then any other brand will. Sure, I may not make as much money the first few years then the other companies, but in the long run I will make more money. I will have to keep my prices down though or else my strategy will not uphold and I will eventually lose customers. Also since my prices will be under the equilibrium I will slowly have to work my prices up to that so I don't have a shortage or shoes. This may make some customers not buy my shoe but they will eventually realize how overpriced most shoes are. Also I will have incentives like buy these pair of shoes and get a free bag, or if you are buying online, we will pay for shipping.
ReplyDeleteIf I were to own a business I would own a toilet paper company I would produce toilet paper. Since toilet paper is a necessity (for most people) it for the most part has an inelastic demand. It has an inelastic demand because everyone has to use it in their homes or in public buildings meaning that everyone has to buy some. This is a good product because people need more and more of it because it is not reusable. Also there are almost no close substitutes for toilet paper. Also this product stays inelastic because as far as I know there isn’t going to be anything replacing toilet paper in the near or far future. Also this good is not affected by a person’s income unless it’s extremely low or toilet paper costs $100 per roll. But my business will create toilet paper in mass quantities so that it is produced cheaper because of mass production. Also I would make different types or quality toilet paper to please all types of customers no matter what their preference. I would make my toilet paper with simpler cheaper machines so that I could crush my competition in production costs. I would have a lower price and better selection and quality. I could still earn a profit because of my cheaper methods of production therefore I could have a lower price and still earn the same or more profit than my competitors.
ReplyDeleteIf I could own a business it would be a movie theater. Going to the movies would be considered a luxury because you could rent a movie from blockbuster, redbox, or get one off of netflix. This would make the movies an elastic demand. If the prices for a ticket at the movies sky rockets or the food sold inside is too expensive, my demand curve is going to shift to the left. By making sure that the prices of tickets and food are at a lower price, my demand will go back up. But I would have to be careful not to make it too low that I make no profit from it, or end up having a shortage of supply on tickets/movies/food, because I now cant afford to produce as much as I could before. If you keep the price of tickets at the equilibrium, you will be able to keep demand up, without having to supply less of your product. In the end making the movie goer, and myself, the owner, happy.
ReplyDeleteIf I were to own a company, it would be a utilitarian type car company (i.e. Saturn). This type of car (Being one with out excessive bells and whistles) would be a highly elastic type of car as well as being an inferior good. The EP for these cars would obviously be lower during economic stages of expansion or overall good economic conditions, being that less income is going toward necessities such as gas and more of the money is going towards luxury, such as Cadillacs vs. Saturns. This shows elasticity more on the demand side rather than the supply side. Saturns are generally known to be fuel efficient cars, and as stated before, during good economic times and times of increased disposable income, you can put more of it towards paying more for gas in a nicer car (Which also costs more money). However, even during times of economic growth, I'm still happy because there are always the people who have a utilitarian life style, environmentalists, etc. who are still interested in the cars. While the and EQ may be down, the demand would go down with it, calling for minimal price variance in the EP. I'm happy, they're happy, and the economy's happy.
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