Demand Wrap Up

Part 1:

Utility:
- The ability for a good or service to be useful to the consumer.
- The utility of coffee would be giving the consumer more energy.

Complementary Demand:
- Products that increase or decrease the demand for another product.
- Soccer balls and soccer cleats are an example of a complementary demand.

Substitute Demand:
- Products that compete against each other that can be used instead of the other.
- Instead of drinking coffee, consumers could just go to bed earlier to get enough energy for the day.














Elastic Demand:
- Demand for the product is changed drastically when the price changes.
- If all coffee drinks suddenly rose to $10 a cup, then consumers would stop demanding it.

Inelastic Demand:
- Demand for the product does not change drastically when the price changes.
- If the price of gas goes up, consumers have no choice but to demand it because they need it.


Part 2:

Elastic Demand Schedule:

$	#D	TR ($)
20	800	16,000
30	120	3,600
40	80	3,200
50	3	150
60	1	60

Inelastic Demand Schedule:

$	#D	TR ($)
1.50	150	225
3.00	125	375
4.50	100	450
6.50	75	487.50
9.00	60	540

Part 3:

Increase:

$	#D	D1
1.50	150	155
3.00	125	130
4.50	100	105
6.50	75	80
9.00	60	65

Decrease: 

$	#D	D1
1.50	150	140
3.00	125	115
4.50	100	90
6.50	75	65
9.00	60	50

Changes in the Demand Environment

Factor: Complements


The product being used are toothbrushes. When there is an increase in demand for toothbrushes, there tends to be an increase for toothpaste as well. As you use your toothbrush at least twice a day, the bristles can become frayed or will lose its structure. Toothpaste is also used the same amount as your toothbrush, which can run out quickly depending on how much toothpaste you use per brushing. When companies figure out a way to prevent toothbrushes from losing their shape, the demand will fall. Also, new inventors have come up with a toothpaste dispenser that distributes the same amount of toothpaste every time so young users do not make a mess. With this new invention, the demand for toothpaste will also decline.

Increase for toothbrushes

$	#D (Original)	D1 Increase
$1.00	55	100
$1.50	40	80
$2.00	25	60
$2.50	10	40
$3.00	5	20

Factor: Consumer Income

As items become more expensive, consumers tend to decrease their demand for it. A reason for the decrease in demand has to do with the consumers income. If he/she does not make enough money to keep buying the product, then he/she will have to stop buying so much or stop buying the product altogether. The demand schedules will show how the demand for the product, coffee, will decline when the price goes up.

	$ #D (Original) D1 (Decrease) $1.00 5 4 $3.00 4 2 $5.00 3 1 $7.00 2 0 $9.00 1 0

Demand Headlines

Complementary: "Jennie Finch launches new bat company, sales get hit out of the park!"

Substitute: "MLB season cancelled, MLS ticket sales score big."

Elastic: "Ghirardelli chocolate prices rise, sales melt."

Inelastic: "Milk costs go through the roof, although utterly ridiculous, consumers still buy."

Milk is inelastic because even though prices may be high, consumers still use milk every day. You could substitute it for soy or almond milk which may be much cheaper, but it is not considered real milk to those die hard dairy fans. We interviewed consumer Sherri Hill about the controversy of raised milk prices. When asked if she would switch to another brand, she said, "Never will I ever switch. It may be expensive, but I've been using this milk since I was a kid. I could not imagine using any other type of milk." As you can see, consumers can try to avoid using this absurdly expensive milk, but in reality, milk is used in countless recipes; breakfasts, lunches, and dinners. Milk is unavoidable, and any other substitutes do not have the same taste or quality of regular milk. Even if milk becomes very inexpensive, consumers cannot buy a lot of milk at a time; because even if you use a lot of milk in your household, the longer you let milk sit in the back of your fridge, the worse it gets. Milk can easily go bad if you do not pay close attention to the expiration date, so be good to your milk!

Demand and Utility

1. I would purchase coffee in order to give me energy throughout the day.

2. I would also get a new shirt to go with a pair of pants I purchased earlier.

3. I would also purchase a new softball bat to replace my old one because it has lost its pop.

Market Economies

  I support Market Economies because it gives everyone the freedom to do what they want with their company/business and meets the needs and wants of consumers.
  Some strengths are: able to adjust to change gradually, individual freedom for everyone, lack of government interference, incredible variety of goods and services, decentralized decision making, and high degree of consumer satisfaction.
  Some weaknesses are: it only rewards productive resources does not provide for people too young, too old, or too sick to work, workers and businesses face uncertainty as a result of competition and change, does not produce enough public goods such as defense, universal education, or health care, and must guard against market failures.

Opportunity Cost

Yesterday my sisters and I went to Starbucks, where I had to choose between getting a smoothie or a coffee drink. If I chose the smoothie, I would be choosing the healthier drink. Also, it wouldn't keep me up all night like coffee would. If I chose the coffee drink, I could get my favorite flavor, vanilla, put into it. I had decided earlier that day that I was going to try to go to bed early. So in the end, I chose the smoothie because it was healthier and it wouldn't keep me up all night.

Scarcity

   I chose bobby pins as something that is scarce in my life. I chose these because I always lose them and have to go buy a whole new pack. I usually use multiple bobby pins at a time, so when I lose that group I have to go get another group. Then I lose those, and so on.