Excerpt from Research Proposal:
For example , fresh competing technology called an eventual fall in demand of video cassettes and an eventual lowering of the supply as a fresh equilibrium was reached. Now there are only a couple of VHS players and cassettes remaining out there, while the amount of TiVo and DVR users offers exponentially increased. But this took time since people replaced their devices and converted their your local library from one channel to the fresh medium.
The necessity for some goods is more responsive to changes in rates than other items. For example , foodstuff as a whole may appear like a incredibly inelastic good – individuals have to eat. Nevertheless because there are a lot of substitute products for a food, within the group of food price is often extremely elastic – consumers is going to respond to an increase in the price of restaurant meals by simply cooking at home.
The degree where the supply contour can react to changes in require will vary together with the product too. For example , every great when and awhile there will be an extremely warm winter months. Mittens and scarves will pile up in department stores, as producers are unable to adjust their supply into a decrease in require – they have to plan ahead just how much winter clothes they will produce for the growing season. Although they might slash the costs, there is just so ‘low they can go’ without having a catastrophic reduction, given the cost of the suggestions materials. Within a very cold breeze, it is difficult to boost inventories of winter apparel by rapidly increasing production and delivery the goods to stores. Yet , if there is an extremely hot day time an ice cream store can increase their supply to make more cash off of the sharp increase in require, and on an awesome, rainy working day, the store can simply leave the product in storage space until the weather condition changes. Yet , if the entire summer is usually cool, or perhaps if folks are not buying the product because of the recession and having ice cream at home, ultimately the store must slash prices to sell ice cream prior to it should go bad, will buy less in the way of products on hand, and the supply will lower (The market system, 2009, part 2)..
Economics basics: supply and demand. (2009). Investopedia.
Retrieved May twenty, 2009 http://www.investopedia.com/university/economics/economics3.asp
The market program. (2009). Biz/Ed
Retrieved Might 20, 2009