Question

Students will select one of the Options listed for each of the applications and will complete a draft essay for each of the applications. The drafts will be submitted for grading by the end of Week 6.

APPLICATION 3: Law of SUPPLY AND DEMAND:

Prior to completing the application, it is highly recommended that students review Chapter 3 to gain a solid foundation.

Option 1: LAW OF DEMAND AND CIGARETTES

Option 2: LAW OF SUPPLY AND WOOLYMPICS

APPLICATION 4: Market Analysis (Equilibrium)

Prior to completing the application, it is highly recommended that students review Chapters 3 and 4 to gain a solid foundation.

Option 1: Equilibrium: CHINESE DEMAND AND PECAN PRICES

Option 2: Equilibrium: HONEYBEES AND THE PRICE OF ICE CREAM

Option 3: WHY LOWER DRUG PRICES?

I need only one answer in EACH application! So please choose just one Thank You!!!

Answer 1

APPLICATION 3: Law of SUPPLY AND DEMAND:mand

Option 1: LAW OF DEMAND AND CIGARETTES

The law of demand says that more product will be purchased when the prices fall.The demand of the product can be defined as te consumers are able to buy a certain product.

The demand of cigarettes are based upon many of the determinants like:

1. The price of the cigarettes.
2. The ability of the consumer to buy them or Purchasing power of the consumers.
3. Market segmentation based upon the age group of the consumers.

The consumption of the products is based upon the price of the product.The less the price the more the demand is.As the prices of the cigarettes becomes low the purchase will be increased.

The demand of cigarettes also depend upon the ability of the buyer or Purchasing power of the consumers.In researches regarding the change in the demand of the product depends upon the Purchasing power of the consumers.If the consumer can only buy when the price of the product decreases then it will be according to the law of demand.But there are people who are use to smoking and hence there is no effect on the demand of the cigarettes whether the change in the price takes place or not.The law of demand does not apply to this .

Another determinant is the market segmentation of the consumer on the basis of age group.It is highly noted that now-a-days youngesters are more prone towards the habit of smoking.They are not really hampered by the prices of the cigarettes and hance the law of demand is not applicable to the people of younger age gruop because they use it a status symbol and a little variation in the price does not effect the demand of the product.

From the above discussion we can say that in many determinats the law of demand does not apply to the cigarettes.

APPLICATION 4: Market Analysis (Equilibrium)

Option 1: Equilibrium: CHINESE DEMAND AND PECAN PRICES

Equilibrium is a situation in which the quantity demanded and the quantity supplied is equal.In this condition when the demand is increased the price rises and when the supply increase the price decreases.

The pecans are highly in demand in China as the people are of the view that pecans help in developing brain and also in minimising the health related issues in cardiovascular.

This help the price of the pecans to rise as the demand increases.