Question

What is the predicted effect of this on the price and quantity in the market for cleaning services?

Answer 1

A) Predicted effects of price and quantity in the market of cleaning services

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Abstract

Let us understand the relationship of price and quantity demand for the market of cleaning services

House Cleaning Service will be focusing on two upper socio/economic groups. The first is the affluent where only one spouse works.

The second segment of the market that is targeted is the two income family. Over the last couple of decades, the number of two-income households have increased, to a point where in parts of the country they exceed one income families

For a residential cleaning company to earn a million dollars or more annually, it would need to clean about 31 homes per day. That's a lot, but there are now several house cleaning companies in the U.S. earning a million dollars or more per year, which says this is certainly possible.

The price effect can be contributed to various factors that dirrectly effect on market prices on consumer demand. The price effect can be an important analysis for businesses in setting the offering price of their goods and services.

In general, when prices rise, buyers will typically buy less and vice versa when prices fall.

A decrease in demand and an increase in supply will cause a fall in equilibrium price, but the effect on equilibrium quantity cannot be determined.

For any quantity, consumers now place a lower value on the good, and producers are willing to accept a lower price, therefore, price will fall.

Now in cosideration of the cleaning services, we can observe the below points :

For cleaning services the target customer is two income families whose combined annual income is over $125,000. These families don't have the time to clean, can afford a cleaning service, and choose to hire a service because the opportunity costs are too high to waste time cleaning their house.

In this scenario if the if the price of cleaning material goes up, the quantity demanded goes down but demand itself stays the same. If the price decreases, quantity demanded increases. This is the Law of Demand. If we try to plot it on a graph, an inverse relationship is represented by a downward sloping line from left to right.

Therefore there is a lot of things need to be considered while setiing up price and predicted of demanded quantity of cleaning sevices in target market of USA's

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