Question

Milestone One: Supply, Demand, and Market Equilibrium. This milestone should be a paper structured as follows: a. Describe the price elasticity of supply or demand for a product or service at any Walmart store. b. Explain how two nonprice factors impact the demand on the chosen product or service. c. Explain how two nonprice factors impact the supply of the chosen product or service. d. Define the industry and market equilibrium associated with thr product or service. e. Predict thr effect of changes in supply and demand on the market equilibrium. f. Describe the decisions related to supply and demand for the product or sevice you would make based on the predicted changes in supply and demand on the market ewuilibrium.

Answer 1

Price elasticity refers to how quantity demanded or supplied of a good changes when it's price changes. In other words it is how much people react to a change in price of an item.

Price elasticity of demand refers to how changes to price affect the quantity demanded of a good. Conversely, price elasticity of supply refers to how changes in price affect the quantity supplied. Thus market equilibrium is achieved when demand is equal to quantity supplied.

Nonprice factors play an important role in determination of price elasticity. There are various non-price factors such as income, price of related goods, taste and preferences,etc which affect demand of a good. As income increases demand for a particular good also increases and vice versa. Price of substitute good also affect the demand.

Non-price factors also affect supply such as cost of production, improvement in technology,taxes etc. When cost of production as well as taxes increase price will also increase resulting in fall in supply.