the demand for such goods, as a rule, does not grow
Posted: Thu Feb 13, 2025 5:07 am
Factors Affecting Supply
The offer is also influenced by certain factors and processes. Let us list some of the most important ones:
1. Production costs. Reducing the cost of goods (for example, through the use of new technologies) allows producers to offer more goods at the same price.
2. Technological progress. The introduction of innovations increases productivity.
3. Cost of goods or services. If the cost of raw materials, labor, or other resources increases, producers may reduce the amount they supply to avoid losses.
4. Number of business representatives. The more manufacturers participate in the production of a certain product, the greater its total number on the market.
5. Government regulation. Tariffs, subsidies or quotas can either limit supply or stimulate its growth.
6. Seasonality. Some products, such as agricultural products, depend on the time of year. In winter, the volume of fresh vegetables and fruits usually decreases.
At the same time, if the price decreases, , since they are affordable and a person does not need to increase their volume. For example, it is difficult to eat more than two packs of buckwheat in a month, or use more than a pack of salt. Therefore, even a price reduction does not attract consumers. This situation is inelastic demand. In general, the inelasticity of demand can be determined by the following parameters:
3) Unit elasticity of demand (Ed=1). The quantity demanded changes south africa phone number list proportionally to the change in price. For example, a 10% decrease in the price of bananas will result in a 10% increase in sales.
4) Perfectly elastic demand (Ed=>∞). Any, even insignificant, change in price causes a critical increase or decrease in demand. For example, if a product can be replaced by an identical one from competitors, even a minimal increase in price will zero out the demand for it.
5) Perfectly inelastic demand (Ed=0). Demand remains unchanged regardless of price changes. A classic example is medications that are vital for patients (e.g. insulin for diabetics).
Let's look at a real example.
In 2023, butter was sold at a price of 150 rubles per pack. The manufacturer sold 100,000 packages. In 2024, the price increased to 190 rubles. Sales amounted to 88,000 packages. The elasticity of demand can be calculated using the formula presented earlier. Let's split it into 2 parts for convenience.
The offer is also influenced by certain factors and processes. Let us list some of the most important ones:
1. Production costs. Reducing the cost of goods (for example, through the use of new technologies) allows producers to offer more goods at the same price.
2. Technological progress. The introduction of innovations increases productivity.
3. Cost of goods or services. If the cost of raw materials, labor, or other resources increases, producers may reduce the amount they supply to avoid losses.
4. Number of business representatives. The more manufacturers participate in the production of a certain product, the greater its total number on the market.
5. Government regulation. Tariffs, subsidies or quotas can either limit supply or stimulate its growth.
6. Seasonality. Some products, such as agricultural products, depend on the time of year. In winter, the volume of fresh vegetables and fruits usually decreases.
At the same time, if the price decreases, , since they are affordable and a person does not need to increase their volume. For example, it is difficult to eat more than two packs of buckwheat in a month, or use more than a pack of salt. Therefore, even a price reduction does not attract consumers. This situation is inelastic demand. In general, the inelasticity of demand can be determined by the following parameters:
3) Unit elasticity of demand (Ed=1). The quantity demanded changes south africa phone number list proportionally to the change in price. For example, a 10% decrease in the price of bananas will result in a 10% increase in sales.
4) Perfectly elastic demand (Ed=>∞). Any, even insignificant, change in price causes a critical increase or decrease in demand. For example, if a product can be replaced by an identical one from competitors, even a minimal increase in price will zero out the demand for it.
5) Perfectly inelastic demand (Ed=0). Demand remains unchanged regardless of price changes. A classic example is medications that are vital for patients (e.g. insulin for diabetics).
Let's look at a real example.
In 2023, butter was sold at a price of 150 rubles per pack. The manufacturer sold 100,000 packages. In 2024, the price increased to 190 rubles. Sales amounted to 88,000 packages. The elasticity of demand can be calculated using the formula presented earlier. Let's split it into 2 parts for convenience.