Diagram A (American Eagle polo’s Diagram B (Boham’s polo’s)
D1 D D*
D1 D $295.
700 720 600 760
In diagram A the demand curve labeled D represent the constant demand for American Eagle Polo’s where the quantity demanded is 720 units for the year at price $400.00. Diagram B, the demand curve D* represents the demand for the substitute good, Boham’s Polo’s at price $310.00 where 600 units are demanded. In diagram B due to a decrease in the price from $310.00 to $295.00 of the of the good Boham’s Polo’s there was an increase in the quantity demanded from 600 units to 760 units as illustrated in the diagram B. Due to this, the demand for American Eagle Polo’s will now decrease from 720 units to 700 units. Hence at the price of $400.00 only 700 units of American Eagle was purchased showing the influence of substitutes on Jay’s Jay’s Sales revenue.
Using the economic theory, substitutes affect the demand for the American Eagle Polo’s greatly. If the price of the American Eagle polo’s is quite high the consumer will then turn to the substitute good that would mostly likely be at a lower price. This may even occur when the quality of the original good is inferior resulting in the consumer moving towards the substitute good. the consumer will then turn to the substitute good resulting in a loss of sale for the business.
Advertising affects the quantity demanded for the product, American eagle polos and forever 21 dresses in many ways. One way that it affects the quantity demanded is through the exposure it... [continues]
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