Mandatory Assessed DQ: Research the elasticity of beef and eggs in regards to price changes. How do supply, demand, and price controls interact to affect equilibrium price of eggs? Why do customers have a more elastic buying response to beef than to eggs?
As we has discussed, elastic demands are placed upon items that are commodities rather than needs. The change of eggs prices are forced due to the demand. During the summer months, egg supply is higher and lower during the winter months. Beef prices change when with customer preference such as competition, safety concern, income, etc. Demand shifts do not cause the price changes in the norm. Somethimes, the government will intervene to affect prices of these items as well. Supply and deman have no affect upon equilibrium price by definition. The equilibrium price is when neither of these items affects the sale. For example, during Easter, consumers will buy eggs to color at home for their kids and host Easter egg hunts. Regardless of the supply or price, the demand will increase. Beef has more of a buying response because it is very convenient for consumption; and can be used to make various dishes. There are some beliefs that beef has more vitamin content as well.
Mandatory Assessed DQ: What would be the consumer buying response to Coca-Cola® if the price of Pepsi® doubled? If the prices of Coca-Cola® and Pepsi® remained constant, what would be the consumer’s typical buying response to these products if their income was reduced by 30%? Suppose all carbonated beverages tripled in price. How would the concepts of utility, income, and substitution predict consumer behavior based on the rise in the cost of carbonated beverages?
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