Supply and Demand
The consumer market is driven by the Laws of Supply and Demand. Excess supply typically results in lower prices. Excess demand leads to higher prices. One example of elastic commodities is the purchase of a vacation to a theme park. Although the vacation is a viable luxury, there are numerous factors that can affect the cost. The comparable price of close substitutes as well as the supplemental costs of complements to the vacation must be taken into consideration. Various factors affect the supply and demand for goods and services. Some of the possibilities include changes in the economy and changes to consumers’ income. Creative marketing of goods and services takes a front seat for companies trying to sell their product or service in a tight economy. Seasonality can be a factor in the instance of theme park vacation sales. Winter packages are less expensive than summer planned theme park adventures. Vacations close to holidays are popular and therefor more pricey. Many people are allotted vacation days from school and work around holidays so the number of potential buyers in the market is increased around these calendar days. One particular factor that weighs heavily on supply is natural disasters. If the area surrounding a theme park property is affected by hurricane, flood, or tornado, prices will drop to encourage tourism. As long as the opportunity costs of a vendor are covered, a profit can be made. Dropping prices in stressful economic conditions encourages sales, however slight, and curtails business closures. In the case of natural disaster affecting a tourist attraction such as a theme park substitutes are instantly relied upon. Theme park vacations are an elastic commodity and substitutes are plentiful. A fishing or camping trip can prove to be a quality family vacation at a drastically lower cost. Planning a vacation around the exploration of museums closer to home is a viable substitute; as is a vacation to a...
References: Mankiw, N. G. (2007). Principles of Economics (4th ed.). Retrieved from The University of Phoenix eBook Collection database.
Hamman, K. (2006, June 29). Quirky alternatives to major theme parks. Smarter Travel. Retrieved from http://www.smartertravel.com/travel-advice/quirky-alternatives-to-major-theme-parks.html?id=1265999
Please join StudyMode to read the full document