Supply Demand Elasticity

Topics: Supply and demand, Chocolate, Elasticity Pages: 4 (1181 words) Published: January 21, 2011
Supply, Demand and Price Elasticity
Anjni Kumar
Jennifer Marciel
Me Mai Nou Yang
Rosina Hughey
Eco/212
December 14, 2010
Zack Zardo

Supply, Demand and Price Elasticity
Consumers and economists use the concept of elasticity to measure how an economic variable responds to changes in another economic variable (Hubbard & O’Brien, 2010, p. 168). Supply and demand go together and play an important part in price elasticity. “Price elasticity of demand is the responsiveness of the quantity demanded to a change in price, measured by dividing the percentage change in the quantity demanded of a product by the percentage change in the product’s price” (Hubbard & O’Brien, 2010, p. 168). Price of elasticity of supply is similar to the price elasticity of demand except the difference is that the price of elasticity of supply measures the quantity of supplies. This paper will discuss the commodity of chocolate and identify the causes for shifts in supply and demand. The shifts in supply and demand of chocolate influences price, quantity, and market equilibrium. Chocolate is a luxury product therefore purchasing any other products without the cacao will affect the price elasticity of the product. Shifts in supply and demand occur daily for a variety of reasons. Some of the factors that have affected supply and demand for the Hershey Chocolate Bar throughout the years include holidays, availability of substitutes, and the cost of the cocoa bean ("The Hershey Company - Introducing the World of Chocolate - Part 1", 2008). During Holidays, such as Valentines, the demand for chocolate rises. When the demand rises, Hershey manufactures a greater supply to meet the demand and maximize available profits. Another area that affects demand is substitute chocolate bars. Substitutes include such brands as Nestle or Dove, each of which gives the consumer the option to purchase chocolate other than Hershey, therefore driving demand downward. The Cocoa bean working as a...

References: Cocoa Bean Exportation. (2010). Retrieved December 9, 2010 from http://web.duke.edu/~cz8/chocolate/beans.html
Hubbard, R. & O’Brien, A. (2010). Economics (3rd ed.). Boston, MA: Pearson Hall. Retrieved December 12, 2010 from EBook.
Keystone Marketing Services. (n.d.). How supply and demand determine commodities market prices. Retrieved from http://futures.tradingcharts.com/learning/supply_and_demand.html
The Hershey Company - Introducing the World of Chocolate - Part 1. (2008). Retrieved December 9, 2010 from http://www.washingtoniv.com/?p=65
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