Bethel University Managerial Economics and Price Elasticity of Demand Discussion
Discussion: The response to the facilitator’s original post should be a minimum of 250 words. The student’s initial post must be supported by at least 3 scholarly reference(s). A minimum of two responses to other learners’ responses should be posted and should be no less than 100 words each. Every post should make use of sources (this includes response posts [at least 2 of them]).Take a look at the three factors that affect elasticity in section 6.3, on pages, 205-207.Explain how each of the factors would or would not affect the price elasticity of demand for a good or service that your company (or a company for which you have an interest) produces?Help your classmates expand or re-focus on what they have observed.Reference for Text: Thomas, C. R., & Maurice, S. C. (2020). Managerial economics: Foundations of business
analysis and strategy (13th ed.). McGraw-Hill/Irwin.Response 1: Durham, Charles, posted 03/10/2021 03:08 PM CST I have an avid interest in the competitive archery industry. There are many different producers of quality competitive archery products, but there are just a few that reach the pinnacle of the competitive archery world. One of these companies is Black Gold. This company specializes in dove-tail precision bow sights. The sights, and sight parts, are customizable; and can even be used in conjunction with other manufacturer parts. This creates a unique niche in bow sight industry. The sights are heavily constructed, and is not often replaced or purchased frequently. This allows for a low percentage of the individual customer's one-time budget. Therefore, the sights are not price-sensitive. Due to the nature of the archery industry, there are barriers that mitigate a new company's entry into the niche market (Auer, & Papies, 2020). The industry is a very high-cost industry, and the manufacturing processes are often tedious and expensive. The Black Gold company has a well established presence in the current market, and its brand strength is second-to-none. This also prevents its competitors from gaining a foothold in their market bracket. Essentially, this creates a vast lead over its competitors, thereby, laying the foundation for an extended period of adjustment for the individual consumer (Khamitov, Wang, & Thomson, 2019).References Auer, J., & Papies, D. (2020). Cross-price elasticities and their determinants: a meta-analysis and new empirical generalizations. Journal of the Academy of Marketing Science, 48(3), 584–605. https://doi.org/10.1007/s11747-019-00642-0 Khamitov, M., Wang, X. (Shane), & Thomson, M. (2019). How Well Do Consumer-Brand Relationships Drive Customer Brand Loyalty? Generalizations from a Meta-Analysis of Brand Relationship Elasticities. Journal of Consumer Research, 46(3), 435–459. https://doi.org/10.1093/jcr/ucz00Response 2: Crawford, Peggy, posted 03/10/2021 10:28 AM CSTI have an interest in Lipton tea, because I drink a lot of Lipton tea. There are three factors that affect elasticity. They are availability of substitutes, percentage of consumer’s budget, and time period of adjustment (Thomas, & Maurice, 2020). There are other companies who produce tea. This makes the tea industry a competitive market (Band, & Shah, 2013). Many people will substitute tea for water, coke, or juice. There are many availabilities of substitutes. Moreover, people who do not like tea has availability of substitutes. “The percentage of consumer’s budget, that is spent on the commodity is also important in the determination of price elasticity” (Thomas, & Maurice, 2020, p.214). Furthermore, percentage of consumer’s budget, is the behavior of the consumer’s (Isabella, Pozzani, Chen, & Perfi Gomes, 2012). Having different brands and kinds of teas, will affect the consumer’s decision to buy the product, this will determine the price. For example, there are fewer people that likes peach tea then black tea. This would make the cost of peach tea more expensive than black tea. Tea would be less price elastic than food because there is a greater demand for food instead of tea. The measure with the time period is used with determining the price elasticity and it affects the size of price elasticity. Moreover, “the longer the time period of measurement, the larger the price elasticity will be” (Thomas, & Maurice, 2020, p.214). In other words, the time period will allow consumers to have more time for adapting with the price change. With Lipton tea if there is a high demand for tea, it would cause an increase with the tea. At first consumers are not alright with the price hike. This could cause Lipton tea users to find a substitute and purchase a cheaper brand.Reference:Band, G., & Shah, N. V. (2013). Customer Is the King... A Microscopic View into Selection of Tea Brand in Nagpur & Wardha. Annamalai International Journal of Business Studies & Research, 5(1), 56–67.Isabella, G., Pozzani, A. I., Chen, V. A., & Perfi Gomes, M. B. (2012). Influence of Discount Price Announcements on Consumer’s Behavior. RAE: Revista de Administração de Empresas, 52(6), 657–671. https://doi-org.bethelu.idm.oclc.org/10.1590/S0034-75902012000600007Thomas, C. R., & Maurice, S. C. (2020). Managerial economics: Foundations of business
