Elasticity
This unit examined the role of costs and prices in decision-making. For this assignment, you will answer a series of questions in the form of an essay. Support your answers with research from peer-reviewed journal articles (2015-2020 references/sources if possible).
Research elasticity information for two particular goods: one with elastic demand and one with inelastic demand. Using elasticity information you gather, predict changes in demand. The United States Department of Agriculture website has a good resource to help with this.
Describe how marginal analysis, by avoiding sunk costs, leads to better pricing decisions.
Explain the importance of opportunity costs to decision-making and how opportunity costs lead to a trade.
Evaluate how better business decisions can benefit not just the producer but the consumer and society as a whole. In your evaluation, contrast the deontology and consequentialism approaches to ethics.
Your essay must be at least three pages in length (not counting the title and references pages) and include at least four peer-reviewed resources. Adhere to APA Style when writing your essay, including citations and references for sources used. Be sure to include an introduction. Please note that no abstract is needed. Use costs and prices in decision-making
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costs and prices in decision-making
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Introduction
The issue of consumer demand is measured as an elasticity that is also a relative measure through the provision of useful means of comparison across different aspects of quantities. Price elasticity of demand will also look at the measure of the responsiveness of demand that looks at the change in prices. For example, the ‘own-price elasticity of demand’ calls for a measure regarding the responsiveness of demand for a product when it comes to changes in the price of the related product(Sabatelli, 2016). Also, the percentage change concerning the quantity of a product leads from a 1 percent change regarding its price. For example, when looking at the own-price elasticity of – 0.58 will mean that a 1 percent increase based on the price of apples will decrease the demand for apples by 0.58 percent. A food item is also said to be price inelastic when it is not responsive to price or when its price is higher than -1.0. Also, the food will be said to be price elastic whenthe item is responsive to price, or when its price elasticity will be less than -1.0(Sabatelli, 2016). Also ‘cross-price elasticity of demand’ looks at the measure of the responsiveness of demand when looking at on product concerning a change in the price of a different or competing product. This means that the percent change concerning the quantity of product as a result of a 1 percent change in the price ofanother product is based on the sign of cross-price elasticity which is also an indication of the product, complements, or substitutes (Andreyeva et al., 2010).
Beef and Pork Elasticity in the United States In the United States, as the prices of beef and pork approached a record high level back in 2014, most analysts were surprised by consumer response. Due to the recent occurrence of the price swings, it calls for the traditional approach regarding the analysis of demand which is based on the historical series of data that could be less useful than is the case typically(Mintert et al., 2001). Based on non-linear demands for meat products, the demand is being more inelastic at higher prices. The ground beef, steak, and pork chop demands are going to be more sensitive regarding changes in the chicken breast prices and not the opposite. Also, the cross-price elasticity between the disaggregate meat based products will go low as the prices continue to rise (Fibich, 2005). The other aspect to look at is the income of consumers which will significantly affect the interrelationships of demand. Consumers with higher income are likely to choose steak and chicken breast but will be less likely to choose beef or deli ham than a lower-income customer…………………………………………………………………………………………………
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