Evaluation of demand price elasticity Essay Example | Topics and Well Written Essays - 750 words

Evaluation of demand price elasticity - Essay ExampleThe comity which we pay for a output at a certain amount is called the price of the overlap. When we talk of the product price, we mean market price. That is the price at which the product is sold to all buyers in the market. The quantity of a product that we purchase at a certain price is called the demand of the product.The price of a product and its quantity demanded are closely related in the sense that each of these has a bearing on a nonher. When one of these two transmutes, the another(prenominal) also tends to change. This tendency is very well described by what is popularly known as right of indigence. The law of Demand is a general law which need not be applicable in all situations. In certain situations, this law seems to be unrealistic. The Law of Demand states that when the price increases, the quantity demanded decreases and vice versa, other things remaining the same. The phrase other things remain the same is an important one that it portrays the exceptions of Law of Demand. The Law of Demand, therefore, postulates the precaution of change in one variable (price or quantity) due to the change in other variable. The law is silent about the magnitude of change it talks only about the direction of change in one variable due to a change in another variable. It does not talk anything about the degree by which demand changes as a result of a change in price. Here lies the importance of Elasticity of Demand. This concept tells us the extent to which demand increases or decreases owe to a decrease or increase in price. Therefore, Law of Demand is a qualitative quantity whereas Elasticity of Demand is a quantitative measurement.Research MethodologyAt this juncture, the present research occupy is an attempt to analyze and evaluate the price elasticity phenomenon with the support of an empirically undisturbed selective information on a certain product and its substitutes. The research is bas ically a qualitative one that analyzes the data to fuck off at logical conclusions. The research uses observation method for data collection as the recorded data alone are sufficient. The data are still directly by approaching common chord shops at antithetic places (City I, City II and City III-for convenience) in the New York City. The demand elasticity is evaluated over a period of twelve months, which is segregated into four periods of three months each. The price variations of selected brands over this period are accumulate and the quantity sold during the same period is compared with that of the other two locations. Therefore, the study takes into account the price of the selected products and their quantity sold (demand) during a period of 1 year, which later compared with that of same brands from two shops each in other two locations. Unit of the studyThree similar products with different brands from one shop constitute the units of study. For comparison, two more shops at different places in New York City are located and similar three brands are taken from each of the two shops. Therefore, altogether the product range is nine of three different brands. The three brands from City I form the units of study about which the price elasticity of demand is evaluated in comparison with similar brands from City II and City III. Data CollectionThe present study relies hard on secondary data. Primary data are not supposed to be collected as the study depends upon the recorded fact such as price, fictional character and demand (quantity sold). Data are collected directly by approaching shops from three shops. Observation method is also applied to assess the quality of the products. The printed price less any discount form the price of the products and demand data are collected from the records of the concerned shops. The study is