Evaluation of Demand Elasticity Research Paper Example | Topics and Well Written Essays - 2000 words

Evaluation of Demand Elasticity - Research Paper ExampleThe value of grab (e) for a mathematical product lies in the range of 0 to 1. If the elasticity for a product is 0 (perfectly inelastic), and so the sellers can easily manipulate changes in the price of the product. However, if the demand elasticity for the product is 1 (perfectly elastic), then the sellers must be very careful while changing the price of the product (as the demand is passing sensitive). This research paper will concentrate on the business price elasticity analysis of a Hamilton shore 4 promote Blender. The learnt from the paper will help the researcher to analyze the most best business strategy for the product (Arnold 167). Section 1 Relative expenditure Comparison This part of the paper will explain the relative price comparison table for the concerned product, Hamilton rim 4 press forward Blender. This is a table that would compare the prices of the product with its close substitutes. Relative Pri ce Comparison Table (Source designers Creation) The above table explains the relative price comparison table for the Hamilton land 4 Speed Blender. The three selected locations are the different cities of Los Angeles. These are West Hollywood, Culver City and Santa Monica. The table would compare the prices of Hamilton Beach 4 Speed Blender in these three locations (prices of the same group products in three different markets in nearby geographic locations) (Hamilton Beach 54615 Wavestation Express Dispensing Blender with 48-Ounce Jar, Black). The two close substitute product of the Hamilton Beach 4 Speed Blender are the Hamilton Beach Big Mouth Juicer and the Hamilton Beach Stainless Steel Peeler of Fruit and Vegetable. It should be considered that there is no perfect substitute for the sociable grinder. This is the reason for which peeler and juicer are the closed substitutes of the product. The table would also compare the prices of the close substitutes of the Hamilton Beach 2 Speed Blender in the same markets (Hamilton Beach Big Mouth Juice cartridge extractor). Before the table is analyzed, one has to understand the meaning of a substitute product. Products are substitutes of each early(a) if the features inbuilt in the product satisfy the same type of demand (hence, utility) for consumers. Cross price congress of substitute products is positive. For example, Coke and Pepsi are substitutes of each other and thus, the rise in the price of Coke would decline its quantity demanded (law of demand) and increase the price for Pepsi (Hamilton Beach Stainless Steel Fruit & Vegetable Peeler 03066). Price of Coke Quantity Demanded for Pepsi (Source Authors Creation) The relative price comparison table in the above graph reflects the price differentials among the close substitutes in the three nearby markets (Hamilton Beach 4 Speed Blender, Hamilton Beach Big Mouth Juicer and Hamilton Beach Stainless Steel Peeler of Fruit and Vegetable) and almost no price d ifferences in the same group of product (Hamilton Beach 4 Speed Blender) in the chosen locations in these three markets (Culver City, West Hollywood and Santa Monica). Before the in-depth analysis, the cause for this situation can be explained by theory of simple economics. The close substitutes are actually products with different characteristic