Therefore, company A needs to stop making this product. Although we can argue that if company A could reduce the cost dramatically, it can become profitable. However, as the demand of its headphones is shrinking and there are so many suppliers (due to low barrier of entry), there will be great price pressure on the product, as explained by William F. Samuelson and Stephen G. Marks (2010). The price reduction may over shallow the possible cost reduction the firm could achieve. Susan Schreter’s second step is to target new customers from within groups.
However in the long-run, this price raise is not enough to make people quit smoking so since cigarettes are a demerit good, it will have a negative effect on the environment and it will increase the number of health issues from second hand smoke, not to mention the high unemployment rate and less taxes for the government. Work Cited: BusinessDictionary.com. 2013. What is inelastic demand? definition and meaning.
Grocery stores are in competition with smaller markets like Kudlers and Whole Foods. If the brand name grocery stores like Ralphs and Vons did not offer organic and specialty items, the market structure of Kudler Fine Foods would differ. This market structure positively affected Kudler because there was no barrier to entrance within the quality foods market. What negatively affects the company with this market structure is that they are compared to big companies who are able to supply some of these rare items at a more competitive price. One of the marketing strategies that ensure the company of long-term profitability is the personal relationship built with the customer base.
A positive effect of Kudler Fine Foods in a monopolistic market structure is that they lead in the market and can increase competition between companies and make massive profits by setting higher prices (Colander, 2010). An advantage of a monopolistic competition structure is the ability to set and manipulate product pricing with little consequence because of their strong product differentiation. A disadvantage of a monopolistic competition market is product differentiation can generate unnecessary waste, and advertising can also be considered
(Doc.1) If gin were to be restricted, the sale, production, and profit of beer would greatly increase. But, for businesses that sale gin, the production of gin would decrease and those businesses would make no profit. More commonly, individuals would argue against the restriction of gin when dealing with the economy. Daniel Defoe defended gin by stating: “…distilling of grain is one of the most essential things to support the landed interest.” (Doc.2)
Although the intention was good prohibition actually negatively affected the populations’ health because they turned to hard liquor instead of beer. While the supply of alcohol drastically decreased the demand remained the same. Due to the ban on importing or manufacturing of alcoholic beverages in the U.S, it became more difficult to get beverages containing lower amounts of alcohol (e.g. Beer and wine) while getting hard liquor became easier because it was easier to manufacture and smuggle across borders into the country. The higher alcohol content in hard liquor was more effective for getting drunk yet it also took its toll on the population’s health.
Although advertisements seem as a positive addition to countries in need of a stable economy, it is a enormous impact on people’s lives. (Doc. E) Without it, people wouldn’t know the latest fashion style, the best car, or the new developed drink and it would keep people in a boring routine of buying the same products and not exploring. Even though advertisements try to influence people’s decisions, it is up to the people as consumers to make moral
Although the demand of alcohol is relatively inelastic, the demand of a specific drink, pre-mixed alcohol is relatively elastic since consumers can simply find other alcohol drinks like rum-coke as a substitution. Q1Q2 amount of consumers who give up pre-mixed drinks will not just give up alcohol. Instead, they change to other kinds of alcohol drinks, which will still lead them to the negative consequences like hurting themselves after getting drunk. The tax on one specific kind of alcohol drink is then avoided by the teenagers. This is the reason why the alcohol-related visit to hospital doesn't really reduce even after the heavy tax.
Currently, college students mainly drink due to the convenience of accessibility to obtain substances from older acquaintances or friends who also enjoy having a good time. As a result, the Mother’s Against Drunk Driving and federal experts in health regulation have consistently fought to prevent the alcohol industry from altering the drinking age (Kirszner, Mandell 458). Furthermore, it is unethical and immoral practice for parents to be allowing minors to consume alcohol, as this is also illegal and detrimental to one’s overall growth and development. Although some countries in Europe may argue otherwise, intoxication levels are higher in Britain, Denmark and Ireland,
The anti-saloon league warned people against alcohol consumption and how it destroyed families. “Men would often spend their money on alcohol, leaving women with no money to provide for their children.”(archives.gov) Prohibition failed to do what it was designed for and created corruption while organized crime spread throughout the United States. Raising taxes on alcohol would have been a more affective means of reducing alcohol consumption. Whenever you try to control a market of goods that is in such high demand you are setting yourself up for a black market and crime. This is what happened and is known as the Iron Law of Prohibition.