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Demand in economics Paper

Words: 697, Paragraphs: 12, Pages: 3

Paper type: Essay , Subject: Economy

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Demand in economics

Demand is an economic standard that refers to customer’s desire and motivation to pay a certain price for goods or services. Demand displays how much in terms of quantity of products that buyers may desire. The demand relationship refers to the price and quantity changes when consumers demand a certain quantity at a certain price. Demand signifies the willingness or ability to purchase a product at a certain price. Conversely, quantity demanded makes an implication of the measure of commodity that corresponds to a specified price as per the demand curve. The quantity demanded is the physical measure of commodity that consumers are willing to purchase at a given price as per the demand curve. A change in the quantity required refers to reaction by customers to the alterations in the prices of commodities when all factors are held constant. The difference lies in the fact that quantity demand occurs at one point on the curve and not the whole curve.

Changes in price

Substitute goods can be defined as goods that can be exchanged in the event of changed circumstances. Changes in the cost of a substitute and complementary goods affect the demand of a good both negatively and positively. Substitute goods can replace another good completely. Positive alterations in the cost of the alternate good lower the quantity demanded for the other good. Scientifically, the variable representing the value of the substitute good will contributes towards a negative effect on the demand function. An example of a substitute product and the effect of changes in its price can be found in margarine and butter. A consumer that uses butter can easily switch to margarine and vice versa when either is missing from a store. When the price of butter rises, a consequent drop in the demand of butter shall be experienced. Consumers will instead opt for the cheaper margarine as it will serve the same purpose. The reverse is true in that a good’s demand increases when the substitute good’s price increases.

Decrease in the market for Blu Ray discs

The increase in the demand for Blu Ray players and other related products has been largely contributed by the popularity of high-definition media and home theater equipment. The increased growth in the purchases of Blu Ray was because of increased quality and size of the Blu Ray discs. Blu Ray is the only media capable of high definition media play back. Normal quality videos lost their quality when displayed on larger screens. Blu Ray was somewhat expensive but had the advantage of higher quality. A product was available for customers who had large HD televisions and more money to pay for the Blu Ray.

The drop in the Blu Ray prices over the months mainly because most people have realized that they are not particularly interested in the products. Most consumers were using DVD and CD players before the development of Blu Ray. Other people were even using VHS. However, the same movie were being offered online free of charge. As a result, the DVD sales keep on dropping after every fiscal quarter. The expected increase in sales due to the switch to Blu Ray was unplanned and mistaken. The opening up of the Internet provided a substitute product for no price. Compared to the hefty price of about $40 for a standard Blu ray movie, most people opted for the cheaper substitute-the Internet. However, studies done by Taiwan Blu Ray manufacturers predicted that the growing popularity of Blu Ray discs would make the price drop up to a minimum of $1 while their American counterparts predicted around $5.

The development of the Internet and cable or satellite TV killed the Blu Ray market within America. Using cable or satellite, a consumer can purchase or freely download films in HD at a cheaper rate than buying Blu Ray. The attempt by Blu Ray companies to block companies from offering free HD movies online sparked prices that further painted the company in a bad light. Blu Ray also has numerous restrictions that have discouraged users such as DRM, RIAA and HDMI that control the flexibility of watching a movie.

About the author

This sample is done by Scarlett with a major in Economics at Northwestern University. All the content of this paper reflects her knowledge and her perspective on Demand in economics and should not be considered as the only possible point of view or way of presenting the arguments.

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Demand in economics. (2018, Jul 17). Retrieved from https://paperap.com/paper-on-15390-demand-in-economics/

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