Price and Demand Research Paper Example | Topics and Well Written Essays - 750 words

Price and Demand - Research Paper Example the change in quantity demanded will be different for an equal change in price of substitutes as compared to compliments. With substitute goods such as brands of cereal or washing powder, an increase in the price of one good will lead to an increase in demand for the rival product. Cross price elasticity will be positive. With goods that are in complementary demand such as the demand for DVD players and DVD videos, when there is a fall in the price of DVD players we expect to see more DVD players bought, leading to an expansion in market demand for DVD videos [1]. In case of substitutes people abandon an expensive product to get its substitute at lower rate. It is so because substitute is a good which is indistinguishable in use from another. If two goods are perfect substitutes, their prices must be the same if both are to be used: the elasticity of substitution between them is infinite, and any price difference will lead to all consumers choosing the cheaper [2]. But, complimentary goods will see an increase in demand for both of the goods as people have to buy both of them to get benefited. But weak compliments will have inelastic cross elasticity of demand and close compliments will have elastic cross elasticity of demand. With an increase in demand, price of a product moves in the upward direction. ... But, complimentary goods will see an increase in demand for both of the goods as people have to buy both of them to get benefited. But weak compliments will have inelastic cross elasticity of demand and close compliments will have elastic cross elasticity of demand. All this implies that an increase in price in one market leads to an increase in demand in another market but the amount of change will be always be different for compliments and substitutes. 1. http://tutor2u.net/economics/content/topics/elasticity/cross_elasticity.htm 2. JOHN BLACK. "perfect substitute." A Dictionary of Economics. 2002. HighBeam Research. 17 Apr. 2009 Part b) Explain why an increase in supply in a market has different effects in the short run and the long run. Use a diagram and relevant examples; refer to the concept of elasticity. (50%) With an increase in demand, price of a product moves in the upward direction. Considering this increased price, producers start to produce more goods to earn more profit. When looking at things from other direction, you can say that producers have to deal with an increased marginal cost of production to increase the output and they can produce more things only if they get more money to cover their marginal cost of production. However, the increase in supply usually creates an impact on the overall market but the amount of increase is different due to different factors. Following are few of the factors affecting supply of a product. Price of relevant resources Price of substitutes State of technology Expectations of producers Number of producers available in a market Now, these are the factors other than the price of a product that can affect

Were the Anti-Federalists correct Was the 1787 Constitution a betrayal Essay

Were the Anti-Federalists correct Was the 1787 Constitution a betrayal of the American Revolution - Essay Example According to the events that led to the formation of the new constitution, it is only right to note that the new Constitution was a step forward in strengthening the revolution. The main aim of the revolution was to achieve independence from the British, but it did not mean that United States of America could not form its own government or manage itself. The new constitution is a representation of the strength of the revolution, by recognising its weaknesses and strengthening them to form a national government, and not a betrayal to what the people of the United States fought against. This essay will describe how the new constitution was a means to strengthening the American Revolution. 1780s is referred to as the critical period. It is during this period that American Revolution faced intense challenges. America already had a Constitution (the Articles of Confederation) which helped the government win the revolutionary war, establish a territorial governance system in the Northwest Territories, resolve conflicting state land claims, and negotiate the 1783 treaty of Paris.[This is a brief description of the benefits of the previous constitution. what was this?] Under this Constitution however, the confederation Congress was unable to protect the nation’s commerce, could not pay the interest owed on national debt, and had no power to fight economic depression. America, after achieving its independence, was in chaos. It had a national debt which it was unable to pay because of lack of congressional powers to raise the money. Congress could ask states to contribute revenue, but could not force them to do so. America needed a sure way of getting revenue to pay i ts debts and govern the nation well. It experienced inflation which was as a result of a move to clear the national debt. Instead of collecting revenue through taxation, state and national governments printed money. Taxing the people was not an option at the time. This is