There has been an increase in the demand for products of Fair trade that have been certified. There was an enormous growth of fifty eight percent in 2008 which was confirmed to be the strongest growth…
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On the other hand, Fair Trade is a controlled certification method where there are conditions set on agricultural commodities production. The goods of Fair Trade that are produced according to the criteria followed in the trade are warranted a small price above the price of the world market. The main important part of this Trade is the products’ market in the countries that are developed. The main purpose of this study is to look into factors that mainly affect Fair Trade coffee demand and work out the coffees’ price elasticity of demand.
This research is mainly aiming in giving answers why many purchasers may buy products of Fair Trade at higher prices than the substitutes of Fair trade goods. In addition, there is price elasticity of demands impacts on retail revenues mentioned in this paper. The findings obtained from this study showed that Fair Trade demands of coffee depend on various functional features like brand, price, taste and locations of sales. According to the theoretical models that are founded on the complementary utility, conclusions that arise are that price elasticity of demand mainly depends on the Fair Trade and regular coffee price differences and the demands of Fair trade coffee shares in comparison to the consumption of the whole coffee (Giovannucci, 105).
Price elasticity of demand measures products quantity responsiveness to changes of the products price. It is referred to as the own price demand elasticity for a product sometimes. Many theories provided have concepts of consumers aiming to make best use of their personal utility. It would be unreasonable if a customer is likely prepared to spend more on the Fair Trade goods than for the Fair Trade good substitute if they have the same quality (Fairtrade Labelling Organizations International, 1). Many people using this product have interests on the conditions used in producing the Fair Trade goods even though there may be no effect on the standard product quality. Fair Trade coffee is described a product that has innovations, whereby making the process of production to be good increases the product quality in a slight way. Many consumers, who are aware of the product and like it, are willing to spend more on the product quality that has been improved. In addition, consumers may be grouped separately. Some consumers will take a product due to their characteristics and others due to the price of the product. Prices of these products are supposed to vary in different point of sales except there are features that permit the sellers to price the products differently. The location effects depend with the mobility of the consumers and if they buy all their products in one locality. There are various reasons that may lead to the Fair Trade coffee demand (Fairtrade Labelling Organizations International, 1). The reasons may be the flavor, the brand, quality, price and convenience of the coffee may affect the decisions used while purchasing the product. Another factor that may affect the decision of purchasing is the origin of the coffee. There are negative values in the price elasticity of demand for products, this is there would be demand in a certain commodity if the price is low. In Fair Trade coffee, the price elasticity of demand is important in various ways (Riley, 1). Retailers may discriminate prices among customers if there is a low price elasticity of demand. In a case where the demand is not elastic, there will be a less demand decrease to be suffered by the producers, even if the coffee prices are high. According to Giovannucci (161), this theory concludes that if there is a small Fair Trade Coffee price elasticity of demand, there will be great revenue obtained from the product sales even if there is an increase in the
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The name of the company is Aldes Middle East (FZE) located in Sharjah, UAE. The company operates in the manufacturing of heating, ventilation and air conditioning accessories and components. The consolidated corporate sales revenue for the company in 2000 was 144 million Euros.
In terms of barrels, stocks piled up to 147.6 million, an increase of 3.99 million. The article further states that demand for heating oil and diesel went down by 3.28 million barrels a day and in percentage terms the demand went down by 2.2 percent when compared with the similar period a year before.
The supply side constraints may push up the prices. Similarly elasticity of demand for the product acts as a limiting factor to sales. However, in real life situations, the elasticity of demand is governed by diverse factors such as branding, cross selling, value addition, creating new uses for the products, multi-level marketing, direct marketing, discount sales and online marketing.
When a child learns a chapter of science from mother then it becomes a want for the service of education. If that very student goes for a private tuition, then it becomes a demand because certain money has to be paid to the tutor. The father of economics Alfred Marshall explained the Law of Demand.
The authorities identify marijuana as one of these drugs. This is the reason that this kind of drug has a label as illegal in almost all parts of the world, because of its viewed potential harm over its weighed advantage. It is in this reason that the supply of marijuana may be scarce while the demand is relatively higher.
In the recent studies, the economists suggest that price level for a product introduced by the members of a company largely depends on the elasticity of market demand for the product. Price Elasticity is basically the degree of responsiveness of the change in quantity demanded for a product with respect to the change in the price level of the product.
Actually, the theory of consumer behaviour explains that quantity demanded of a particular good doesn't only depend on its price but the price of other goods and services also creates an impact on it. But, in case of cross elasticity of demand, you have to keep one important thing in mind, i.e.
Price elasticity of demand can be defined as “a measure of responsiveness or sensitivity of consumers to price change”. With some products, consumers have a higher responsiveness to price changes. These products are said to have a relatively elastic demand. On the other hand, some products have a low responsive to price changes.
Price where quantity demanded and quantity supplied equates is called the equilibrium price (Arnold, 2008). It is calculated in combination with using both forces of demand and supply that exist in market. Individually these forces cannot
On the other hand, a product is said to be inelastic if a huge change in price has little impact on the quantity in demand (Moschandreas, 2000).
Several factors affect price elasticity. The factors with the largest effect on the elasticity
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