Market Economy Issues - Essay Example

?Market Economy Market economy insinuates the relationship between the quantity of goods in demand, and their pricing according to Altvater (1993). With such factors in consideration, the market will have to shape its demand for the products in the market depending on the prevailing prices. Therefore, the market will only depend on the pricing, which affects their frequency for demand of some products. For instance, when some prices of some goods are reduced, the customers could insist on increasing the quantity in demand. This technique could be used by markets to shape their demand for products in the market, depending on the market perception of the products and pricing (Gregory & Robert 2004).  In part A, there is need to have a focus on the provided data, which would be used in plotting the demand curve. Given the equation P = 10 – 0.5 Q, there should be a stated acceptable pricing and quantity that will be used by the consumers. The pricing will have a direct effect on the quantity in demand, as they are closely related. Using the current price of ? 6.50, the equation will be denoted as follows; P = 10 – 0.5 Q This will be followed by a substitution of the price, which is P ? 6.50 = 10 – 0.5 Q 6.50 – 10 = - 0.5 Q -3. 50 = - 0.5 Q 3. 50 = 0.5 Q 2 *3. 50 = 0.5 Q *2 7=1Q Q = 7 When the pricing of the moonshine club is at ? 6.50, the attendance according to the above mentioned equation will be seven. This means that, the attendance will be at 7, when the pricing is at ? 6.50. Using the above equation, there is a possible curve that could be derived, given the pricing range from ? 0 to ? 10. The pricing and attendance will have change, depending on the curve and preference of the demand. For instance, many people will increase their attendance when the pricing is low. pricing quantity 0 20 1 18 2 16 3 14 4 12 5 10 6 8 7 6 8 4 9 2 10 0 In plotting a demand schedule, there are various considerations that should be factored. The First factor is the pricing of the moonshine club. The second consideration is the demand for the services of the moonshine club. When the price of the club is at 10, there would be a possible zero attendance. However, when the price of the club is at 0, the attendance is likely to be at 20. The elasticity of the moonshine club is evident in their pricing. The highest pricing is denoted at 10, which brings a zero attendance. However, when the club decides to reduce its pricing to zero, the attendance will be full at 20. To make a better reflection on the elast5city of the club in pricing, there is need to focus on the equilibrium point. The equilibrium point is where the lines intercept. This is when the price is at ? 6, and the attendance will be denoted at 8. In part B, there are several considerations that could be used to make the favourable changes in the pricing and demand for the services of moonshine club. In the first instance, when a substitute club initiates a reduction of the pricing from ? 5 to ? 4.50, there are possible changes that could be discovered. Since moonshine is charging ? 6.50. With two visits to moonshine club, the customer will be spending ? 13.00. However, going to the substitute charging ? 4.50 will be favorable as the customer would make three visits which will be charged a ? 13.50. ? 5.00 ? 4.50 2 3 In this graph, it is evident that a person would prefer three visits to a substitute club, than spend the equivalent on two visits top moonshine club. In the second scenario, there is a change in the annual income which is a 10 percent increase. With such an increase, there is a possible increase in the disposable amount of cash that could be used in attending the movies. For instance, when the income increases, there is an increase in the amount of money that could be expended in the movies. Though there is an increase in the pricing in the movies, there is a possible increase in the number of attendance. For instance, when the pricing increases from ? 6.50 to ? 7.20, there is a possible increase in the number of visits, say from 2 to 3. ? 7.20 ? 6.50 2 3 In part C, there are various considerations to be put in place. The choice between lowering the price and raising the cost would have different effects on the club. However, the choice for lowering the pricing would be appropriate in such a business. When the prices of a commodity are lowered, it is an indication that the business is contented with the amount of proceeds from the commodity. In lowering the pricing, there are various accounts that will be affected. First, there will be an increase in the demand for the products of the moonshine club. When customers are relieved of some amounts of cash, there is a possible increase in the number of attendances. This means that the customers will increase the demand for the services by making an increased attendance in the moonshine club. This would be appropriate in the business as it will appreciate more. Secondly, lowering the price will put the moonshine club at equilibrium of offering quality service. When the club is at equilibrium, it will attract a larger number of customers. This will result into a larger revenue level, as opposed to the higher pricing. Lastly, changing the pricing to a lower level will be appropriate in attracting customers on a lower scale (Tucker, 2002). Customers earning a lower scale of salary will be attracted to the services as it will be affordable. In the end, the club will benefit more from lowering the pricing. In conclusion, pricing determines the entry level of customers. Customers are attracted to the pricing, and will have to focus on the pricing in determining the quantity that could be in demand (Bockman, 2011). Since price is a considered factor, the management should also consider initiating the appropriate pricing techniques. When the pricing is appropriate, there will be a plausible demand for the products. Similarly, when the pricing is too low, the business will record an upsurge in the demand for the services (Koller 1978). This could lead to good proceeds from the business. However, the pricing in this particular point should not be too low to relieve a lower amount of profits. This will not be of an economic sense to the business. In actual sense, a business should look forward to making appropriate profits for continuity. This would be appropriate in making greater developments to the business as it would be in an improving manner. References Altvater, E. (1993). The Future of the Market: An Essay on the Regulation of Money and Nature After the Collapse of "Actually Existing Socialism, Verso, New York. Bockman, J. (2011). Markets in the name of Socialism: The Left-Wing origins of Neoliberalism, Stanford University Press, Stanford. Gregory S. & Robert P. (2004). Comparing Economic Systems in the Twenty-First Century, George Hoffman, New York. Koller R. (1978) Predatory Pricing in a Market Economy, Ayer Publishing, New York.  Tucker, B. (2002) Macroeconomics for Today, West Publishing, New York. Read More