A Picture is Worth a Thousand Words: Demand. Unit 2 Lesson 8.
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Unit 2 Lesson 8
One day you are shopping with your friends, and you walk into a small greeting-card shop close to school to buy a birthday card for one of your relatives. While you are checking out the cards, you overhear the owner complaining that a certain style of card is not selling, and the display of that card is taking up precious space in the small store. “Unfortunately, I bought these cards up front and they cannot be returned,” he says. As the store owner looks over to you and your friends, he continues: “I learned in my economics class in high school that a person shouldn’t cry over spilt milk or let costs incurred in the past influence future choices-right?” It becomes obvious that the owner is soliciting a response from you.
Lower the price of the cards.
Put them on sale.
Place the cards in a more prominent place in the store.
Donate the cards to charity.
Advertise the value of sending greeting cards.
If you are going to throw them again, at least recycle them.
When business people put products on sale, they are attempting to predict consumer behavior. They are predicting that the number of products bought will increase at lower prices. That is not the only possible way to increase sales, of course. If the owner could change his customers’ perception of value for the cards, the customers also would buy more. Changing customers’ perceptions is one of the purposes of marketing through advertising.
Demand – A schedule (or graph) showing how many units of a good or service buyers are willing and able to buy at all possible prices during a period of time.
Determinants of Demand – Factors other than the price that change (shift) the demand schedule, causing consumers to buy more or less at every price. Factors include income, number of consumers, preferences, and prices of related goods.
Price – The amount of money that people pay when they buy a good or service; the amount they receive when they sell a good or services.