Economics Assignment

  

Assignment: Consider the info for the 3 items below and answer the three questions based on the information. Each answer must be 2-3 paragraphs long. A maximum of 1 citation is allowed, paraphrase sources rather than copy them. 

Due Date: Friday, December 21st.

Format: Times New Roman, 12pt, APA for citation, double-spaced, no page numbers or headers/footers.

Consider the 3 items below and how price affects the buying habit of the consumer: 

A. The current price and the quantity that you normally buy.

B. A higher price than the current price and the quantity that you would buy at that price.

C. A lower price than the current price and the quantity that you would buy at that price.

Item 1 – Avocados (NON-ESSENTIAL PURCHASE)

A = NORMAL PRICE = $2.75 PER KILO, USUAL QUANTITY PURCHASED IS 2KG.

B = HIGHER PRICE = $5 USD PER KILO, WOULD PURCHASE 1KG AT THIS PRICE.

C = LOWER PRICE = $2 USD PER KILO, WOULD PURCHASE 3KG AT THIS PRICE.

Item 2 – Dog Food (ESSENTIAL PURCHASE)

A = NORMAL PRICE = $70 USD PER BAG, USUAL QUANTITY PURCHASED IS 2 BAGS.

B = HIGHER PRICE = $98 USD PER BAG, WOULD PURCHASE 2 BAG AT THIS PRICE.

C = LOWER PRICE = $62 USD PER BAG, WOULD PURCHASE 3 BAGS AT THIS PRICE.

Item 3 - Cheddar cheese (NON-ESSENTIAL PURCHASE)

A = NORMAL PRICE = $10 USD PER KILO, USUAL QUANTITY PURCHASED IS 1KG.

B = HIGHER PRICE = $15 USD PER KILO, WOULD PURCHASE 0.5KG AT THIS PRICE.

C = LOWER PRICE = $5 USD PER KILO, WOULD PURCHASE 2KG AT THIS PRICE.

Now, consider the price, and the quantities purchased and answer the following questions.

1.  How does price influence the quantity of an item a person is willing or able to purchase?

2. Does it make a difference if the item is an essential item, like food vs. a luxury item like a sports car whether a person is likely to continue to purchase the item even if the price goes up?

3. What can be inferred about the above purchasing habits and about price and demand? Explain your answer.