Organizational Economics DQ Response

Q1. Please read the following paragraph and write your opinion. Do you agree or disagree.

Minimum 125 words. Make sure you add intext citations and references.

In economics, financial managers believe that price is the only factor that affects the quality of goods and services (Berry Anderson P, 2018). While bearing this in mind, it is important to consider that a variety of factors affect the quantity of a particular service or good that customers will demand at a given period of time. For instance, the desire to buy BMW cars is always universal for many people. However, such wants do not carry any weight unless they are accompanied by the power to purchase (Berry Anderson P, 2018). Therefore, in conjunction with this desire, a person needs to have the power to purchase so they can satisfy the want. This is, therefore what demand is referred to as. However, this demand is affected by five key variables.  These are; price of the service or good, price of the services or goods that are related to it (Greg, 2017). The demand elasticity of a BMW car highly elastic. This is because the increase in the price of the car leads to decrease or increase in its demand. This is mostly due to association of the car to luxury and class. Increase in price may increase demand as people associate the increase to upgrade of the car model or improved class. For other people they may reduce their demand for it and seek for other alternatives.

Q2. Please read the following paragraph and write your opinion. Do you agree or disagree.

Minimum 125 words. Make sure you add intext citations and references.

The product I choose is PlayStation, which has a high price elasticity of demand. The fact that there are close substitutes is one of the factors that increases its price elasticity. There are three main gaming consoles available to consumers, the PlayStation, Xbox, and the Nintendo. When the prices of these gaming units increase, the demand will decrease, or vice versa, when the price decreases, the demand increases. In addition to game consoles, the games purchased as complimentary products also have an elastic demand. Dropping the value of a video game increases revenue for the producer, as more individuals are willing to purchase the product. Video game consoles and video games are a good example of cross-elasticity of demand, as they are complementary products.  A decrease in console price would result in an increase in game demand.

The PlayStation 4 console was originally launched at a price of $400. It was thought that there would be another price drop, due to a decline in sales of hardware. Consumers base their buying decisions on price, especially with an item that is considered a luxury. However, consumers don’t want to spend that amount on such dated hardware. Now the price has been dropped to $300. The price would possibly be dropped to a point before its demand goes inelastic.