How are we affected by price elasticity of demand Research Paper

How are we affected by price elasticity of demand - Research Paper Example The Law explains that keeping all other factors affecting demand constant, the quantity demanded for a product or a service at a particular point of time is inversely proportional to its price. Thus, price and quantity demanded has an inverse relation with each other. The higher is the price level, lower will be the consumer willingness to buy a product or a service. As a result, the demand curve is always negatively sloped according to the law of demand. (Source: Author’s Creation) The above figure reflects the demand curve where Q stands for quantity demanded for a product or a service and P is the price level. There are also other factors that affect quantity demanded. This essay will briefly explain the different determinants of demand, assuming the impact of one variable on demand is analysed provided all the other factors are given. The income of consumers is positively related to the quantity demanded for goods and services. The higher is the income of the consumers the greater is their level of purchasing power thus consumers will always demand more with the rise in income levels. The quantity demanded also depends on the tastes and preferences of the buyers. When analysed in details the quantity demanded for a product or service is largely dependent on the complementary and substitution effect. For instance, the quantity demanded for Pepsi will always be increasing with the rise in the price level of Coke. Again the demand for cars will drastically fall with the rise in fuel price. There are other products like Bajra also known as inferior goods, whose quantity demanded falls with rise in income of the consumers. The nature of goods concerned is also an important parameter to analyse the quantity demanded for a good or a service. The goods reflecting status symbol always show a positive price effect in the quantity demanded. For example, the demand for a house sold in auction. Necessities are other types of goods that are insensitive to the chan ges in price, like the demand for life saving drugs. Price Elasticity of Demand Elasticity of demand is a quantitative measure that shows the degree of responsiveness of quantity demanded for a product or a service with respect to the changes in the various determinants of demand (IOWA State University, 2007). Price elasticity of demand shows the degree of responsiveness of quantity demanded for a commodity or a service with respect to chances only in its price level keeping all other factors affecting demand constant (Andrews & Benzing, 2010). The basic method of calculation of price elasticity of demand (Ep) is:- Ep = dQ/Q dP/P P and Q stands for price and quantity while dQ and dP shows the change in quantity demanded and price respectively (Litman, 2004). In order to make the analysis easy, economists take the mod values for calculating price elasticity of demand. The table below shows the five basic variations in price elasticities of demand. Value Types of elasticity’s E p = ? Perfectly Elastic Ep = 0 Perfectly Inelastic Ep = 1 Unitary Elastic Ep > 1 Relatively Elastic Ep < 1 Relatively Inelastic (Source: Traczynski, 2007) The above five variations in elasticity are all measured in terms of their mod values. Impact of Price Elasticity of Demand The quantity demanded by the consumers technically depends on the different values of price elastici

Information Systems Theory Essay Example | Topics and Well Written Essays - 5000 words

Information Systems Theory - Essay Example This system has become the focused area of latest research (Bose and Lou, 2011). The understanding of societal, organizational, and human interaction with technology is good defined through the information system theory (IST) (Rose & Scheepersm, 2001). The basic understanding about information system is described in figure below. Social Theory Information system Information system practices Fig.1 Theme of Information System Theory This report surveyed the main ideas about information system theory (IST). Theory of critical success factor and international information system are elaborated in the second and third sections of this report. The second and third section of the report is also representing the general strengths and weaknesses of Theory of critical success factor and international information system theory (IIS) theory. The Forth section will discuss the ways in which these approaches could be used and evaluated. The Fifth section is about the summary and conclusion. 2. Theo ry of Critical Success Factor 2.1 Main Idea The core success factors according to Wong and Tein about the information system are efficient, effective with a high reliability. For the achievement of success factors key development practices are followed. From available literature list of critical success factors are identified by Wong and Tein, some of them are: the improved information system is required to maintain the change management culture, system integration, software development training and testing, performance monitoring and evaluation, information system management structure. From the study some factors are identified that become the reasons of failure. Some of the factors like risk management and change management are not properly focused. Mismanagement of information system, delay in shipments due to lack of coordination or no proper use of information system. All mentioned factors are critical and need to address seriously, which can bring the organization in a better position. These factors could be converted into critical success factors for organization. The concept of critical theory is about the ethical and moral queries. The work in this area enhances and improves the human condition (Lee and Baskerville, 2003). The contribution of Rockart (1982) in the area of information system theory (IST) is vital for the theory of critical success factors. The information system is all about computer related things, environment and applications. The Computer hardware, software, application area, and communication come under the theory of information system theory (IST). The changes in the field of information system are vital, as information technology is growing day by day and same is adopted in the information system. The progress in the information system is in the form of centralized processing of data and distributed processing of data. In centralized data processing method, all systems are located at same geographical location, while in the case of distributed data processing all systems are dispersed in the different geographical locations. The key areas of activity for information system theory require some critical success factors. These critical success factors may vary from company to company. The nature of organization also provides success factors for it. The set of management tools, techniques, and processing factors for getting the best performance in all