Products, Services And Prices In The Free Market Economy

Running Head : Products , Services and worths in the Free MarketNameUniversityCourseTutorDatePrice centering of indigence is a term commonly used in economical and business studies to mean an elasticity that measures the degree of the kind between variation in metre demanded of a favorable and variation in its price . In most cases median(prenominal) goods and most inferior goods price drops results into add-on in the quantity demanded . But goods for which there is no substitute are for the most part inelastic . This type of demand is relatively associated with necessities . However proceedss with a high elasticity in most cases have many a(prenominal) substitutes (Karl 1999In the case of Southern Airline , there are diverse airlines that operate through the same part of America . therefore there are a number of substitutes in the vault of heaven which means that the demand is elastic . If for example the friendship dilute too much on its tickets , peck are promising to move to the separate forms of air move around in Texas (Karl 1999Demand for giffen goods or Veblen goods are considered to increase with increase in price . beginning(a) class air run short happened to rank in the categorisation of giffen goods (goods whose demand increase with increase in price ) so I would advice you to increases the price of the first class tickets but non for the ordinary class passages (Henderson 2004On the other hand , there is a case of price inflation , during an economic bubble , consumer knowledge have a crucial role in explaining products demand in some categories . If for example you increase your prices , customers may get on on the perception that you are charging higher because you are offering higher quality services . This in return allow for have a positive impact on the company s revenue (Karl 1999Price elasticity demand is altered by a number of factors but all of them are under unmatchable umbrella the `choice .

By choice we mean the power of choice the consumers of a certain good holds to give up the consumption of the said good . All this is due to consumer s ` comprehend value like first class those customers value their prestige and allow not do without it . So I would advice you to increase the 1st class ticket prices . Also , on the other classes based on the principle of price inflation during an economic bubble you can increase the price believing that people will perceive that there is quality improvement and react positively thereby increasing the overall revenue (Sowell 2004Air travel is a basic necessity to some long blank space travelers in America . This means that if price is increased they will probably not change their mode of transport . so change in price is not likely to affect much the change in demand since the elasticity of the product is not too elastic . I would advice you to increase the price since you offer good quality service , Air travel to some people is habitual and they will still observe , most of the people who use air...If you want to get a full essay, order it on our website: Ordercustompaper.com

If you want to get a full essay, wisit our page: write my paper