Managerial Economics

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    Pick a business in Raleigh, NC that is known for a single good (or service) and has local competitors Then:

    1. Describe a change in the market that will result in a shift in demand for either the individual business or the groups of local business producing the same good or service.

    2. Describe a change in the market that will result in a movement along the demand curve

    #17086
    john Smith
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    Business: Coffee Haven – a local coffee shop in Raleigh, NC

    1. Change in Market Resulting in Shift in Demand: The emergence of a health-conscious trend in the region can result in a shift in demand for Coffee Haven and other local coffee shops. Suppose there is a growing awareness among consumers about the negative health effects of excessive caffeine consumption. In response to this trend, a significant portion of the population in Raleigh may start seeking healthier alternatives to traditional coffee drinks.

    To address this change in the market, Coffee Haven and its local competitors could introduce a variety of healthier coffee options. For example, they could offer a broader selection of decaffeinated beverages, herbal teas, or coffee alternatives made from ingredients like roasted barley or chicory. Additionally, Coffee Haven might also consider expanding their menu to include more plant-based milk options and healthier snack alternatives.

    By catering to the health-conscious consumer segment, Coffee Haven and other local coffee shops could tap into a new market and potentially increase their customer base. However, it might also require them to adjust their sourcing and marketing strategies to highlight the health benefits of their products.

    1. Change in Market Resulting in Movement Along the Demand Curve: Suppose there is a sudden increase in the price of coffee beans due to adverse weather conditions affecting coffee-producing regions globally. This would lead to a change in the market and a movement along the demand curve for Coffee Haven and other local coffee shops.

    As the price of coffee beans rises, the cost of producing coffee-based beverages also increases. In response, Coffee Haven may face the challenge of maintaining its current profit margins without significantly passing on the price increase to its customers. Local competitors are also impacted by the rising costs of coffee bean acquisition and may face similar challenges.

    To manage this situation, Coffee Haven and its competitors could explore several strategies. One option is to temporarily absorb some of the increased costs to maintain price competitiveness and customer loyalty. Another approach might be to find alternative suppliers or seek out more cost-effective coffee bean options without compromising on the quality of their coffee.

    The movement along the demand curve may result in some customers reducing their coffee consumption or seeking more affordable alternatives, such as making coffee at home. As a result, the coffee shops might witness a slight dip in the quantity demanded, but it would not fundamentally change the overall demand for coffee; people still enjoy their coffee fix, albeit at slightly different consumption levels or price points.

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