20 Supply and Demand examples
The law of supply and demand shows the interplay between the quantity of a product offered at a given price (supply) and the buyers who are willing to purchase it (demand).
- A fast food restaurant is selling more hotdogs than usual, because a new building is being built half a block away and the workers choose to eat them because of their price, so the restaurant owner decides to buy more sausage and bread inventory to satisfy the workers' demand.
- A company that produces perfume launches a new fragrance on the market with the help of a pop music star for advertising. The company conducts a market study and projects that the semi-annual demand will be 100 thousand units at the normal price of $10, so they decide to raise the price, and now the new projected demand will be 20 thousand units at a price of $80.
- A movie theater has a total capacity of 50 seats; the owner has a policy of selling 2 tickets for the price of 1 on Mondays and Wednesdays, but on weekends and holidays he does not offer discounts.
- On an island with only 2 major cities, a computer services company started operations, making it necessary to hire programmers. A year later, another similar company moved to the island; this meant that the greater the demand for programmers, the higher their salaries.
- In one town, more than 20 clothing and footwear stores have opened in the last 5 years, so the sales force has fallen on the salespeople. The owners of these stores have chosen to increase the salaries of their salespeople to retain the best ones, and the salespeople pay for online courses to improve their sales skills: Salary increases make salespeople feel incentivized to develop and become better at what they do.
- A lady in the corner house buys once a month the same ration of instant coffee in her neighborhood supermarket. Yesterday the price of instant coffee went up by 5%: individual buyers, like the lady on the corner, have no influence on the price of instant coffee and are forced to buy it at the price that was previously established by the law of supply and demand.
- The neighborhood football stadium has the capacity to hold 5 thousand fans; and last year the country's team won the World Cup. This past weekend the winning team came to the neighborhood football stadium for a friendly game. More than a thousand fans could not get in because there was no room: the stadium had a limited capacity, so it could not meet 100% of the demand.
- Oxygen is a shared resource and is classified as a common good; in our example oxygen is a fixed and limited supply; therefore, in order to avoid its excessive use by polluters (demand) and thus avoid its depletion, governments have levied taxes on companies and vehicles that generate pollutants into the atmosphere to limit its "use".
- The price of peanuts in Central American countries falls as producers bring out the first crops for sale in July, and conversely, the price rises at the end of August when peanut stocks are depleted.
- Europe's exclusive Opel-branded car manufacturers know that they account for less than 5% of the Central American market, yet they are more concerned with quality than price.
- A drugstore chain has launched a membership card to build customer loyalty and maintain sales throughout the year. The membership card offers its customers permanent discounts, monthly raffles and extraordinary discounts for accumulated purchases of more than "X" per month.
- The city's theater offers free hotdog and soft drinks to children under 12 and half-price admission when 3 or more adults arrive.
- Amazon offers special discounts in November on a day called Black Friday, which is the Friday after Thanksgiving in the United States. On that day, sales soar.
- Land prices in distant towns are cheaper compared to land in the center of a city, and the most expensive tend to be those in the center of the capital.
- During the winter months, the number of people affected by the flu and colds increases, so pharmaceutical companies increase their sales of drugs to treat the symptoms; this causes prices to rise as demand increases.
- A transnational company came to a town and promoted a strong 2-week advertising campaign about the benefits of oranges, so the consumption of this fruit increased. This caused several producers to acquire more hectares of land, labor and machinery to grow and harvest the fruit. The following year the supply of oranges doubled in the town.
- The government decided to encourage the tourism sector by exempting 80% of the tax on construction materials for all hotels that invest more than $10,000 dollars in expansion or remodeling of their business: this will allow them to attract more foreign and domestic demand.
- Conflicts in oil-producing countries have caused the price of fuel to rise, causing the sale of four-wheel drive (4X4) cars to decrease.
- The letter envelope business has declined considerably in the last decade because nowadays most people no longer use physical mail, as Smartphone cell phone technology with programs such as WhatsApp have replaced it.
- The small supermarket on the corner has not been selling melons for a week, and being a perishable product, in a few more days they will be completely lost, so the owner decides to sell them at half price to at least recover part of the investment.
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