Microeconomics: Private Consumption – Supply / Demand

Private Consumption – Supply / Demand
List three (3) goods or services that you buy frequently. Fill in the following details for each
(goods) or service in the provided table:
A. The current price and the quantity that you normally buy.
B. A higher price than the current price and the quantity that you would buy at that price.
C. A lower price than the current price and the quantity that you would buy at that price.
Item 1: Massage (Hand and Stone)
Price Quantity Bought
$89.0 1 (40 min)
$140.00 1 (80 min)
$59.95 1 (40 min)
Item 2: Yogurt (Chobani)
Price Quantity Bought
$0.89 15
$1.50 10
0.5 20
Item 3: Grande Coffee (start busks blonde roast)
Price Quantity Bought
$4.54 1
$6.50 1
$2.25 3
Analysis
Now, consider the price, and the quantity that you are willing to purchase at that price and
answer the following questions.
1. How does price influence the quantity of an item you are willing or able to purchase?
The relation between price and quantity bought basically depends upon the products and
services necessity and requirements for the consumers in the market. There are basically three
types of goods and that is:
1. Necessity goods where consumers addiction is high such as Grande Coffee.
2. Daily use and common goods but consumers are not that much addicted such as Yogurt.
3. Luxury goods and services such as Massage.
For example, Grande Coffee is a necessity product which became the common need of the
consumers in present time (Nicklisch, Putterman and Thöni, 2021). That's why at current price or

even at high price the consumer buy at least one quantity. This indicates no change in quantity
bought but when the price of coffee decreases its quantity bought increases to 3. Now the other
goods such as Yogurt is a common good which is generally used by all the consumers. The price
of this good largely influence the quantity bought. It is because when price is increasing the
quantity bought is also increasing and in case when price is decreases its quantity bought is also
decreases (Li and Teng, 2018). Another goods and services such as massage which is also known
as essential services increases with an increase in the income of the consumers. This is mainly
afforded by rich and wealthy people thus the change in this items price will not influence the
quantity bought and demanded of the consumers. Whether the price of Massage service is high,
low or fixed the consumers will buy the same quantity. The overall analysis of three type of
goods indicate that the luxury goods and services prices do not influence the quantity of goods.
While on the other hand, in case of common and necessity of goods price influences the
consumer's quantity demanded but it also based on the addictions of the consumers.
2. Does it make a difference if the item is an essential item, like food vs. a luxury item like a
sports car whether you are likely to continue to purchase the item even if the price goes
up?
There is a huge difference between the essential items such as food and luxury items such
as sports car because of their price and quantity demanded. In case of essential items, there is an
inverse relation between the price and quantity demanded. It means a higher price of essential
goods leads to lower quantity bought and vice-versa. While on the other hand, luxury items has
no deep interactions between the price and quantity demanded as it is only purchase and
affordable by wealthy people (Kaplan and Violante, 2018). But it has a positive high price
elasticity of demand. The luxury items are those goods and services whose demand is affected by
the income of the people which means a high income of people will definitely buy this good at
high price. The luxury goods are also known as Veblen goods which quantity bought by
consumers increases with the increase in price in apparent contradiction of law of demand. Thus,
it is stated that even the price of luxury items increases is equally and continuously purchased by
consumers because it is considered as a status symbol of consumers.
3. Consider what you can infer from your own purchasing habits about price and demand?
Explain your answer.
As per my own purchasing habits, I usually buy both necessity and luxury goods. The
price of essential goods which I buy such as food, water etc. are comparatively low from all the
luxury items. But these products are easily available in the market so in case if the prices of such
products increases by the any company than I shift to other one where the same products
available at low cost. This means that whenever the price of this type of goods increases the
demand of such goods decreases. But on the same side the essential items such as coffee which I
personally very addicted to it faces no change in quantity demand when their price increases. But
when the price of coffee decreases I buy it in bulk which increases its demand in market. I also
buy luxury goods and services such as Branded watch, shoes and clothes (Lee and Jo, 2017). The
change in price of luxury products does not influence its demand because the people with low