Impact of Shipping Prices on Trampoline's Profit: Microeconomics of Demand and Supply

This presentation discusses the impact of high shipping prices on Trampoline's profit and how microeconomics of demand and supply can help understand the situation. It covers the concept of demand and supply in microeconomics, including the law of demand, elasticity of demand, law of supply, and elasticity of supply. The presentation also highlights the factors that affect the demand and supply of a commodity and how they can impact the profit of an organization.

BMP4003 Business Environment
Assessment 1 - Individual Presentation

Table of content
 Introduction
 Trampoline's profit issues
 Microeconomics
 Concept of demand and supply in microeconomic
 Conclusion

INTRODUCTION
Business environment refers to the internal and external factors such as employees, needs of
customers, their expectations, supply and demand, suppliers, owners, government,
management, clients, social trends economic changes and so on. All these factors impact the
profits and business of an organisation whether directly and indirectly.
The presentation has highlighted the issues relating to the high transportation cost and port
congestions of the Trampoline. It will cover the basic understanding of the economic concept
and also discuss the demand and supply and market structure.

Trampoline's profit issues
An article has been released by BBC new on its webpage that is related to the issue of hiking in
the prices of shipping which leads to the high transportation cost of the trampoline, swings, and
climbing frames. This thing is known by the James Owen, the owner of the outdoor toys and
stated that the equipment's get more expensive. Thus, the trampoline prices increased by 40 -
50 % which may reduce the sales and profit of the organisation. Therefore, high transportation
cost may affect the company negatively and provides it unfavourable outcomes. The prices of
the 40 foot shipping container are hiked on the major routes.

Microeconomics
Microeconomics is a part of economics which help in explaining and providing reasons of how the prices of the
different commodities are ascertained. This assist in determining the prices of the various factors of productions
such as wages for the labour, rent for land, interest for capital and profits for the entrepreneur. This also helps in
explaining the international trade aspects such as effect of tariffs, gain from international trade, determination of
exchange rates and so on. With the help of microeconomics, the scarce resources can be utilised effectively in
order to achieve the maximum output. Microeconomic is a useful tool that assist in designing the prices policy,
taxation policy etc. the working of the free market economy and various complex economic situation can be
understand through microeconomics.

Concept of demand and supply in
microeconomic
Demand
Demand refers to the quantity that is desired by the customers and willing to pay for
the products or services. The customers buy the products without any hesitation and pay the
price for it. Therefore, the demand determines the ability of the consumers to buy the products
or services at the certain prices. Thus, the demand of the people can affect the growth of the
economy and market expansion. As shown in the article that the demand of the Chinese goods
is increasing which causing stress on the capacity of shipping.

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Law of demand
Law of demand refers to the situation where the prices of
the goods and the quantity demanded have an inverse relation. In
this situation, when the prices of the goods become higher so the
demand get reduced for that product. Conversely, when the prices
of the products get reduced so the there us high demand of that
specific product. The economist represent that only the prices
changes and other variables remain constant that can affect
demand. The law of demand is generally represented with the help
of graph which as under:

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Elements which impact the demand of the particular commodity
There are some factors which can impact the demand which are described as under:
Product cost: When there is change in the price of the commodity then the demand also get
changed. In relation to Trampoline, people purchases less when the prices of the trampoline
increases and buy more when there is decrease in the prices.
Income of buyers: When the income of the consumer increases then the demand for the
Trampoline also increases and when the income decreases then there is also fall in demand for
the trampoline.

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Consumer expectations: When there is high expectation of the income or expect increment in
the price of the goods so it will increase the demand. Similarly, when there is low expectation
of income and low prices then the demand decreases.
Cost of related goods and services: For the complimentary goods, when there is increase in
the cost of one products then the demand for the other product also increases.
Buyers in the market: When there are numbers of buyers for the commodity are less or more
so there will be shift in demand.

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Elasticity of demand
When there is change in the price of commodity so
it affects the demand and this can be find out by comparing
the percentage prices with quantities demanded. Elasticity of
demand can be understood through the quantity demanded of
the goods or services that depends on the multiple factors
such as price, income and preferences. When there is change
in the variables then quantity demanded for the goods and
services also changed. Thus, the demand of the trampoline get
affected by these factors.

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Supply
Supply refers to the number of units of the goods and services that a suppliers shows
willingness to provide to the buyers for a specific prices. It can be determined by the market
movement and willingness to avail products to the markets. These market movements are the
positive indication to increase the volume of the supplies. It indicates that when there is high
demand then the supplier is forced to increase its supplies.

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Law of supply
Law of supply is a basic concept in the market
economics which states that when the prices of the goods
increases in the market then the supply of the specific goods also
increases by the suppliers. When the prices of the goods decreases
then the quantity of the supplies get decreased by the suppliers. It
is indicated that in the law of supply, only the prices changes and
all the other variables remain constant that can impact the supply.
It has been understood from the graph where quantity is on the
horizontal axis and price is on the vertical axis which forms an
upward slope that is called as supply curve.

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Factors that affect the supply of the specific goods
There are some factors which affect the supply of the commodity which are mentioned as
under:
Technology: When there is change in technology so it affect the supply of the commodity because
improved technology reduces the cost of production which leads to higher profit margin. When
supplier of the trampoline adopt latest technology so it increases the supply of the trampoline.
Government policy: When there is rise in the taxes policies so it increase the cost of production
which leads to reduce in supply and lower profit margin. The owner f the trampoline can be
impacted by the government policies which can impact the supply of Trampoline.

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Elasticity of supply
A quantitative relationship is established through the
elasticity of supply between the supply of a commodity and its
price. The supply of the goods increases when there is rise in
the prices of the commodity or vice versa. From the above
diagram it has been understood in case of trampoline that when
the supply increases so there will be shift in curve from s0 to
s1 whereas when there is decrease in supply so the supply
curve will shift from s0 to s2.

Conclusion/Summary
From the above discussion nit has been concluded that the hike in the prices of shipping affect
the transportation cost of the trampoline. This impact the demand and supply of the trampoline,
swings and other equipments. This may leads to the decrease in the sales and profit margin of
the organisation. Therefore, the suppliers of the trampoline is require to view the factors that
can impact the demand and supply of the products.

References
 Nudurupati, S.S., Garengo, P. and Bititci, U.S., 2021. Impact of the changing business
environment on performance measurement and management practices. International
Journal of Production Economics, 232, p.107942.
 Ruhnau, O., 2022. The Economics of Flexible Electricity Demand (Doctoral
dissertation, Hertie School).
 Huy, D.T.N. and Thuy, N.T., 2021. Education for students to enhance research skills
and meet demand from workplace-case in vietnam. Ilkogretim Online, 20(4).
 Phansatarn, T., Srinuan, C. and Srinuan, P., 2022. Demand for Thai Mobile
Telecommunications and Market Power Measurement. Applied Economics
Journal, 29(1), pp.56-77.

Thank you