Microeconomic Analysis: Trampoline Profit Issues and Market Dynamics

This report delves into core microeconomic principles, focusing on demand, supply, and elasticity within the context of a trampoline business facing rising costs. It begins with an introduction to economics and highlights the profit issues faced by trampoline companies due to increased shipping costs and port congestion. The report then defines microeconomics and explains the law of demand, the factors influencing it (price, income, taste, and preferences), and elasticity of demand. It proceeds to discuss supply, the law of supply, factors affecting supply (production costs, government subsidies, and technology), and elasticity of supply. The conclusion summarizes the impact of these factors on the trampoline market, emphasizing the need for companies to manage production costs and understand market dynamics to maintain profitability. The report uses examples from a real-world scenario reported by BBC news about the rising cost of larger toys, and it provides relevant references to support its findings.

MicroEconomic Concepts

Table of contents
• INTRODUCTION
• TRAMPOLINE'S PROFIT ISSUES
• CONCEPTS IN MICROECONOMICS
• LAW OF DEMAND
• FACTORS AFFECTING DEMAND
• ELASTICITY OF DEMAND
• SUPPLY
• LAW OF SUPPLY
• FACTORS AFFECTING SUPPLY
• ELASTICITY OF SUPPLY
• CONCLUSION
• REFERENCES

Introduction
ECONOMICS CAN BE DEFINED AS THE
STUDY OF ECONOMIC RESOURCES AND
THEIR USAGE IN VARIOUS MARKET
SITUATIONS. THERE ARE DIFFERENT
ISSUES FOR THE BUSINESSES WHICH
ARE PREVAILING IN THE MARKET
WHICH CANNOT BE IGNORED.

Trampoline's profit Issues
AN ARTICLE HAS BEEN FOUND OUT ON BBC
NEWS RELATED TO THE RISING OF TOTAL COST
OF LARGER TOYS DUE TO SOARING OF
SHIPPING COST AND PORT CONGESTION. IT IS
BEING KNOWN BY ONE OF THE OWNERS OF
COMPANIES OF TRAMPOLINE. THE OWNER OF
OUTDOOR TOYS NAMED OWEN WHICH SAYS
THAT THERE WILL BE MAJOR CHANGES IN THE
PRICES OF LARGER TOYS WHICH INCLUDES
TRAMPOLINE.

Concept of Micro economics
IT CAN BE DEFINED AS THE STUDY OF THE
TENDENCIES WHEN THE INDIVIDUALS
MAKE CERTAIN CHOICES IN RESPONSE TO
CHANGES IN FACTORS LIKE PRICES,
INCENTIVES, RESOURCES, AND METHODS
OF PRODUCTION.

Law of demand
DEMAND CAN BE DEFINED AS THE WANT OF
THE INDIVIDUAL FOR PURCHASING ANY
SPECIFIC GOODS AND SERVICES WHICH IS
ASSOCIATED WITH SUFFICIENT PURCHASING
POWER. IT IS DIRECTLY RELATED TO THE
CHANGE IN PRICES OF THE GOODS OR
SERVICES IN THE MARKETPLACE.

Factors affecting demand
THE ELEMENTS WHICH IMPACT
THE DEMAND OF THE PARTICULAR
GOODS AND SERVICES WHICH
ARE GIVEN BELOW:
PRICE OF THE COMMODITY
INCOME OF THE CONSUMER
TASTE AN PREFERENCES OF THE
BUYERS

Elasticity in Demand
It can be defined as change in demand due to
change in other related factors which can
affect demand such as price, income level or
substitute availability. The demand curve will
shift to left or right with regard to the increase
or decrease in the demand of Trampoline in
the target market(Kreps, 2019). There are
various factors which are impacting the
variation in the price, income, preferences of
the buyer in order to buy the Trampoline in
the target market.

Supply
Supply means a situation which is related to the amount
of money available for the customers in the market. It is
related to the amount available for resale of products
while making the profit for the business.

Law of supply
This law defines the direct and positive
relationship of the prices and the quantity
supply of goods and services in the
marketplace. When the prices of goods or
services rises, the supply of the products also
increases since the supplier will sell his
products at a much higher price resulting in
increased profits.

Factors affecting supply of goods or services
FACTORS AFFECTING SUPPLY OF THE SPECIFIC GOOD ARE AS
FOLLOWS:
• COSTS OF PRODUCTION
• GOVERNMENT SUBSIDIES
• TECHNOLOGY

Elasticity of supply
It can be described as a change in the supply of
goods or services due to change in related
economic factors like cost of production,
government subsidies, technology and many
more. When the factors are favourable, then the
supply of goods and services in the market
increases and vice-versa.