Applying Microeconomic Theories to Trampoline Supply Chain Issues

This report examines the factors influencing the soaring prices of trampolines through the lens of microeconomic theory. It begins by introducing microeconomics and its relevance to understanding individual and small group decision-making. The report then delves into the specifics of the trampoline market, highlighting issues such as increased transportation costs, port congestion, and scarcity of resources. Applying the law of demand and supply, the analysis explores how these factors contribute to price increases. The concept of elasticity, including price elasticity of demand and supply, cross elasticity, and income elasticity of demand, is used to further explain the dynamics of the trampoline market. The report concludes that economic theories are essential for understanding the changes in microeconomic factors affecting the market.

Business
Environment

Table of Content
 Introduction
 Microeconomic Theory
 Arguments over Trampoline prices soar
 Application of theories on the Trampolines Supply Issues
 Conclusion
 References

Introduction
 Microeconomics is a study related to decision
making of individuals and small groups such as
families, clubs, firms, and governmental agencies. It
helps to evaluate the concern and take justified
actions.

Microeconomic Theory
 It is study related to various micro aspects of the environment. It
helps in forecasting and its likely impact in upcoming future. All
the decisions related to these factors can be taken effectively by
using this theory.
 It helps to allocate the resources and take necessary actions
based on them. The use of micro economic theory helps the
business organisations to use the resources wisely and carry on
the work properly.

Arguments over Trampoline prices soar
 It is analysed that the price of trampoline is going to increase in summer. The
owner of James Owen believes that there is high transportation cost being observe
and that will enhance the price of toys. The ports are being congestions makes the
issues regarding the products in ports.
 The rates of frames are going to enhance and the save will enhance the burden on
the customers. The rise in inflation is the cause behind the rise in trampoline
prices. Along with that the price is huge and will impact the customers. It is being
forecasted that the price is enhancing by 40 to 50%.

Continue…
 The manufacturing companies in the market are facing the issue of scarcity of
resources and due to the reason they process will go high. The process of
manufacturing is now taking time and the scarcity will lead to price soar.
 The trampoline is famous in kids and the demand is also huge. The rise in price
will impact on its demand. It becomes difficult to manage the students and let
them understand about the scarcity of the products. The price soar is a major issue
of the time being observed.

Continue…
 The major issue at this time is port congestion due to which the price of products
is enhancing. At this time the business organisations must work on finding
solution to this problem.
 There must be use of digitalisation by the companies in order to manage the
situation. The must also works to redistribute their cargo on the different ports.
 Due to Brexit, there are certain restrictions that are being implied on the ports.
They must know the ports that can use and help to provide the products on time.

Application of theories on the
Trampolines Supply Issues
 Law of Demand and Supply Theory: This theory
shows the relationship among seller and buyer of a
particular resource. Another important aspect that is
studied under this theory is price. The process of
purchase and sale at a price level is considered and has
direct on the consumers. The price can be defined as the
monetary figure that the customer is willing to pay for
the commodity.

Continue…
 It is seen that, after Brexit the shipping cost is enhancing and the same impacts the
rate of products. Along with that the cost of transportation is one of the major
factor that impacts the product price.
 In regard to rise in price of trampoline is because of cargo congestion. The lack
of resources with the manufacturers is making the situation ever worse.
 There is need of understanding that if there is scarcity of the product the price
start rising due to non availability in the market.

Continue…
 Elasticity: : It can be understood as a concept of measuring change in the
aggregate quantity demanded of goods at the moment. It is another theory of
economics and helps to measure the economic viability.
 A product is called elastic when the quantity demanded changes more than the
change in price of goods. It is applicable in different business situations. It is
necessary check the variables such as price, demand, income, resources so that the
elasticity of the product is known. It will assist to understand the case trampoline
better.

Continue…
 Price elasticity of demand – It is the case when the price of commodity is fixed and there
is change in demand of (increase or decrease) the commodity.
 Price elasticity of Supply – It is being used to measure the changes in supply due to the
change in price of the product.
 Cross elasticity – It is used to measure the elasticity among two commodities. The change
in price of one product impacts the demand of other. It includes substitute and
complementary goods.
 Income elasticity of demand – This is used to measure the changes in quantity demanded
according to changes in income of the customers.

Conclusion
 From the above presentation it is concluded that economic theories play a critical
role in understanding the changes in micro economic factors. There is discussion
related to the news related trampoline that was published in BBC. It is examined
that there is rise in price by 40 to 50% in summer. The use of various economic
theories is done to analyse the situation effectively. The demand and supply
theory helps to know about the relation of changes in price and its impact. The
theory of elasticity is also necessary to know about the relative changes in the
demand as per price.