Individual Presentation Article Review on Economic Concepts and Models

This report analyzes the microeconomic factors influencing the price increase of trampolines, referencing a BBC article. It begins with an introduction to economics and microeconomics, defining key concepts such as production theory and consumer demand. The report then examines the specific case of rising trampoline prices due to increased shipping costs, affecting demand and supply dynamics in the UK market. It explores the core components of microeconomics, including demand and supply, and delves into factors influencing these elements, such as consumer preferences, substitute goods, and consumer income. The report also discusses the law of supply and factors affecting supply, like technology and transportation. Finally, it categorizes different market structures, providing a comprehensive overview of the economic principles at play. The conclusion summarizes the impact of microeconomic factors on product demand, supply, and market share, highlighting how changes in production costs influence consumer preferences. The report aims to provide a detailed understanding of how economic principles affect real-world market scenarios.

BMP4003 Business Environment
Assessment 1 - Individual Presentation

Article Review - Economic Concepts And
Models
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Contents
• Introduction
• Microeconomics
• Rise in the Price of Trampoline
• Factors of Microeconomics
• Demand
• Supply
• Market Structure
• Conclusion

INTRODUCTION
• The term Economics is used by government, businesses, and nations
to allocate the limited resources in an efficient and effective manner
between unlimited needs and wants of the population.
• It helps in analysing the past, present models and determining the
future models. It is mainly deals with the production, distribution and
consumption of commodities and services.
• It is broadly classified into two categories for assuming individual's
behaviours towards each incentive and economy as a whole.

Explain the term Microeconomics before evaluating
the crucial statement of the article
• The study of choices of businesses and individuals to distribute
the scare resources for better utilization is microeconomics.
• Theories in microeconomics includes Production theory
(deciding the production quantity and number of commodities to
be sold), Theory of production input level (according to the
theory, selling price of any product is decided by the resources
used in its production), Theory of consumer demand (this theory
explains ability of consumer's expenditure for a particular
product).

Rise in the Price of Trampoline
• The BBC article indicates approximately 50%
hike in the price of trampoline due to
increase in its shipping cost which indirectly
the affected the price elasticity of demand
and price elasticity of supply in area of UK.
• The owner of outdoor toys James Owen,
reflects that due to rising cost of
transportation and congestion on the
shipping ports is reasons of increasing rate in
the big outdoor game objects like
trampoline, climbing frames and swings.

Two Main Factor of Microeconomics
• Demand and Supply:- These are the basic models of
microeconomics, which are determined by the
fluctuating price of the commodity or services
available in the market. Correlation between demand
and supply is indirectly proportionate. If demand of
any goods or services arises then producer increases
its supply to earn maximum profit. Increase in the
cost price of trampoline is affecting its demand and
supply.
• Demand:- The demand theory explains the number of
consumers willing to buy commodity and services at
different price and their capability to pay for the same
product at a particular point of time. Production of a
product is dependent on its demand.

The Factors other than Price that also
influence a products quantity demanded
• Taste and preference of the consumer: It is measured by its utility, of
different types of products according to an individual tastes. Ability of
consumer to purchase a product does not define their likes and dislikes.
• Effect of Substitute Goods: The substitution effect occurred when the
price of commodity shifts then demand of the similar product also
shifts.
• Income of the consumer: Income of the consumer determines
purchasing power. Income effect is the shift in the demand of a product
and service due to shift in the consumer's choices because of the
change in the real income of its consumer.

Supply
• It refers to the quantity of goods or services that a producer or
supplier is willing to offers in the market at a defined price in a
specific period of time.
• As the price falls for a product its demand increases and
producer will supply more to earn maximum profit and market
reach the point of equilibrium, at which the demand and supply
curves are equal means there will be no surplus supply and no
scarcity of product.

Law of Supply
• It explains that the supply and
price of a commodity are directly
proportionate to each other
assuming other factors remain
same. The rise in the price of a
commodity and service also
increases its quantity supply
(Khrennikov, 2018).
• The diagram implies Law of Supply,
it shows the correlation between
price and supply of good.

The factors other than the price that also influences
the quantity supplied of a product
• Introduction of New Technology: Whenever a business finds out a
new production technology that reduce the cost of production and
raised up profit then firm tries to produce more and supply curve
starts moving to rightward. Also outdated technology decreases
supply and profit margin.
• Price of other goods: Alternative of all products are available in the
market. Price of other related goods also influence the supply of a
particular product.
• Transportation availability: Distribution channels and supply chain
management also affects supply of finished product and ensure
availability of raw material.

Market Structure
A structure which categorized different industries on the basis of their
nature of production, commodities and services, and degree of
competition. It indicated to the correlation between suppliers to
producers, sellers to buyers, and wholesalers to retailers. Market
structure is divided into four different types of markets according to their
behaviour:
• Perfect competition
• Oligopoly market
• Monopoly market
• Monopolistic market

Conclusion/Summary
• It is concluded from the report, that the factors of
microeconomics influence the demand and supply of product
and service.
• Microeconomics is important in determining the behaviour of
individuals towards the initiatives taken by the firms.
• It throws light on how demand and supply of trampoline affects
its market share or position and the rise in cost of production
increases selling price of trampoline which caused shift in its
buyer’s preference.

References
• Bagajewicz, M.J., 2021. On the integration of process and
product design with microeconomics and finances. In Enpromer
2005, 2nd Mercosur Congress on Chemical Engineering, 4th
Mercosur Congress on Process Systems Engineering.
• Caudill, S.B. and Long, J.E., 2019. Homework, practice, and
performance in principles of microeconomics. Practice, and
Performance in Principles of Microeconomics (January 1,
2009).
• Durell, A., 2018. Essays in applied behavioral microeconomics.
Harvard University.

Thank you