Annotated Bibliography: Price, Demand, and Profit in Business

This annotated bibliography examines the complex relationship between price changes, demand, and profitability in a business context. It analyzes five sources, including a newspaper article, peer-reviewed articles, and online articles, to explore whether dropping prices always leads to increased demand and higher profits. The sources cover various aspects, such as the impact of oil prices, broadband services, commodity price speculation, and the pricing strategies of companies like Apple. The bibliography highlights the importance of considering factors beyond the demand curve, such as market dynamics and consumer behavior, when making pricing decisions. The findings suggest that while price reductions can sometimes boost demand, they do not always guarantee increased profitability. This annotated bibliography provides a comprehensive overview of the topic, offering valuable insights for understanding the nuances of pricing strategies in different market scenarios.

IF A BUSINESS DROPS ITS PRICE WILL IT ALWAYS
INCREASE DEMAND - AND WILL IT ALWAYS MAKE
MORE PROFIT?
(ANNOTATED BIBLIOGRAPHY)
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Table of Contents
Source 1: newspaper article.......................................................................................................3
Source 2: peer-reviewed article..................................................................................................3
Source 3: peer-reviewed article..................................................................................................4
Source 4: online article...............................................................................................................5
Source 5: Website......................................................................................................................5
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Source 1: newspaper article
Elliott, L. (2016). Why the falling oil price may not lead to boom. the Guardian. Available
at: https://www.theguardian.com/business/2016/jan/17/why-falling-oil-price-not-mean-
global-economic-boom [Accessed on 12 Aug. 2017].
This article explains why decline in oil price may not be lead to increase in demand and
market boom. Elliott, in this article, has illustrated that heavy decrease in the price of share,
coupled with decline of oil price will not be as effective as expected. In this way, the author
has provided strong empirical evidences and stated that cheaper oil price actually make
people to spend extra as crude oil producers gains additional profit at times of price surge.
However, the writer has not taken account of interdimensional factors associated with change
in oil price and shift in demand for it. Therefore, more in-depth research is required to
uncover the internal factors and ascertain their influences in this matter of price-demand
elasticity.
Source 2: peer-reviewed article
Galperin, H. and Ruzzier, C.A., (2013). Price elasticity of demand for broadband: evidence
from Latin America and the Caribbean. Telecommunications Policy, 37(6), pp.429-438.
The authors have empirical evidence on the price elasticity associated with demand for
broadband. This article has gathered empirical data from a survey conducted by the authors in
the second quarter of 2010. The aim of this research was to approximate the consequences of
price drop in broadband in LAC region on the adoption of broadband connections.
The main limitation is that it did not take account of the notable variance latent between
different markets in the LAC region. Despite that, the authors have explained how reduction
of price can help the broadband service providers to penetrate in the market and thus earn
more profit. In particular, this article has shed light on the price change in technological
resource can affect the demand in market.
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Source 3: peer-reviewed article
Knittel, C.R. and Pindyck, R.S., (2016). The simple economics of commodity price
speculation. American Economic Journal: Macroeconomics, 8(2), pp.85-110.
This article examines the economic relationship between commodity price and demand
attached to it. The authors have used supply and demand model for determining the
consistency of price speculation. The major finding of this article is that price speculation has
minute impact on oil price in the global market.
However, there is lack of evidence whether reduction of oil price is actually effective on
demand increase. Therefore, research that is more extensive is needed to be conducted with
special focus on oil industry. This article is aligned with the focal theme of this assignment
and hence it is relevant.
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Source 4: online article
Marketing MO. (2017). Will Lowering Your Prices Increase Profits? | Marketing MO.
Available at: http://www.marketingmo.com/strategic-planning/will-lowering-your-prices-
increase-profits/ [Accessed on 11 Aug. 2017].
This article answers whether lowering of price is actually associated with profit making. The
article states the common belief that lowering price of product can lead to increase of sales
and thus would maximise profit is not always right. It states that profit is basically related
with demand curve of a certain product. It also states that estimation is one valuable step that
can help to ascertain whether price reduction can lead to profit.
However, the article does not take account of additional factors and only have emphasized on
demand curve. This overemphasis on one singular aspect can be considered as significant
limitation of this article. Moreover, the article has presented a dialectical approach without
actually concluding on any standpoint. Therefore, this source cannot be considered as a
relevant source for this assignment.
Source 5: Website
Forbes.com. (2013). What If Apple Cut Prices By $100? Forbes.com. Available at:
https://www.forbes.com/sites/markrogowsky/2013/12/11/what-if-apple-cut-prices-by-100/
#ac489de49686 [Accessed on 12 Aug. 2017]
The purpose of this website is to ascertain the results associated with price reduction of Apple
products. The author has explained in this article that reduction in price of Apple product by
$100 would certainly increase volumes, but profitability will fall. This article is beneficial for
this assignment as it concentrates on the price change of one of the costly consumer gadget in
contemporary society. However, the article revolves around a hypothetical scenario, and thus
feasibility of the outcomes explained here might not be similar in reality. Despite this
limitation, this article point out a probable scenario for other organisation manufacturing
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costly consumer products. From this perspective, this article is relevant and helpful for this
assignment.
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