BMP4003 - Economic Models: Analyzing Trampoline Price Increase

This presentation reviews an article discussing the increasing prices of trampolines due to rising shipping costs and port congestion, using microeconomic concepts to explain the situation. It covers the principles of demand and supply, highlighting how changes in shipping costs affect the supply curve and ultimately increase the market price of trampolines. Factors influencing demand, such as consumer preferences and income levels, are also explored. The presentation further delves into the elasticity of demand, examining how sensitive consumers are to price changes and the impact of income and substitute goods on trampoline sales. The analysis concludes that the increased cost of trampolines affects market supply and emphasizes the importance of understanding demand and supply dynamics and related elasticities in this context. The assignment is available on Desklib, a platform offering a wealth of study resources for students.

BUSINESS ENVIORNMENT

Table of content
 Introduction
 Trampoline profit issues
 Demand and supply
 Elasticity of demand
 Conclusion
 References

Introduction
 Economics refers to study of the scarceness and it is
associations for the use of resources, production of goods
and services, healthy growth and production of the related
goods and services and many other related complicated
and vital interest of the society.
 This is study of economic resources and their application
is different situations.

Trampoline's profit issues
 Given article on BBC News which is related to the souring of total selling
cost of bigger toys as the gliding costs of due to soaring of transportation
cost and port congestion.
 This is recognised by one of owners of the organisation of trampoline.
Owen was name that owner gave to his outdoor toys shop which addresses
that there will be efficient major alterations in prices of the toys that are
larger in shape and size including the trampolines.
 It also directed that port congestion is going to be higher for the larger and
bigger toys and the toys that have huge shape and size.

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 It is also mentioned that they were lacking enough space outside
China and there includes some items which is being
manufactured in United Kingdom and rise in transportation or
shipping cost is influencing the gross fecundity and functionality
with effective operational activities of the business organisation.
 Ultimately, this is being notable that overseas cargo and
consignment weights and strikes gross price of such toys
(Cowell, 2018).

Demand and supply
 Demand is defined as quantity of consumer who are willing and able
to buy new product at the various price during given period of time.
 This relationship between price and quantity demand is known as
demand curve. This demand is instantly accompanying to alteration in
cost of the products in business world and marketplace.
 There is a reciprocal relationship between cost and quantity demand
of goods and services as provided prices rises and then gross demand
of products and goods declines down.

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 Law of demand: The law of demand refers to a key value of
economic science which mentions that consumers would
demand a low quality of goods and products at higher prices.
 This law dictates about the uprising and down-falling of the
prices of the products and goods. (Fitch-Roy and et. al.,
2019). So when the cost of the product and goods declines,
then there is an instant rise in the demands of the goods and
their related services.

Components impacting the demand of specific
commodity
 Price of the good: There is a reciprocal kinship or
relationship between the cost prices and the related
demands of the products in the target market or their
customer bases (Greenstein, 2020). So ultimately when the
cost price of the Trampoline rises the demand of the
Trampoline finally declines bringing changes in the
organisational growth and value.

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 Preferences of consumer: The consumers are the supreme
aspect of any business and their preferences are the ultimate
goal of any enterprise. Their preferences can alter at any
given time and this directly affects the demand of the
Trampoline (Jawad, Lee, Glantz, and Millett, 2018).

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 Law of supply: The law of supply is the microeconomic law
which refers to the laws stating that all the factors and aspects
being equal (Jawad, Lee, Glantz, and Millett, 2018).
 Law of supply represents the seller’s behaviour and their plan
of action at the time of alteration in the cost prices of the
related goods and services.

Factors affecting supply of certain commodity
are as follows
 Production cost: The aspects that directly relates and affects the supply of the goods and commodity in the market
place. When there is limited stock of the goods and products in the organisation, the organisation supplies very less
products to the consumers. With regards to the Trampoline, when the suppliers have stocked the trampolines they
tend to incline in supplying the goods in the market place and vice versa.
 Government subsidies: The government is responsible in providing benefits for helping the organisations by
declining the gross production cost of the goods and the products. There is a healthy and positive kinship and
relationship between the subsidies and the products and goods supply processes (Reeves, 2021). With regards to the
Trampoline, the suppliers tend to supply more of goods and products to their consumers when the government is
providing more of subsidies and vice- versa.

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 Technology: Technology is very crucial in operation of the
businesses. Innovation is the key aspect that an organisation holds
for their growth and advancement in the technologies. This further
aids in the sustainability of the organisation for a longer period of
time. With regards to Trampoline, the gross supply of trampoline
inclines when there is an upgradation in the technology of the
manufacturers functionality for declining the overall cost price of
the goods (Jawad, Lee, Glantz, and Millett, 2018).