Robert Morwind Business and Management

10.3.10 Mr. Buckley

Robert Morwind Mr. Buckley Business and Management 10.3.2010

Word count: 590

Robert Morwind Business and Management

10.3.10 Mr. Buckley

Price Elasticity Investigation

This investigation is used to find out where price elasticity occurs in markets. We researched price elasticity and took it in consideration with the location and store sizes to figure out how it effects the price of the good. First I assumed that only the location was influencing the price but later I got to know that the store size and the consumers are decisive for Nescafe Original the price. The biggest price difference between a single product of my research was Nescafe Original. It had 33% Kaisers difference in price from the kiosk Kiosk 34% 37% to Handelshof. The Kaisers Price was in between the two extremes. This price difference usually occurs because of the Handelshof different scales of buying and 29% selling the products. The big markets get the products at extremely low prices because they are ordering a lot of the product and therefore are a constant buyer of a big sum of the product, while a small scale shop only buys very few products and very inconstant for the producer. Another factor which allows the supermarket to 7 offer such a low price is the 6 specialized labor. The big 5 supermarket have people Kaisers *Kaisersw erth 4 for everything and dont Handelshof (Haan) have to do jobs in other 3 Kiosk (Haan) mtiers, while the small 2 shop owner has to do 1 everything in his job, even 0 though he is not trained to do things, e.g. writing bills or buying products and comparing prices. You can see the price difference in every single product, as you can see in the table on the left. Although mostly the price change is due to the economics of scale, it still partly depends on the location. For example the Kiosk where I checked the prices is outside the city and there is no shop around. That is why it partly can set the prices higher than in a super market, because people would just go to the kiosk to buy single goods, because they forgot to buy
N es ca N fe O Mi l es k te rigi a na Pf i rs l Po ic h w e r Pe ad p s e i Bl ue Fa C nt oc a a Sp C ol rite a Ze ro M ar s

Robert Morwind 10.3.10 Business and Management Mr. Buckley them at the supermarket and they would usually go and buy everything they need. This monopole exists because people would just go to the kiosk because it is close to their house, while people go to the supermarket firstly because they have a bigger 100% variety of goods and secondly 80% because the prices are lower. 60% If the prices at a supermarket would be high then they could 40% go to another supermarket. 20% In the table at the 0% right you can see the prices in percentages. Again the yellow percentages represent the kiosk and are the highest. This table is extremely helpful Kaisers *Kaisersw erth Handelshof (Haan) Kiosk (Haan) to see the actual price change in the percentages. This represents the change better than just seeing the prices. In the graph on the left you can see the difference between elastic and inelastic economics. In this example the demand is elastic, which means the demand can vary and the supply is inelastic, cannot vary. This graph describes the elasticity of the shops and the products which basically answers the question which we had to investigate due to the fact that the prices are elastic in the shops and supermarkets As a conclusion you can say that the Prices are highly influenced by the size of the shop and by the location. Economics of scale highly influence the price and control the profit of the company/shop. It allows the shops to vary in the price, because the fixed costs are different. Although the rent could be much higher for a supermarket the shop still has to set the prices higher because the quantity and labor is more expensive.
H es H caf C Mil ei e o k ar N nye Or ffe ib es K ig e o te e in G a tc al ol P h db fi up ae r si rc ch h po Po Pe Pe en w w e ps ps er ra i l i a d d ig e e B ht O lu ra e ng C F e oc a a nta C C M S ol M oca ez pr a es C zo ite se o M rm la Z ix er er Te o C or M e nf ar la s ke s N

Robert Morwind Business and Management

Appendix:

10.3.10 Mr. Buckley

Products Milk Coffee Nescafe Original Heinye Ketchup Nestea Pfirsich Haribo Goldbaerchen Pepsi Pepsi light Powerade Blue powerade Orange Fanta Coca Cola Sprite Mezzo Mix Coca Cola Zero Messermer Tee Mars Cornflakes

Handelshof Percentage Kaisers Percentage Kiosk Percentage Increase Average Haan Increase Kaiserswerth Increase Haan Handelshof to Kiosk Price 0.60 20.00% 0.75 25.00% 1.00 40.00% 0.78 1.00 13.04% 1.15 23.33% 1.50 33.33% 1.22 4.99 16.69% 5.99 7.85% 6.50 23.23% 5.83 1.99 13.10% 2.29 16.73% 2.75 27.64% 2.34 1.40 3.45% 1.45 14.71% 1.70 17.65% 1.52 0.60 32.58% 0.89 19.09% 1.10 45.45% 0.86 0.45 10.00% 0.50 16.67% 0.60 25.00% 0.52 0.80 5.88% 0.85 15.00% 1.00 20.00% 0.88 0.85 14.14% 0.99 1.00% 1.00 15.00% 0.95 0.85 4.49% 0.89 11.00% 1.00 15.00% 0.91 0.85 4.49% 0.89 11.00% 1.00 15.00% 0.91 0.85 4.49% 0.89 11.00% 1.00 15.00% 0.91 0.85 4.49% 0.89 11.00% 1.00 15.00% 0.91 0.85 4.49% 0.89 11.00% 1.00 15.00% 0.91 0.85 4.49% 0.89 11.00% 1.00 15.00% 0.91 2.00 12.66% 2.29 23.67% 3.00 33.33% 2.43 0.59 14.49% 0.69 31.00% 1.00 41.00% 0.76 1.89 20.92% 2.39 31.71% 3.50 46.00% 2.59

35 30 25 20 15 10 5 0 Handelshof (Haan) Kaisers *Kaiserswerth Kiosk (Haan) Add up Average

Bibliography

Robert Morwind Business and Management

10.3.10 Mr. Buckley

comparing Prices. (2010, February 25). Shopping [Good source to compare different prices at different location and countries]. Retrieved from http://de.shopping.com/?ncrd=1&rpu=1

elasticity of supply . (2010, February 18). businessdictionary. Retrieved from http://www.businessdictionary.com/definition/elasticity-of-supply.html

How to set a price. (2010, February 22). businessvision. Retrieved from http://www.businessvision.co.uk/finance_accounting03.html

Price Elasticity. (2010, March 3). ingrimayne. Retrieved from http://ingrimayne.com/econ/elasticity/Elastic1.html

Price elasticity of demand. (2010, March 1). Wikipedia [First General information about the topic]. Retrieved from http://en.wikipedia.org/wiki/Price_elasticity_of_demand

Price Elasticity of Demand. (2010, March 3). Economics.About. Retrieved from http://economics.about.com/cs/micfrohelp/a/priceelasticity.htm

Price Elasticity of Supply. (2010, March 8). tutor2u. Retrieved from http://tutor2u.net/economics/content/topics/elasticity/elasticity_of_supply.htm