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Shifts in demand

Student’s First Name, Middle Initial(s), Last Name

Institutional Affiliation

Course Number and Name

Instructor’s Name and Title

Assignment Due Date

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Shifts in demand

Starting an enterprise is the most valuable experience any person can get. Running the

business requires specific economic knowledge and skills because it is genuinely a risky process.

The opportunity given to me, according to the first scenario, is the classic case of monopoly – the

type of market where only one seller operates (Zeder, 2020). Under the given circumstances (the

price – $1,50, the number of products and customers – constant), the changes in the demand are

possible, and the seller must know and understand their causes in order to manage the business

masterfully.

The fluctuation in the demand in the first scenario can be caused by the following factors:

income, customer preferences and weather (Woodruff, 2019). Each student has his own amount

of money he has to spend during the day, whether it be pocket money, scholarship, or salary. The

buyers need to estimate, how many ice creams per month their budget can allow. That is why the

quantity of goods sold on various days is different: the more the customer earns, the more ice

creams he can afford. The preferences of the customers can also change during the given period

– each day the buyers can purchase different kinds of ice cream. This is the reason, why there

can be, for example, no strawberry ice creams left on the first selling day, and 15 ones left on the

second selling day. The weather can sometimes be unpredictable, and ice cream is a commodity

depending on climate change. A rapid decline in sales may appear if there are a few cold days

during the month of selling. The sells will fall rapidly and affect the total amount of traded

goods. All these factors

When another competing student is given the opportunity to sell ice cream on the

campus, the market turns into oligopoly with two competitors, which sell identical goods (Zeder,

2020). Obviously, each competitor tries to maximize profits, so the competing student will sell

the products at a lower price. This way the customers will buy ice cream where it is cheaper, and

the sellers will lower the price while the profits exceed the costs, until they reach the minimum
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price they can afford. It is not the situation in which the sellers receive the biggest gains. The

best strategy is to agree upon a certain price at which the goods will be traded. It will equal the

sales and profits acquired by the sellers.

All in all, the cases examined showed that the demand largely depends upon the factors

beyond the seller’s jurisdiction, if the price is constant. The race of prices will not bring profit as

much as detailed agreement between the competitors, the defined price will balance the sales and

benefits received from trade.

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References

Liberto, D. (2019, November 13). Change in demand. Investopedia.

https://www.investopedia.com/terms/c/changeindemand.asp

Woodruff, J. (2019, March 9). What Are the Four Factors That Cause a Shift in Demand? Small

Business - Chron.com. http://smallbusiness.chron.com/four-factors-cause-shift-demand-

56212.html

Zeder, R. (2020, January 31). The Four Types of Market Structures. Quickonomics.

https://quickonomics.com/market-structures/