Chapter 2 : Price Mechanism (Blog Challenge)

 Reflection time: "K.W.L. Table"

K  (What We Know)

Defitions of the terms, Demand And Supply

Both demand and supply curves

The varies shifts of curve  alongside and outwards

The theories of demand and supply

Examples would be Price and Non-Price Determiants

Price Determiants-Change in Price of Goods itself

Non-Price Determiants-P.E.T.P.I.G(D) W.E.T.P.I.G(S)

W(What We Want To Know)

Economic analysis of Demand and Supply

Demand and Supply Utilised to Obtain Market Price

Accurate definitions of Demand and Supply

Supply curve affects the demand curve,Vice versa

Effective analyse of the demand and supply curves

Knowledge on Price Equilirium & market price

L(What We Learnt)

The interception point of supply and demand  curve

The definition and information on Price Quailibrium & Market Price

How the curve works in terms of shifting movements along and outwards

Non-Price determinants of Supply and Demand

How demand and supply curves affect each other

Point of views from Consumers and Producers

Accurate definition and thoeries on Demand and Supplies

Group Essay-(Select a product you are interested in.Analyse with evidence how the demand and supply of products change and its resulting effect on equilibrium price and quantity)

The product we am interested in is a sports shoes, 'Nike Free 3.0 Flyknit' in a sports retail outlet.

The 'Nike Free 3.0 Flyknit' is a brand new model of shoes. These shoes have an ultra-light upper which provides a supportive, contoured fit. By securing the foot over the low profile sole, the upper complements the flexibility of the Nike Free platform, the shoe allows the foot to move more freely in all directions. Nike Flyknit technology enables designers to micro-engineer areas of stretch, support and breath ability, and to seamlessly integrate Nike Flywire support where needed. As a result of the Nike Flyknit technology, the demand for this shoe is very high. An estimated supply of the shoe in a sports retail outlet is about 400. This quantity of shoes shows that the demand for this shoe is very high as other normal Nike shoes have a lesser supply for example, Nike Free Run 3.0 has a quantity of about 175. 

The pictures below shows the different prices of the two different shoes. The 'Nike Free 3.0 Flyknit' has a price of $140. Whereas The 'Nike Free Run 3.0' has a price of $79.97

The 'Nike Free Run 3.0' was also a highly demanded shoe in 2013 but it became obsolete as more new models like the new 'Nike Free 3.0 Flyknit' which was created this year, 2014. Therefore both the demand and supply curves for the 'Nike Free Run 3.0' will shift inwards due to obsolescence whereas the demand and supply curves for the 'Nike Free 3.0 Flyknit' will remain as it with very minimal changes. But overtime, the demand and supply curves for the 'Nike Free 3.0 Flyknit' will also shift start to shift inwards also due to obsolescence. Therefore both the equilibrium pricing of the shoes will drop. The graph below represents the demand and supply curves for the 'Nike Free Run 3.0'.

The point where the two curves intercepts is the equilibrium price of the demand and supply curve.

The next graph above which represents the demand and supply curves for the 'Nike Free 3.0 Flyknit'

The point where the two curves intercepts is the equilibrium price of the demand and supply curve.This is the equilibrium price of 'Nike Free Run 3.0'. In comparisons to the newer model that shows a lower equilibrium price .