Factors that affect the elastic and inelastic demand

Posted on September 21, 2011 | Leave a comment

Demand for goods can be both elastic and inelastic. Why did it happen? It is these factors that influence it.
a. Principal whether or not the goods. Demand for staple goods such as rice and cooking oil are generally less affected by rising or falling prices. This is because any increase, people continue to buy rice because rice is a staple that should always met their needs. Similarly, when the price drops, people do not then buy up the rice as much as possible. He will buy according to the magnitude of the needs of families within a certain time. Thus, the subject of a goods then permintannya more inelastic.
b. Presence or absence of substitute goods (substitution). Availability of substitutes has led to a good high level of elasticity. However, it’s easy to substitute an item, the more inelastic demand. For example, cow’s milk has soy milk substitutes. If the price of cow’s milk rises, people will buy soy milk. Thus, the demand for cow’s milk is elastic.
c. The proportion or part of income spent on goods. The greater the proportion of income consumers to purchase any item, the more elastic the demand. If the proportion of income spent on goods was small, demand is more inelastic. For example, the decline in the price of the refrigerator caused the people will soon make a purchase on the refrigerator. The proportion of revenues to the high amount refrigerator so that when there are price reductions refrigerator, demand will rise dramatically.
d. Tradition or habit. If the use of an item has become a tradition or habit, the demand will be inelastic. Although the price goes up, consumers will still buy it.

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Equilibrium price

Posted on September 21, 2011 | 1 Comment

Quantity demanded and quantity of goods offered is very influenced by the price. From the demand side, the lower the price level, the better for consumers. From the supply side, the higher the price, it will be more profitable for producers. The problem is to unite the two sides are in the same market. The answer to the above problems is through the equilibrium price.

Equilibrium price formation process
Price equilibrium is reached when the quantity demanded equals the number of items offered at specific times and specific prices. Graphically, the equilibrium price occurs at the point of intersection between the demand curve with the supply curve.

If the equilibrium price is reached, either producers or consumers alike do not want to increase or decrease the price and quantity of goods bought and sold.

The impact of shifting demand and supply on equilibrium price
1. Shift the demand curve
When demand increases, the demand curve will shift to the right of DD to D1D1. This shift will impact the balance point shifts from point E to point E1. In addition, the price is also shifting from P to P1, and the number of shifts from Q to Q1.
When supply decreases, the demand curve will shift from DD to D1D1. A balance also will shift from E to E1. Prices will be shifted down from P to P1 and the number of shifts from Q to Q1.

2. Shift the supply curve
When the supply curve shifts to the right, the number of bids will shift to the right and the price level down. The supply curve shifts to the lower right of the SS to S1S1 and the balance point shifts from E to E1. The amount of goods on offer increased from Q to Q1, while the price dropped from P to P1.
At a reduced supply, the supply curve shifts to the left of the SS to S1S1, causing the balance point shifts from E to E1. The reduced supply will result in changing the equilibrium price. Prices will increase from P to P1, and the number of items reduced from Q to Q1.

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elasticity of demand, elastic demand and inelastic demand

Posted on September 21, 2011 | Leave a comment

Consumer needs are very diverse, so are capabilities or their purchasing power for goods and services. Therefore, in determining the selling price, manufacturers must consider consumers react to rising or falling prices. For example when manufacturers lower computer prices, market demand for computers will go up. This shows that market demand is very sensitive to price changes. Thus, manufacturers can determine how large an increase or decrease prices in order to achieve maximum results.

Elasticity of demand
The elasticity of demand shows a comparison between the relative change in the amount of goods and services purchased with relative changes in price. Elasticity of demand can explain the sensitivity of demand to price changes of a goods item.

Elastic demand
Said to be elastic if the coefficient of demand elasticity of demand is greater than one. This situation occurs when the percentage change in quantity demanded is greater than the percentage change in price.

Inelastic demand
Market demand is said to be inelastic when the coefficient of elasticity of demand is smaller than one. This situation occurs when the percentage change in quantity demanded is smaller than the percentage change in price.

Unitary elastic demand
Request an item is said to have a unit or unitary elasticity when the percentage change in quantity demanded equal to the percentage change in price.

Perfectly elastic demand
Request a product is perfectly elastic if price changes led to little change in countless requests.

Perfectly inelastic demand
Perfectly inelastic demand means that no matter what the price of an item, people will still buy it takes the same amount. For buyers, prices will not affect the quantity demanded.

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Innovation Strategy of Traditional Market

Posted on September 18, 2011 | Leave a comment

Based on the above explanation, then the strategy that must be taken in the development of traditional markets include some things, namely: the strengthening of market participants to develop the human resources market, cooperative partnerships with local producers to market local product development, purchasing cooperatives collectively through the market to fix prices for producers and small traders, the arrangement (setting) and the revitalization of the market stalls next zone to maximize the function of the market place, move the public passion since early through various promotions in the public media, perform a variety of business innovation to optimize service to customers.

While the aspects of actors, need a serious effort to develop a material capital (innovation building, lay-out and setting, and the products sold in traditional markets), intellectual capital (innovation the way businesses, marketing “social value” (social marketing), and imaging (branding) of traditional markets, and institutional (innovation membership, collective effort, resource folders, and network (networking) organization of traditional market players.) Specifically pengembangn cooperative market can be done through the expansion of membership base, business diversification, expanding partnerships, and education of members intensively.

Bids can be driven model for market development include the Independent Market Model, Model Goods Market Integration, Market Services, and Regional Market Event, Model Traditional Market Integration and Cluster Special Markets, Market Integration Model Village, Special Markets, and Local Events Markets, Model Economic Corridor (Shopping-belt) Special Market Tour, and Model Development of Cooperative Market in Yogyakarta (Bukopy).

Studies PUSTEK-UGM and LOS DIY held in late 2010 and early 2011 this can be one of the prefix for the policy of protection and development of traditional markets in Yogyakarta. It is also hoped the study could be lighter for the government and parliament DIY efforts that are currently working on a draft regulation, government and regency and city that are clean in the traditional market management.

In addition to direct actors such as service-level market, the cooperative market, market traders, APPSI, can close ranks to keep the spirit of working together to develop the traditional markets in Yogyakarta Special Region. With so hopefully highlights the DIY market is growing dimmer and the market is not exactly getting ilang kumandange.

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Protection vs. Free fight liberalism

Posted on September 18, 2011 | Leave a comment

Market penetration of modern macro economy not only threatens the traditional market players, but also economic actors in other sectors. With the trade structure of the above conditions it can be concluded that the conditions of business competition in Indonesia growing lead in the pattern of monopoly or oligopoly as a result of the influence of economic globalization (free markets).
Unfortunately, regulation at national level related to trade (Presidential Decree No. 112/2007 and No. 53/2008 Permendag) do not have sufficient material and substantial in providing direction and model of the protection and development of value systems, social capital, and the traditional market players. Her spirit was even more leads to free competition (free fight liberalism). The contents of both the regulation is more accommodating ketelanjuran current trade order where there has been the dominance of large retailers than meets the spirit and constitutional imperasi contained in the Articles of Social and Economic Development Act of 1945.

Trade draft being discussed today the Government and Parliament are also better reflect the reality ketertundukan factual rather than the ideals of the ideal (law as a tool of social enginering). Regulation is only a residual policy delivery, which makes the traditional market players will remain as an object of the project and the player the edge.

Nevertheless, the vagueness spirit, direction, and a model of trade protection and development of the people, has given a wide space for the existence of local regulations. In the context of protection, some local regulations that already exist and are being designed in the province of Yogyakarta has shown enthusiasm and assertiveness aspects / protection model for the traditional market players. But how much protection against the system of values ​​and social capital, as well as direction, aspect, and the traditional model of market development is still unclear and is largely determined by the interpretation and orientation of regional policy makers.

Protection policy should be aimed to protect the value system (togetherness and kinship), social capital (cultural production), and all elements of a traditional market in Yogyakarta Province include traders, suppliers, retailers, informal workers, and consumers. In accordance with the 1945 Constitution the protection of traditional market players include protection against the elements of the material, intellectual, and institutional.

Protection of the third dimension and the element should include a comprehensive range of aspects including restrictions (quotas) the number of trendy shops, the determination of location and distance (zoning), restrictions on opening hours of a modern store, which sold the product distribution, licensing arrangements, distribution of ownership and viewing the modern shop, balancing the relationship between wholesalers, medium, and small (the division of market share), and the affirmation of direction and pattern of development of traditional markets.

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