Price Elasticity of Demand Assignment Example | Topics and Well Written Essays - 500 words

Price Elasticity of Demand - Assignment Example If more farmers decide to produce corn, the demand will be met. The price of soybean in relation to corn also matters. The increase in the price of corn prompts demand for soybean but demand for soybean also depends on tastes and preference and income. Although the price of soybean decreases, it does not result to increase in its demand since preference is on corn which has multipurpose use hence income will be spent on corn and buyers will incur the opportunity cost of buying soybean. Since both kinds of cereal use same raw materials, farmers will shift production factors from a production of soybean to corn production hence reducing acreage on soybean for planting more corn. The price of commodities is determined by forces of demand and supply. As long as the quantity of corn oil produced is equal to quantity demanded, the market will be at equilibrium price and quantity. Since the demand for corn is up it means demand for corn oil is also up hence quantity demanded is higher than quantity supplied. The buyers will compete for the available corn oil hence pushes the prices up. Baumol & Blinder (2009 p 57) argues that quantity demanded is also dependent on; income, tastes, the price of other products and population size. If the price of corn oil goes up, buyers in response to price change will cut a quantity of demand of corn oil to alternative sources of energy which are cheaper especially if the price elasticity of demand of corn is high. If buyers have increased income and have high-income elasticity they buy more corn oil thus increasing demand and pushing prices up. PEoD is used to measure the response of consumers demand to price changes all factors held constant (Moffat, 2010). It’s the proportionate change in quantity demanded over a proportionate change in price. PEoD is affected by factors such as; substitutes, a degree of luxury, time period and price points (Bochholz, 1996). The higher the price elasticity, the more sensitive consumers are to price changes (Moffat, 2010).  Ã‚  

International Business Strategy Essay Example | Topics and Well Written Essays - 1500 words - 4

International Business Strategy - Essay Example 30% of the 1100 joint ventures shaped before 1967 between one of the US firm and the company from the other developed nation did not survive largely due to organisational or strategic changes made by the management (Killing, 1982). The paper attempts to explore some key reasons behind the failure of large IJVs; at the same, it will also find the specific success factors of IJVS in emerging economies. Cultural difference between partners is considered one of the principal reasons that come in the way to the success of joint ventures. Before forming a joint venture, the companies do not conduct compatibility analysis. Most of the time, their management style differs from each other. One could be more decentralised in its decision making process while the other partner believes in more control and does not provide enough freedom to its line staff. Even after forming a joint venture, no efforts are made to create a suitable mix among the staff making the joint venture nonfunctioning. Farkas and Avny (2003) argue, "Difference in organizational culture is the reason for performance gaps in joint ventures rather than national culture differences. They also state, "The influence of cultural difference on the performance of international joint ventures is indirect, but highly influenced by the level of trust between its partners†. The researchers studied those joint ventures where one of the partners hailed from Israel. Cultural differences between western multinational enterprises and Japanese companies have also been determined as the factor behind the failures of their joint ventures (Brown et al. 1989). Chryslers merger with Daimler is worth mentioning here that could not evoke successful outcomes due to cultural mismatch between them. The Chrysler division was a profitable division prior to merger but its performance deteriorated after the merger. Management undertook several layoffs at Chrysler following the merger that was never anticipated in the beginning.