Wk 2 Day 7 Assignment: Supply and Demand Paper
Lisa D. Nolan
Axia/College University of Phoenix
PRINCIPLES OF ECONOMICS
September 26, 2010
Instructor Timothy Kelley
Supply and Demand: Vacation to a theme park
The supply and demand of goods and services vary due to various factors. This paper will discuss the supply and demand when vacationing at a theme park, the possible changes in supply and demand, two substitutes for the product, and how the necessity of the chosen good impacts price elasticity.
First, there are many reasons why people wish to go on a vacation to a theme park. The many reasons include the fun and entertainment which can be experienced at the theme parks, and also the family bonds that can be formed when attending one. Price is definitely a factor for people when making a decision to have a vacation at a theme park. In line with the law of demand, when prices are high, people will be less able and willing to spend their hard earned money to visit a theme park. On the other hand, when prices are low, people will be more able and willing to spend a vacation at a theme park. However, prices only affect the quantity demanded of the good. In terms of changes in demand of a vacation to a theme park, there are various factors which can influence it.
One of the factors which affect demand will be expectations of the future. When people expect economic health to deteriorate in the future, they will be more cautious about their spending for they fear consequences such as an increase in unemployment or decrease in income. As such, marginal propensity to save will increase, and thus people will be less willing and able to spend on a vacation to a theme park and this result in a fall in demand. On the other hand, if people expect economic growth in the future, they will be more willing to spend on a vacation to a theme park because; they expect positive consequences such as an increase in income in the future. In this...