Explain the difference in prices for each of the following pairs of goods in terms of the laws of supply and demand: (a) natural diamonds and zircons (human-made diamonds), (b) a loaf of bread baked today compared with day-old bread, (c) roses in January and roses in June.
That's my answer and I tried but I know it's not right I just don't get it..
A. So with the law of demand people would mostly go for zircons they will be a lot cheaper and the law of supply the diamonds will cost more.
Natural Diamonds have inelastic supply as the Diamonds cannot be produced by man according to tAN Che Demand
Zircons will have relatively elastic supply as it can be changed according to the demand
Old bread will have inelastic supply as the supply is already over and it cannot be produced to day
To Day baked bread will have relatively elastic supply as it can be changed according to demand
Regarding roses will have relatively elastic supply as the supply can be changed according to demand (INDI AN CONDITION) and in elastic supply during june as the weather does not permit the roses to be grown according to the demand
Let me explain the price differences for each pair of goods in terms of the laws of supply and demand:
(a) Natural diamonds and zircons (human-made diamonds):
The price difference between natural diamonds and zircons can be explained by the laws of supply and demand. Natural diamonds are formed deep within the Earth over millions of years and are relatively scarce, which means their supply is limited. On the other hand, zircons are synthetic or human-made diamonds, which can be produced in a laboratory at a lower cost. The law of supply states that as the supply of a good increases, its price tends to decrease. Therefore, zircons, being more readily available due to their synthetic production, will have a lower price compared to the rarer and more expensive natural diamonds.
(b) A loaf of bread baked today compared with day-old bread:
The price difference between freshly baked bread and day-old bread can also be understood using the laws of supply and demand. Freshly baked bread is desirable as it is still soft, aromatic, and retains its freshness. Due to its higher demand, bread that has just been baked is likely to have a higher price. However, as time passes, the quality of bread deteriorates, making day-old bread less desirable. The law of supply and demand suggests that as the demand for day-old bread decreases, its price will lower to incentivize buyers.
(c) Roses in January and roses in June:
The price difference between roses in January and roses in June can be explained by the laws of supply and demand. In January, roses are out of season, and their supply is limited. As a result, the scarcity of roses drives up the price since they are in high demand, especially during events like Valentine's Day. However, in June, roses are in season, and their supply increases significantly. The law of supply states that as the supply of a good increases, its price tends to decrease. Consequently, the increased availability of roses in June will result in a lower price compared to the more expensive January roses.
Let me help you understand the difference in prices for each pair of goods in terms of the laws of supply and demand.
(a) Natural diamonds and zircons:
The difference in prices between natural diamonds and zircons can be explained by the laws of supply and demand. Natural diamonds are formed under intense heat and pressure deep within the Earth's mantle, making them rare and valuable. Due to their limited availability, the supply of natural diamonds is relatively low. On the other hand, zircons are artificial diamonds created in a laboratory. They can be produced in large quantities and at a lower cost compared to natural diamonds.
According to the law of supply, the quantity of a good supplied will increase as its price increases. Since the supply of natural diamonds is limited, their higher price is a reflection of their scarcity. The law of demand states that as the price of a good increases, the quantity demanded tends to decrease. In this case, the higher price of natural diamonds compared to zircons will lower the demand for natural diamonds, while zircons, being a more affordable alternative, will likely experience higher demand.
(b) A loaf of bread baked today compared with day-old bread:
The price difference between a loaf of bread baked today and one that is a day old can be explained by the laws of supply and demand as well.
Freshly baked bread is considered to have higher quality because it is still warm and has a fresh taste and texture. As a result, the demand for a loaf of bread baked today is generally higher compared to day-old bread. The law of demand indicates that when the demand for a good is high, its price tends to be higher too.
On the supply side, bread is perishable and has a limited shelf life. As time passes, the quality of the bread deteriorates, making day-old bread less desirable. Therefore, the supply of day-old bread is often higher compared to fresh bread, as bakers try to sell their unsold inventory at a lower price before it becomes unsellable.
(c) Roses in January and roses in June:
The price difference between roses in January and roses in June can also be explained by the laws of supply and demand.
In January, roses are not in season and are harder to find. The reduced supply of roses during this period, combined with occasions such as Valentine's Day, where the demand for roses is traditionally high, leads to an increase in the price of roses. The law of supply suggests that a lower supply will lead to a higher price.
In June, roses are typically in season, and their availability is higher. With a higher supply of roses, the price tends to decrease because suppliers have more stock to meet the demand. The law of demand indicates that when the supply of a good is high, its price tends to be lower.
Understanding the laws of supply and demand can help explain why different goods have different prices based on their availability, desirability, and market conditions.