Personal Finance Assignment

...

consumers various options, so that if they are willing to pay more for a higher quality product, they can. Or if they would like to pay less for a decent product, they can do that as well.

7. In capitalism, most businesses have a profit motive. Describe at least one reason that businesses with a profit motive may be helpful for society and at least one reason that they may be harmful for society. Then, explain whether you think profit motive is a good thing or a bad thing for society. (4-7 sentences. 2.0 points)

A profit motive for businesses can be both a blessing and a curse for consumers. It can be a blessing in the fact that they are willing to drop prices to compete with other companies so that they sell more and in turn receive more profit. Though, it is also a curse in the way that if a company has control of it’s area, (i.e. it’s the only company providing internet to an area), it can easily jack the prices up as high as it would like and consumers would either have to pay that price, or go without.

I believe that a profit motive is mostly good for consumers and society because it is very rare that only one company or business will be providing a certain product. With that being said, competition will impact their profit motive and most often result in benefits for the consumer.

8. Choose a well-known company that you know of, and describe its direct and indirect competitors. Describe at least three direct competitors and three indirect competitors. (6-12 sentences. 3.0 points)

McDonalds is a very well-known company, with many competitors, both direct and indirect. We’ll start with it’s direct competitors. McDonalds is in direct competition with other companies such as Burger King, Dairy Queen, and Jack in the Box. These are all well-known companies that provide the same products, therefore competing directly with McDonalds. Indirect competitors would be companies such as Popeye’s, KFC, and even a pizza joint such as Papa Johns. These companies all sell foods that can easily replace the food sold by McDonalds, therefore competing indirectly, as they are still selling foods.

9. Imagine that you are buying a new computer and comparing different brands and prices. Describe at least two nonprice competition factors you might consider when making your decision. (2-4 sentences. 2.0 points)

I would look into how long each computer tends to last. I would want to know how long I could have each computer on average, before something happens and I would need to replace it or repair it.

I would also look into what all comes in the computer. What processors, what kind of programs I can run, what comes pre-installed, and what all comes with the computer in general.

10. Describe a real or made up but realistic example of a product that went through a time of scarcity, when demand was greater than the supply. What is the product, and why do you think it became scarce? What happened to the price of the product when it was scarce? (3-6 sentences. 2.0 points)

When the Xbox One first came out, not enough were made to sufficiently sell to every consumer who wanted one. Therefore, they ran out and people began paying more to be able to get their hands on it before someone else could get it. People stayed outside of stores to have the chance to buy them when they came in. Other people would buy them then sell them for $100-$200 more than retail value on Craigslist, and they were successful. People were willing to pay that much just to get their hands on it because it was new and not enough of them were on the market.

11. Describe a product, and then give an example of a time when the demand for this product might be high and the demand for this product might be low. (2-4 sentences. 2.0 points)

The Tickle Me Elmo. This product came into the market and was immediately in high demand as it was around christmas time. This product flew off the shelves on black friday and almost every other day leading up to Christmas that year. Though the following summer, they were not selling near as well, as the demand had gone down. The price also fell.

12. Describe an example of a product that has highly elastic demand. Describe at least two factors that make this product’s demand so elastic. (4-6 sentences. 2.0 points)

Something as simple as pizza can be extremely elastic. When Little Ceaser’s came out with their $5 large pizza, other companies had to step up their game, by lowering their prices. This is an example of how competition can make this product elastic. Also, the price of their product can make it elastic. Little Ceaser’s has been booming since they came out with their $5 pizza, which is a quick and easy solution for lunch or dinner for many families, which adds to the appeal

...