Increase In Demand Due To The Income example essay topic

For as long as I have been in this school, there has always been a kiosk and a dining room, plus the presence of vendors down at the entrance at the morning and afternoon. The dining room has change almost every year since my first year in this institution in 4th basic, but the kiosk has never changed of being in charge of the parent directive, at least until this year. This year, the school board decided to change the control of the kiosk to the same company that runs the dining room, Eurest. In this essay, I will try to review the problems that the new kiosk has had to put up with, specially the problem that involves demand.

Indeed there have been many changes this year, and for the best, since new products have been introduced, such as 'sopaipillas', 'calzones rotos', and many others. Everything seemed good through the first half of the year, but nothing is perfect. Problems started to appear. Products started to disappear, whilst other were introduced, such as the 'calzones rotos'. Also prices gradually started to rise. This has decreased demand, especially during the lunch break, since that is the time were the kiosk has more competition, because during this time, the dining room is selling lunches to students and because a man in a trolley goes to the entrance of the school to sell snacks, known to everyone as Juan Carlos.

Maybe this doesn't concern to Eurest, since they run the dining room also, so still, they have a majority in the market shares that is Saint John's food vendors, but clearly is not as much as it is during the first to breaks, when they have a monopoly. The decrease in demand has been very clear, because during the first half of the year you could see easily that many students went to the kiosk to buy some food, and you could see really long queues, most of the times the students had to run to avoid these queues, during all breaks, even during the lunch one. But, from half of the second trimester and on, these queues have been shortening down, every day a little bit more, especially during the lunch break, although you can say that for some products is a bit of a strategy, like soda can's. The price of these rose only twenty pesos, making a change of only 6.6%, but since we are in summer, and we are experiencing some hot weather now, the demand for any kind of drink would go, but I think that for this to work, they have to raise every single liquid products' price up, which they haven't.

So maybe it is only a coincidence. The change on demand has been clearly notorious, but I thought it might be pertinent to make a little questionnaire to several students, to get their opinions on this matter (To see the questionnaire go to annex 1). A total of four simple questions were asked to thirty students from first, second and third medio. Considering that there are more than a thousand students in this school, and that between those three levels there are at least two hundred and fifty students, the results are pretty insignificant, but they are very good to have an idea of what I am talking about. Basically, twenty five out of thirty (83.3%) told me that they are very displeased with the sudden rise of prices, whilst the other five (16.6%) told me that they were unconcerned about this. But, later when I asked them the second question all 30 answered that they were still buying at the kiosk.

This is funny, since they are unhappy about the prices, but they still buy the products. This clearly shows us, that the price elasticity for these products is very inelastic, since there is a less than proportionate decrease in quantity demanded. This can be seen in the next graph. After the third question, sixteen out of the thirty students (53.3%) answered that if their income increases they would buy more of the products, and the remaining fourteen (46.6%), said that they would spent the same as before and the rest of their income would be saved. This, tells us that the income elasticity of demand is also inelastic, meaning that if there is an increase in income, there would be a more than proportionate increase in quantity demanded. This, also, can be seen on the next graph.

And finally for the final question, nobody could say to me why the kiosk chose to raise its prices. Clearly we have somewhat of a situation here, since there is an increase in demand due to the income raise for some students, but this increase is lower than the decrease in demand that have regular students. We can see, that the kiosk in this case is like a restaurant after its first week of opening, since during the first week the restaurant does everything possible to win their clients, but after they have settled down, their only concern is to keep these clients, instead of worrying to have more customers. The same happens here during the first half of the year, the kiosk, was almost perfect, but then, from the half of the second trimester and on, they stopped worrying about the costumers, thus the stop worrying about the students.

Just like a restaurant, they stopped worrying about us, and started to worry about themselves, so they raised prices to have more profits. My only advice to the school directive, is to find someone that starts worrying about the students, since we are in a school were the most important thing is us.