Sunday, February 23, 2020

Income and Substitution Effects of a Price Change Essay

Income and Substitution Effects of a Price Change - Essay Example Complete, reflexive and transitive are the axioms of consumer theory. The theory of consumer preferences can be formulated on the basis of the above axioms (Samuelson, 1956. p.3). The two axes represent a typical consumption of a consumer of goods 1 and 2. A consumption bundle (x1,x2) is taken along with the other consumption bundles that are preferred weakly to the selected bundle. This is what we mean by a set that is weakly preferred. The indifference curve is formed by the bundles forming the boundary of the selected set i.e. the bundles that will provide the consumer as much satisfaction as the selected bundle. The indifference curve can be drawn through any consumption bundle. One of the disadvantages in using indifference curve analysis is that it shows only the consumption bundle perceived by the consumer is indifferent. It fails to capture the bundles which are better or worse. One of its characteristics is indifference curve that represents distinct preferential levels cannot cross. The rate at which the consumer likes to substitute goods is called the marginal rate of substitution. MRS is derived from the slope of the indifference curve The budget constraint of the consumer is p1x1+p2x2=m. The consumption of good 1 is taxed at a rate of t. The new budget constraint will be (p1+t)x1+p2x2=m. The effect of the change in price on the demand conditions is shown in the figure below. The set of bundles that are preferred by a consumer to the optimal choice is above the indifference curve and the set of bundles that is against the affordability is above the indifference curve. Hence the optimal choice is the best bundle that can be chosen by the consumer. Now, an income tax is taken into consideration which raises the revenue by the same amount as the tax. The form of that budget constraint will be p1x1+p2x2=m-tx1*, where tx1* is the rise in revenue because of tax.

Thursday, February 6, 2020

THE LUXURY FOOD SERVICE INDUSTRY Essay Example | Topics and Well Written Essays - 2000 words

THE LUXURY FOOD SERVICE INDUSTRY - Essay Example The world is also experiencing increasing urbanization as several people shift from rural places to urban centers. As people move from rural areas to urban centers, they tend to change their lifestyle trend especially their eating habits (Pride and Ferrell 26). As the number of people working in office increases, people tend to get less time to prepare foods at their homes. Such consumers under constraint of time usually opt to each outside in restaurants and cafes’. Other factors seen to have led to the high growth in food service industry include tourism. Some investors opt to put up luxurious food service industry for purposes of hosting tourists that visit the country (Great and Gavin 6). Britain is one such country that has witnessed an increase in growth of food service industry over the last decades. The high growth rate has mainly been seen in London the capital city. Among the restaurants based in London include Hakasan, Nobu and Zuma. His are food joints that have been able to build luxury element within the service industry. The question that may be asked is, ‘How have these restaurants been able to build such luxury, and what tools have the restaurants used to build the luxury element? The purpose of this paper is to examine the marketing tools that have been used by Hakasan, Nobu and Zuma to build the luxury element within the foodservice industry. This will also involve analysis of the 7Ps employed by the three restaurants. The paper will conclude by the most important elements derived from the study of luxury service industry in general particularly the food service industry. Finally, the paper will provide a recommendation regarding what has been learnt from the study. The Chartered Institute of Marketing (2) defines marketing as the management process which entails identification, anticipation and satisfaction of the