ManEco Assignment #4

1. Why are changes of prices of commodities is very responsive to the needs

of the consumer?

Because when the price of commodities increases as a result of change it can affect also the
economy through inflation. Increase in inflation can cause several problems and
negative effects in the society . We can define commodities as a basic product
that can be bought, sold or exchange to its similar or particular product. We can also use
those products to create new goods and services that we can offer in the market.
Consumers or basically humans are very dependable on the basic products that are
available in the market, as most of us use and rely on different products that we can avail in
the market. due to the factors that affects the production and distribution of commodities, its
prices are being a f f e c t e d . W h e n i t s p r i c e s a r e a f f e c t e d , c o n s u m e r s a r e a l s o
a f f e c t e d b e c a u s e manufacturers, retailers and s ervice company will als o
increas e its pricing as a response to the current situation. One factor that we can
consider that affects the prices of commodities is the elasticity of the demand.
When the prices increase and the demand decrease of a particular product, we can define
it as an elastic because its response to the behavior of the consumers when the price changes.
Those products are typically products that are less important for the consumers or has a
substitute in the market. Inelastic refers to the product that the demand remains stable
whether there is an increase or decrease in price, most of the products are necessity of
the consumers or has a low price in the market. Based on the things that we have stated, we
can see that prices of commodities will always vary on the response and behavior of the
consumers in the market.

2. Is price discrimination considered as fair business practice. Why do companies

tend to sell commodity to different buyers at different prices?

Yes, price discrimination is considered as a business practice, because it is a pricing

strategy that charges customers for a different charge, where they can tell the customers or
consumers different reasonable prices of a certain product based on the seller thinks on what
could the customer afford to or agree to.