Tuesday, October 29, 2019

Unit 2 Scenario Essay Example | Topics and Well Written Essays - 500 words

Unit 2 Scenario - Essay Example Preferring organic, natural and health foods, Gordon Gourmand however can cater to my choices. Having these options, 3 bags of groceries at a cost of $120 will be bought from Gordon Gourmand. The remaining amount from the budget will be spent in Northern Lake Foodstore and will be more than enough for the same number of bags of groceries costing $75. $5 dollars worth of groceries can also buy a considerable number of goods from the same store. Supposing, my income increases by 20 percent hereby raising my budget for groceries to $250. This change in income will also bring changes in the budget line for groceries. Having more money to cater to my preference of products, instead of just three bags, more groceries, probably 3 bags more will added to the groceries from Gordon Gourmand. These additional bags from the Gordon Gourmand will mean fewer groceries from the other store. My favored groceries from Gordon Gourmand therefore are normal goods. These are basis commodities which are necessary as required by my lifestyle. As the income increases, it is but natural to buy more of such products instead of alternative goods, those from Northern Lake Foodstore. If the price of a bag of groceries at Northern Lake Foodstore decreased to $20 per bag, and assuming that my income did not increase, the bulk of my groceries will be coming from the store. This price change however will not affect my budget line for groceries and surely it does not affect my previous choice of groceries. The 3 bags of preferred groceries will still be from Gordon Gourmand. However since the price of the commodities from Northern Lake Foodstore decreased, instead of just 3 bags of alternative goods, about one more bag of groceries will be bought at the store. Looking at the increase in the number of bags purchased due to the decrease in price, the demand is price elastic. The price

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