mgnt_6005_Chapter4_case_analysis

mgnt_6005_Chapter4_case_analysis - MGNT 6005-Managerial...

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MGNT 6005-Managerial Economics Professor J. Elu, Group Members: Verda Weekes, Joel Njenga, Mohammad Aladalh and El Drame Case Analysis: Why Tracking Consumer demand is so tough.
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Case: Why is Tracking consumer demand so tough? Overview: Economists in the past used economic theory to explain consumer behavior in terms of what effect would be created if consumer wealth was increased or decreased. How their personal preferences, spending and saving habit all together changed as a result. By doing so, it was fairly simple for economists to predict consumers demand. However, as technology continues to advance and businesses as well as consumer rely and use more of it, economists are finding it more and more difficult to accurately predict and measure between demand, quality, price and value for product such as telephone services, illegal music download etc. Problems: According to the article, economists have used the wealth effect theory in the past to predict consumer demand. However, this theory failed to explain consumer’s behavior after the 1 stock market crashed in 2000-2002. The following are the problems attributed with this irregularity in the economic theory that states that increases in consumer wealth results to increase in household spending. Widespread use of technology especially in the service sector, has led to difficulty
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mgnt_6005_Chapter4_case_analysis - MGNT 6005-Managerial...

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