Aeon Members Day

Demand can be define as something more than a need or desire of human being.

Diagram 1

In the philosophy of economics, the law of demand is negative relationship between quantity demanded of any good and the price charged. As shown in Diagram 1, when the price falls from P1 to P2, the quantity demanded will increase from Q1 to Q2.

AEON is a hypermarket that selling many type of product from convenience product, toiletries product, kitchen product and more. Aeon usually will do MEGA sales at certain festival and member day to boost the demand of its product and to earn more profits. 


But the QUESTION is, how can AEON earn more profits when it decrease its goods price to boost the quantity demand during MEGA sales? 

Diagram 2

Based on Diagram 2, AEON can earn profits and increase its goods demanded when the magnitude of an increases in demand is larger than the magnitude of an increases in supply. Therefore, AEON can earn more profits due to it increase the price with an increase of quantity demanded at the same time.

Reference
Graph
http://economicsexposed.com/effects-of-shifts-in-both-supply-and-demand-on-equilibrium-price-and-quantity/

Written By,
Tang Tze Yuan
0315263