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The Economics of LPs & CDs

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Introduction

The Economics of LPs & CDs The case studies the reasons for shifts in demand for LPs and CDs, the particular factors affecting the demand, the limited supply for LPs and price change of records. Demand reflects both consumer willingness and consumer ability to purchase particular good at each possible price. The ability to purchase goods is based on income, the greater the income, the greater this purchasing ability. An increase in income will normally increase demand- that is, at each price level the quantity demanded will increase. The shifts in demand for goods and in this case for LPs and CDs might be determined by several factors, changes in income, changes in prices of related goods, changes in price expectations, changes in the number of consumers and changes in tastes. A change in any of these determinants could cause the demand curve to shift. Market demand is a sum of individual demands of all consumers. The demand curve will shift if the number of consumers changes. ...read more.

Middle

The climb in values comes as sales of new compact discs overtake LPs. A research by HMV Shop, which has 67 stores, shows that although CDs have been around since 1983, half of all CD-users began buying their discs in the last year. Another factor for still the huge demand for LPs is that the supply is getting lower with time. This is due to the long-time ago edition of particular records by artists whose albums have garnered massive amounts of critical acclaim and are no longer produced or by artists who had already passed away like Tupac Shakur, Jim Morrison or Elvis Presley. People will buy their favorite artist's record no matter at what price the record companies sell those albums. In this case the LPs' market experiences the so-called market shortage --- an excess of quantity demanded over quantity supplied at a price which record stores give. ...read more.

Conclusion

will be wide spread, and also the mp3 players, which are available only on the Internet, for the time being. As soon as these players hit the market, the demand for CDs and vinyl will head downwards. This will be due to the improved sound quality of the digitally mastered mini-discs, and the fact that a person would be able to listen to 150 tracks, for example, instead of 15 as it is on a tape, CD or vinyl. People can listen to a song from a particular album and at the same time watch the video of the song on a DVD. But that of course depends on the price of the new technology. If the price would be acceptable, the buyers would be willing and able to buy a greater quantity of these products. The music industry is a stable one. People will always by music and it is all the same what they buy CDs, LPs, tapes, mini-discs etc. The format strongly depends on the person and his taste, and less on all other factors for shifts in demand. ...read more.

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