StudentShare solutions
Triangle menu

Recession and Cosmetics Demand - Research Paper Example

Nobody downloaded yet

Extract of sample
Recession and Cosmetics Demand

Therefore a decline in their real income makes goods and services relatively expensive.
In economics demand is influenced by a number of factors and this include price, price of substitutes and income. For a normal good as the price of this good increases then the demand for this product declines, assuming that all the goods in an economy are normal goods and that cosmetics are substitutes to highly luxurious goods then it is evident that a decline in the income of consumers will result into a relative increase in the price of the luxurious goods which will be substituted with less expensive cosmetics. This is referred to as the substitution effect, the following diagram shows the effect of an increase in price on the demand.
Consumers want to maximize their utility, in order to maximize utility consumers want to increase the total units of goods consumed, however the total units of goods and services purchased is determined by the budget line and the indifference curve, for this reason therefore the decline in income results into a decline in the real income and therefore consumers will only purchase a few units of goods, in order to maximize utility the consumer will opt to purchase...
The article states that the employment level and investment in the cosmetics industry increases in a recession, this can be explained by the multiplier effect, as the level of demand increases as discussed above investors anticipate higher demand and as a result they invest more, more investment mean that the level of employment in this industry will increase. Therefore investment is influenced by the high demand in this industry.
This scenario can also be explained by the inferior good concept, the demand for inferior goods decline as the income of consumers increases, at a certain level of income consumers no longer demand the inferior goods and therefore it is true to state that as the income level declines the inferior good demand increases, the following diagram shows the changes in the demand curve as income increase for an inferior good:

From the above diagram it is evident that as the level of income increases the demand increases however at a certain level of income an increase in income will result inot a decline in demand. For this reason therefore cosmetics especially lipstick can be considered as an inferior good whereby during economic hardships and the level of income is declining the demand for this good increases, it is also true that when income increases the demand for this good declines.

From the above discussion it is evident that the article states that the cosmetic industry does not change as expected, in the first case we associate cosmetics with the theory of inferior goods whose demand declines as income increases and therefore demand may increase as the level of income declines in a recession. Consumers also experience an increase in relative prices as their real income declines, this means that as consumer ...Show more


This paper analysis the demand of cosmetic in a recession based on the demand theory, inferior goods theory, the substitution effect and the income theory, a recession refers to a period whereby the economy experiences a decline in output. In a recession employment declines and this means that per capita income declines, as a result the demand for goods and services in the economy declines as income declines…
Author : kerlukeeula
Recession and Cosmetics Demand essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the research paper on your topic
"Recession and Cosmetics Demand"
with a personal 20% discount.
Grab the best paper

Check these samples - they also fit your topic

Also, economists forecasted that the contraction is not permanent; however, the abrupt shifting has worsened the EU recession (Pylas & Rising, 2013). In world market, this may result to the withdrawal of investments and collapse in confidence. For instance, countries worldwide may withdraw their investments in Germany, as they believed that the latter’s economic frame is unstable, and would just compromise their own problem.
7 pages (1750 words) Research Paper
Aggregated demand
It is pointless to say that recession has been responsible for the decline in the economy (black enterprise, pp 107). Although, there is high possibility that a perfect hit of demographic and economic factors- from escalating prices of gas, to stagnant wages, to re-urbanization, to technological changes leading to changes in consumption has basically changed Millennials’ game.
3 pages (750 words) Research Paper
Demand Management
This is because according to Mentzer and Moon (2004), forecasting is an important mechanism for matching demand and supply and could therefore be used to undertake sales and operations planning for businesses. Meanwhile, demand and supply matching has been said to be an important element in planning and decision making for businesses (Mentzer and Moon, 2004).
3 pages (750 words) Research Paper
Animal testing on cosmetics
Many alternatives have been supported by the anti-test supporters including computer simulation model but they have been declined due to their inability to calculate all the variables that show up when an animal is used. As shown below there are many reasons why animal testing is still a practice more so in the cosmetic field in spite the criticism.
6 pages (1500 words) Research Paper
Financial Recession
But, both the residents of Kingston upon Thames and London suffered a lot due to financial recession. Recession affects more on household types who are primarily reliant on savings for their income. This is mainly because of the interest rates have dropped.
4 pages (1000 words) Research Paper
Quantitative demand
This will be illustrated by the price elasticity of the cigarettes, which shows the proportional change in the quantity demanded due a percentage change in its price. Another factor that assists in the demand analysis is
9 pages (2250 words) Research Paper
So, what could be the solution to this? Well, a lot of economists would say that it would be best for the United States to focus
1 pages (250 words) Essay
CoverGirl Cosmetics
But even after 20 years of its acquisition, the brand is still struggling to come out of US market and become globally renowned
2 pages (500 words) Research Paper
CoverGirl Cosmetics
Financial ratios are one of the ways to measure the performance of any organization and these ratios also reflect the objectives of the organization. As the strategies
2 pages (500 words) Research Paper
Recession in Dubai 2008
According to Kganyago (par 3), some 34 million people lost their jobs following the devastating consequences of the crisis. With its relatively attractive
3 pages (750 words) Research Paper
Hire a pro to write
a paper under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
Comments (0)
Click to create a comment
Let us find you another Research Paper on topic Recession and Cosmetics Demand for FREE!
Contact us:
Contact Us Now
  • About StudentShare

  • Testimonials

  • FAQ

  • Blog

  • Free Essays
  • New Essays
  • Essays

  • The Newest Essay Topics
Join us:
Contact Us