China on the mind at FAO Schwarz

Essay by yukahamada22High School, 11th gradeA, January 2008

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This article is about the decrease in demand for toys from Schwarz that are made in China because of the lead tainted and faulty designed toys that are not suitable for young children.

Demand is the relation between the prices of a good or service and the quantity that people are willing to purchase (1).The factors that may change the demand for products are: changes in the tastes, number and price of substitutes, consumer’s expectations. “‘A lot of concerned parents and grandparents have been asking about whether the products are made in China,’ said Vanessa Guardian, an employee at the upscale Manhattan toy store. She guided those customers toward products made in other countries, like the Steiff and Gund lines of German teddy bears.” There are many substitutes to Chinese toys and also due to the lead paint coating, design of the toys and products that are from China take up majority of the market of toys in FAO Schwarz, the entire demand for toys decreases.

The initial price for toys was at P1 and the quantity demanded was at Q1. Since many customers does not like toys made in China for the reason that it might be dangerous, the demand for the toys decreases which shifts the demand curve to the left from D1 to D2 in the graph. Also, the price does not change in response to the change in demand; there occurs a surplus. (the graphs can't be put on the essay)However, as stated in the article, “but the Sinophobes weren't taking a bite out of business.” The demand was once again raised in the toys from FAO Schwartz, decreasing the surplus especially at Thanksgiving Day. “Thanksgiving Day sales were a third higher than last year's and overall sales are up 68 percent year-to-date”. When the...