Lastly organizations must all seek the greatest profits meaning nothing else but profits. When these conditions are meet which isn’t often, organizations can supply goods following their own self-interests in a predictable manner to the market. Suppliers utilize the demand curve to determine the amount of productivity and the right cost for the market. The requirement that all the firms are large ensures no organizations will be able to gain more than another. These types of conditions keep firms from monopolizing the market.
In the next chapter we learn how sellers set the prices in which we pay for an item, why things cost what they do and not what they are worth. The key to prices are sellers that can sell their products as close to the cost of making the item. In a regular market, prices are the key. Businesses cannot afford to charge a higher price, customers are normally looking for a lower price and the lower the better, in today’s economy. Many customers ask the question, “What affects prices?” We learn that things happen beyond the sellers’ and buyers’ control to raise and lower prices in today’s market.
A monopolistic Competition market has many sellers and provides good substitutes but differentiates their products from other companies. The nature of competition in a monopolistic market focuses on marketing, special features and pricing (Colander, 2010). Kudler Fine Foods has only a few competitors in the market that offers the same products and service to its customers. This market structure has negative and positive effects. A positive effect of Kudler Fine Foods in a monopolistic market structure is that they lead in the market and can increase competition between companies and make massive profits by setting higher prices (Colander, 2010).
A demand curve shows the relationship between the price and quantity of a product that consumers are willing to buy. In business, demand curves are useful when testing and measuring the supply and demand of certain products within a competitive market. Graphed over time, demand curves assist businesses in determining if a certain product is actually profitable at the pricing point on the curve where it is in demand. Price Quantity There are many things that influence demand of product. In Chester Zoo’s case, this could be the economic environment, as Chester Zoo are dependent on their customers and the customer generally do not have a lot of money to be able to afford the tickets to get into the zoo as well as pay for the important things they have to pay for, then the zoos money that they earn will fall because lower amounts of people are coming to the zoo.
Monopoly is where only one company is providing a good and or service. Businesses may maximize profit in each market type by agreeing upon a lay down price. Perhaps businesses cannot agree upon a set price then the price is going to be above marginal cost. If the company is in competition with other companies in the same market, making decisions about prices, how they advertise, output, etc, can influence the profits of every, if not all companies in the same market. This is where management gets involved to ensure the company that their strategic way of thinking and planning can and will allow the company to gain
To stay profitable, sellers must receive minimum prices that “cover” their marginal costs (McConnell et al., 2009). If selling a particular service generates more revenue than what it costs then sell it, if not then don’t. Pricing and Non-Pricing Strategies Pricing strategy is how a business depends on how to maximize profits. According to (McConnell et al., 2009) not all sellers must create or accept a “one-for-all” price. Most firms have “market power” or “pricing power” that allows them to set their services prices in their best interests.
In a highly competitive business world, on a firm’s priority list is the subject of increasing profit and reducing cost. One might than pose the question, has this put them out of business (mom and pop store)? The answer is absolutely not, but rather, they too benefit from cheaper prices as they continue to buy in bulk and continue to operate as the name suggest, convenient
Supply and Demand Simulation Amanda Huenefeld ECO/365 Sadu Shetty January, 14, 2013 Introduction Supply and demand are the two influences that govern pricing in the larger picture of a viable economic market. The two factors are like two forces. Equally the conclusive levels of supply and demand, and the comparative levels of the two in contrast to one another, are significant. The standard of supply and demand is that if one or both varies, there will be a transient difference in the amount of product manufacturers are equipped to sell and the quantity that consumers are willing to buy. This difference will cause the market price to increase or decrease when necessary until the quantities are the same.
However using the curve we have to set a fair price to get rid of a lot of accounts at time and sell them in bulk. Setting a fair price helps the flow of the debt to come in out and keeps the demand and supply at an equal level. Microeconomics creates models that are effective when looking at the markets supply and demand for certain products it relies a high degree of competition which means there are enough buyers and sellers for bidding to take place which raises and lowers prices. The equilibrium is the point of which all bidding has been done and no one at this point will go higher or lower. With this said in the simulation the elasticity is the quantity how many apartments were vacant and how the demand of these apartments were not being met because of the price.
Governments may choose to increase minimum wage on an arbitrary basis, making it difficult for companies to hire individuals at a consistent market rate. Government price controls distort the economic theory of supply and demand. Supply and demand is a significant underlying feature of free-market economies. This theory allows individuals and businesses to make decisions based on self-interest. Businesses often pay individuals a wage based on current market standards.