EGT 1 Task 2: Elasticity Jeffery S. Short #0257373 Element A: The world of business exists because of the consumer. Business owners are concerned if customers will purchase the goods they offer and how they will react to the constant changes that occur in the marketplace. If a business owner can estimate how consumers will react to product offerings or the changes to those products, then they can offer better services while maintaining profitability. Economists study the many variables involved in the marketplace by observing how consumers react to changes in products, pricing, supply and demand in an effort to classify or codify trends. They then develop calculations to categorize these consumer patterns, and then use them as tools to provide insight into consumer reactions and possible future buying patterns.
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.
Study the demand elasticity for its products and discuss the availability of close substitutes for its products. How does that affect pricing decisions? Analyze the company’s profitability. Identify the economy or industry influences on its costs, operations, and profitability. Describe the competitive environment in which the firm operates, the distribution of market power, and the strategic behavior of the firm and its competitors.
The balance sheet connects to income statements, in turn also connected to cash flow statement. Occurrences or a change to the net cash activities of the cash flow statement affects the balance sheet. The balance sheet is useful when estimating the potential of the organization in order for them to achieve there long-term mission. However, cash flow statement displays the exchange of currency among an organization and external agents. For example, the cash flow can be affected when the company purchases products, and if the costs of the products are an outstanding amount in turn it will affect the assets on the balance sheet.
You want to know how your product or service will stack up against your competition as well as what the demands of the market are or will be. With that being said, your supply and demand which has a significant impact on the organizational performance is reviewed. Per the textbook, supply is the number of products (goods and/or services) that businesses are willing to sell at different prices at a specific time and demand is the number of goods and services that consumers are willing to buy at different prices at a specific time (Hellriegel & Slocum, 2009,