Two disadvantages to automation are that it costs more and it is not easily changed. 6. A products margin is determined by subtracting its manufacturing cots (labor and material) from its price. Logically, higher prices and lower labor and material costs result in higher margins. Keeping in mind the customer buying criteria, how would you increase margins for a low end product?
According to Price (£) vs. Demand of Californians graph, it shows the negative relationship between price and quantity demanded. The higher the price of the product, the lower the quantity demanded would be. Or the lower the price, the higher quantity of Californian would be demanded. b) Elasticity of demand is a measure of how much the demand for a product changes when the price changes with all other factors held constant. It varies among products because some products may be more essential to the consumer.
If there is a large increase in some of the figures of the expenditure, it could mean that there would be either a large decrease in the profits made by the company or that the company’s loss figure has increased suddenly. If there was a decrease on some of the figures in the expenditure, then this could mean that there has been a sudden increase in the profit they are making or the loss figure has decreased suddenly. Increasing VAT If there are increasing prices of VAT, then the company will need to make sure that this doesn’t affect the company to bad. The
Those who consider it to be a negative term, mainly the average consumer, would define price gouging as taking advantage of or exploiting in times of need by charging unfair and unreasonable prices beyond normal. On the other hand, a business owner or an entrepreneur would define it as turning a profit on goods which have suddenly become much more expensive to obtain or produce because of increased demand possibly due to an emergency or sudden event. However, some free market economists reject the term altogether and suggest that “higher prices can be viewed as a valid system for rapidly distributing scarce resources to those who need the highly desirable resources and sets off an economic chain reaction that ultimately remedies the shortages” (Price gouging, 09). Over thirty of the states in America have anti-gouging laws but the definition of price gouging vary from “excessive and unjustified” price increases or “unconscionable pricing”, to percentages amounts of previous prices, to “unjust or unreasonable profits in the sale of necessities” (Antitrust - Fuel and Energy Committee, 06). So price gauging may not be easily defined but it does mean something to those it affects.
By contrast, the price elasticity of demand tells you “how much” quantity demanded changes when price changes. It shows the responsiveness of a change in quantity demanded to a change in price. [text: E p. 114; MI p. 114] 2. Why do economists use percentages rather than absolute amounts in measuring the responsiveness of consumers to changes in price? There are two basic reasons.
The higher the price of a good the more supply of the good will be placed into the market. Conversely, as the price falls, the less of a supply of the good will be placed into market. Determinants of Supply Supply is determined by the cost of the resources needed to produce the good, technologies used in production, any taxes or subsidies that the producer receives, the cost of goods that are comparable or not, the outlook of the producers, and how many sellers are in the market. As these determinants change there will be a corresponding change within the supply side of the
As the time horizon increases, variable costs rely less on existing factors and restrictions and therefore will begin behaving differently which will in turn affect the cost of production (Wright, 2007). The second way a firm that’s into profit maximization can decide its greatest level of output is by way of the marginal revenue -- marginal cost method. This is done by subtracting the marginal cost from the marginal revenue that a product generates. Using marginal cost and marginal revenue as the bases, profit maximization will be obtained at the point when marginal revenue is equal to marginal cost. If the marginal revenue is greater than marginal cost this would be when a profit maximizing firm would need to increase production until marginal revenue is equal to marginal cost.
Consumer price and producer price in 2009 to 2012 continue to drop and raise the price for consumers was not steady. The direction and magnitude of price change in the Producer Price Index for finished goods anticipates a similar change in the Consumer Price Index for all items. When this assumed relationship is contradicted by the actual movements of the two series. The answer is that conceptual and definitional differences between the PPI and CPI—differences which are consistent with the uses of the two measures—contribute to the differences in their price movements. A primary use of the PPI is to deflate revenue streams in order to measure real growth in output.
The elastic VS inelastic states that the law of demand depends by how much quantity demanded responds to a price change. When a price change causes larger change in quantity demanded then the price would be elastic. However when a price change causes smaller then the demand is elastic. The law of demand states that as prices raise the people would like to buy less and the quantity demanded falls. As the prices fall, the people would like to buy more and the quantity demanded increases.
This means that as there is a substantial amount of excess supply prices should be cut heavily in order to increase the demand for this stock. If Monsoon ignore how much excess supply there is when deciding at what extent to cut prices they wouldn’t know how much supply there is to actually sell and therefore may try and sell it at too high a price, therefore causing demand to rise slower than it potentially could, should they discount the prices further Secondly, it is important to consider how quickly stock will go out of fashion. If some of the surplus clothing stays in fashion after the seasonal period, consumers are more likely to buy it at a higher price. This could affect the extent as to how much Monsoon cut prices because if the clothing goes out of fashion they will have to cut prices further, in order to sell the excess supply; getting rid of stock. It is important to consider how expensive the clothing was to buy in, in order to try and maximise