miércoles, 7 de noviembre de 2012

Market conditions and business environments


Supply and demand

-         Consumers demand products and services.
-         Businesses supply products and services.
-         Market depends on both demand and supply.

Demand

Demand is the quantity of particular goods or services the market is willing to buy.
The law of demand:
-         It states that when the market demands a high quantity of a good or service the prices will be high.
-         When the market demands a low quantity, the prices will be low.
Consumer demand depends on:
a)      Price of goods:
-         Demand will depend on the price of the product or service.
b)      Price of substitute and complementary goods
-         Substitute goods are those that are easily replace other. Ex: tea for coffee.
-         Complementary goods are goods used with another good. Ex: DVDs with DVD players.
c)      Consumer income
d)      Preferences and tastes
-         What consumers like and choose affects demand.
-         Image and advertising influence consumer tastes.

Supply

Supply is the producer side of the market. Supply refers to the quantity of goods and services that producers and sellers are willing or able to sell.
The law of supply:
-         It states that as price rise, the quantity supplied tends to increase.
Supply depends on:
a)      Cost of production
b)      Changes in technology
c)      Desire to own and operate a business
      d)   Environmental and other conditions