Supply and Demand.html

Supply and Demand

There are several basic relationships in economic theory, such as supply and demand or costs and revenues. A market is a place where potential buyers and sellers come together. All of them have their own perspectives on the market and differ in how much they are willing and able to buy or sell. The mathematical relationships that express these behaviors are called supply and demand functions.

The demand side of the market shows how buyers behave.  For most goods and services, as the price decreases, the demand for the goods increases.  This behavior is described by the Law of demand.  This function shows that as price changes, the quantity demand moves in the opposite direction.

The supply side depicts how the sellers or suppliers of a good perceive the market.  They see the same prices as the buyers but react to these in the opposite manner.  As the prices increase the quantities supplied by sellers increase and vice versa.  As these factors change, managers must be able to incorporate these changes into the supply function and the decision making process.

The market for goods and services are rarely in a state of balance and constantly changes.  Both buyers and suppliers in the market aspire to an ideal situation called market equilibrium, the point at which supply and demand functions are equal. It is the point at which buyers and sellers agree as to the amount that will be sold as well as the price that will be paid.

Comparative Statics Analysis.html

Comparative Statics Analysis

“Managers typically control a number of the factors that affect product demand or supply. To make appropriate decisions concerning those variables, it is often useful to know how altering those decisions affect market conditions. Similarly, the direction and magnitude of changes in demand and supply that are due to uncontrollable external factors, such as income or interest rate changes, need to be understood so that managers can develop strategies and make decisions that are consistent with market conditions” (Hirschey, 2009, 133).

“One relatively simple but useful analytical technique is to examine the effects on market equilibrium of changes in economic factors underlying product demand and supply.  This is called comparative statics analysis.  In comparative statics analysis the role of factors influencing demand is often analyzed while holding supply conditions constant” (Hirschey, 2009, 133).

“Similarly, the role of factors influencing supply can be analyzed by studying changes in supply while holding demand conditions constant.  Comparing market equilibrium price and output levels before and after various hypothetical changes in demand and supply conditions has the potential to yield useful predictions of expected changes” (Hirschey, 2009, 134).

Reference:

Hirschey, M. (2009). Fundamentals of managerial economics, (9th ed.). Boston, MA: Cengage Learning.

A surplus refers to the demand falling short of the supply.  A shortage, on the other hand, refers to the demand exceeding the supply.  Management must be aware of the market imbalance and make adjustments accordingly.  The most time efficient solution is to increase the price in the case of a shortage or decrease price in the event of a surplus.

Goals of a Company.html

Goals of a Company

What is the primary goal of a company? Is it profit? Business companies exist to earn profit, even though there are other goals. In most cases, if at least a normal profit is not earned, companies dissolve and owners place their wealth in investments that have the potential of giving them the desired returns. Managers need to consider various questions regarding the benefits and costs of a particular activity or investment before they make any decisions for the company.

Before making a decision for a company, managers must try to answer various questions that address long-term and short-term considerations. Your decision must address the following questions:

• Will the particular activity benefit the company only in the short term?
• Does this decision have an impact on the company’s success in the long term?
• Will the particular activity have a negative impact in the short term and positive effects only in the long term?

Managers must also consider risk in the decision-making process. Two investments may show overwhelming profits. However, it is unwise to compare results of two investment possibilities with two different chances or probabilities of being realized.

So what should be the ultimate goal of a company? It is to maximize its value. In other words, the company should try to maximize profits and minimize risk to the owners. These are long-term goals of a company, as are most goals of any company, because companies rarely plan to exist for just a short duration.

Fill in all the assignment paper details that are required in the order form with the standard information being the page count, deadline, academic level and type of paper. It is advisable to have this information at hand so that you can quickly fill in the necessary information needed in the form for the essay writer to be immediately assigned to your writing project. Make payment for the custom essay order to enable us to assign a suitable writer to your order. Payments are made through Paypal on a secured billing page. Finally, sit back and relax.

About Wridemy

We are a professional paper writing website. If you have searched a question and bumped into our website just know you are in the right place to get help in your coursework. We offer HIGH QUALITY & PLAGIARISM FREE Papers.

How It Works

To make an Order you only need to click on “Order Now” and we will direct you to our Order Page. Fill Our Order Form with all your assignment instructions. Select your deadline and pay for your paper. You will get it few hours before your set deadline.

Are there Discounts?

All new clients are eligible for 20% off in their first Order. Our payment method is safe and secure.

Hire a tutor today CLICK HERE to make your first order