For the economy as a whole, demand pulled inflation refers to the price increases which results from an excess of demand over supply. It is a form of inflation and categorized by the four parts (households, businesses, governments and foreign buyers). When these parts want to purchase greater output than the economy can produce and we need more cash to buy the same amount of goods as before and the value of money falls, so they have to compete in order to purchase limited amounts of products and services. Generally, the demand-pulled inflation result from any factor that increases aggregate demand. Also, an increase in export and two factors controlled by the government are increases in the quantity of money and increases in government purchases
3. FINANCIAL RATIO ANALYSIS 3.1. PROFITABILITY (Ho, 2013) mentioned that the gross profit ratio assesses the gross profit generated per dollar sales. A drop in this ratio can signify more competition in the market, lowering selling prices or a higher cost of purchases. A rise in this ratio can signify that the firm has a competitive edge in the market and so it is able to charge higher prices for its products, or the firm is able to obtain its supplies at a lower cost.
The new relative demand curve would intersect the relative supply curve for labor at a lower relative wage. As a result, the wage relative to the rental falls. The lower wage causes both industries to increase their labor-capital ratios. According to the Stolper-Samuelson theorem, in the long run, when Home opens to trade and faces a higher relative price of cloth, the real rental on capital in Home rises and the real wage in Home falls. In Foreign, the changes in real factor prices are just the reverse.
The first one is cost of production- cause if the cost of any factor of production decreases, the quantity that producers are able to supply at a given price increases. Second is changes in government policy, as in government spending and taxation influence employment and household income, which dictates consumer spending and investment. Third one is changes in the numbers of producers increased demand to increased supply, decreased demand so it will decrease supply. There is also two terms you need to know about supply elasticity, one is if supply is elastic, a change in the price will cause a change in the number of items produced. The other is inelastic, a change in the price will not cause a change in the number of items produced.
Bulk buying economies: as a firm grows in size , it needs larger raw material , with increase in raw material firm attains bargaining power over suppliers. It purchases raw material at discount which results in lower average cost of production. 2. Technical economies: firm may use advance machinery or better techniques for the production purposes. 3.
Exactly how is demand used for the benefit of the consumer? Well the demand used by how much consumers are willing to spend on a particular product at a given time. Demand is more needed for the producers to how much of a product to supply at a given time. They can use that to their advantage by having a limited stock and jacking up the prices. The way that the consumer can use it to their advantage is by lowering the demand all the way around so that the prices of the goods will go down, due to the producers having a surplus of that product in their store.
Hence, it will be addressing and evaluating a local company of my choice. Factors affecting international trade 1. Inflation Inflation is the continuous and significant increase in general price level of the standard of living of the people of the country. The higher the inflation rates the lower consumption rate. Hence, if a country’s inflation rate increases compared to other countries with which it trades, its current account will be expected to decrease, other thing being equal.
Usually, if there is demand, there is also supply involved. The essential factor of the increasing and decreasing of demand and supply are normally depend on the price of the good. Hence, the law of demand and supply was created. The law of demand is a principle where the price of a good and the quantity of the goods that the buyer are willing to buy relate with each other creating an inverse relationship (Gwartney, J.D., Stroup, L.R., Sobel, S.R., and Macpherson, D.A., 2009). This means that if the price of the good increases, thus the buyers purchase less of the product (refer figure 2.1.1 ).
Price Inflation is the percentage increase in the price of the basket of the products over a specific period of time. The Price Deflation is the percentage decrease in the price of the basket of the products over a specific period of the time. The formula can change to percentage when use the formula multiple with 100 to get “The Inflation Rate”. The rate of inflation of formula measures the percentage change in purchasing power of a particular currency. As the cost of prices increase, the purchasing power of the currency will decrease.
• Income- income of the costumer is directly related to the price of the good. More the income, more the consumer is willing to spend. Raymond’s Apparel falling in the category normal good the demand will increase with the increase in income and vice versa • Substitutes- Since Raymond’s is affordable, the threat of substitutes is low 2.2.3 Shift In Demand Curve The shift in demand curve refers to the change in demand due to change in factors other than price. These shifts can be of two types 1. Rightward 2.