Along these lines, unemployment may decrease, as this has different favorable circumstances, for example, lower government using on profits and less social issues. However, this phenomenon includes a number of different expenses. Firstly, if economic growth is unsustainable and is higher than the long run pattern rate, inflations are liable to be seen. An increase in economic growth could prompt an equalization of issued installments. In case the expanded customer expenditure causes further development, there will be an increase in the import sector.
People use it to measure how much the company actually earn out of sales. It is used for comparing similar companies. The company with higher profit margin means it has a better cost-control. This ratio reminds company of suitable budgeting on cost and sale(Kong, 2007). Promotion According to Kettler (1988), promotion can be viewed as an essential motivational factor for making purchase, changing the sense of customers on price or product by adding extra benefits.
This means as employees’ nominal wages increase with inflation their real wage (purchasing power of nominal wages) may remain constant. Since inflation reduces the incentive for households to save, it causes a shortage of savings for firms to borrow. Firms finance investment (the purchase of new capital goods) by borrowing money. Therefore, if there is not saving funds for investment will
The Trans Mountain pipeline has characteristics or properties of Natural Monopoly, so it falls into the products of natural monopoly. When there is an economic of scale, that is, average cost decreases as quantity increases, the natual monopoly occurs. As a result, one firm is able to supply total amount of the products at a lower cost in the market than two or more firms. If the govenment does not regulate the Natural Monopoly, it may not benefit the social welfare and the optimal outcomes. In other words, they will produce much less and charge a higher price than social optiaml lead to a high price,low average costs and high profits.
In this case when the government borrows, it would lead to a higher demand for loanable funds, meaning it increases the interest rates. When interest rates increase, it lowers consumption and investment. Referring back to the graph, the government borrows money, which shifts DM0 (initial demand for money) to DM1. Simultaneously, the quantity demanded increases from Q0 to Q1 (as the government borrows), creating a temporary shortage of money. By borrowing so much money, the government “crowds out” private individuals and private commercial interests.
The classic example of a technical internal economy of scale is Henry Ford's assembly line. Another type occurs when firms purchase in bulk and receive discounts for their large purchases, or a lower cost per unit of input. Cuts in administrative costs can cause marginal productivity to decline, resultingin economies of scale. Internal economies of scale tend to offer greater competitive advantages than external economies of scale. This is because an external economy of scale tends to be shared among competitor firms.
Change in supply, usually supply curve doesn’t be static it could happen that will shift certain quantity and price. The characters of the market can change the supply curve by shifting in or shifting out. There are several types that change the supply curve such a decrease in costs of production; this means business can supply more at each price. Lower costs could be due to lower wages, lower raw material costs. An increase in the number of producers will cause an increase in supply.
Therefore, when organic companies are expected to increase the production of food because of a high demand and high price of the production, it will happen to fulfil the demand in the market. Nevertheless, when the demand decreases, the demand curve will shift to the left, and so the price of the grains will fall too. This is because when there is a decrease in demand, the quantity also decreases because it could lead to a loss if there are too many products that are not being sold in the
• Threat of substitute products or services: Substitute products refer to products in other industries. “To an economist, a threat of substitutes exists when a product 's demand is affected by the price change of a substituted product.” (Substitutes - PlanningSkills.COM. (n.d.).) Therefore, when a product has more substitutes available the demand becomes more elastic and the threat of substitute products becomes higher. For UMUC Haircuts this means that if the substitution is easy and viable, then this weakens its power for competitive advantage.
CHAPTER 2 LITERATURE REVIEW INFLATION (InvestorWords, 2015) stated that inflation is the increase in the general price level of goods and services in economy, normally caused by excess supply of money. Inflation usually measured by the Consumer Price Index (CPI). When the cost of producing goods and services goes up, the purchasing power of dollar will decrease. A customer will not be able to purchase the same goods and services as he/she previously could. Inflation rate of 1-2% per year are acceptable and even desirable in some ways (Investopedia, 2015).