Case Study The Law Of Diminishing Marginal Returns

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.

Firms finance investment (the purchase of new capital goods) by borrowing money. Therefore, if there is not saving funds for investment will

Long run cost curves are U-shaped in light of the presence of economies and diseconomies of scale. Economies of scale are the cost advantages that a firm, or a business when all is said in done, acquires by extending production. At the end of the day, they are spoken to by the diminishment in unit costs over the long run as the extent of the firm – the scale – increases. Diseconomies of scale are the inverse: long-run average costs will in the end start to rise when the measure of the firm turns out to be too much expansive. The most evident reason is that as organizations increment in size they turn out to be harder to control and co-ordinate.

One explanation appeals to be behavioral traits; the managers acquiring firms may be driven by overconfidence in their ability to run the target firm better than its existing management. This may well be so, but we should not dismiss more charitable explanations. For example, Firms can enter a market either by building a new plant or by buying existing business. If the market is not growing, it makes more sense for the firm to expand by acquisition. Hence, when it announces the acquisition, firm value may drop simply because investors conclude that the market is no longer growing.

Therefore, normal goods possess positive income elasticity. The quantity of normal necessities demanded will rise with the revenue but at a measured speed than that of luxury goods. This phenomenon is due to the fact that consumers will opt to buy more extravagant goods and services rather than more of the necessities with their improved incomes (Haque 18). During a time period of improved incomes, the demanded quantity for luxurious commodities will rise at a faster rate than the demanded quantity of necessities. The demanded quantity of luxury products in response to variations in income is very sensitive.

The law posits that as supply increases, while other things are kept constant, there is a decline in price and vice-versa. As demand increases, while other things are kept constant, the price tends to increase and when demand declines, the price declines. The economy achieves a state of equilibrium between quantity and price when there is a balance between demand and supply. The law of supply and demand has a big impact on the labor market and consequently, the economy. An increase in wages leads to a decline in supply of goods and services because labor is considered as a business cost.

The individuals that are not supporters of the minimum wage increase feel that an increase, (while it is helping low-income individuals) will make it more difficult for companies and businesses to succeed. Anti- supporters believe that due to the fact that company owners would have to raise wages or prices of their products in order to make profits, this could eventually lead to the business closing. This could then lead to a “trickle-down” effect for the rest of the economy. Anti- supporters believe an increase in the minimum wage will negatively affect the economy. Both sides of the debate will be explored in this paper.

Companies take a very basic, low-cost approach to marketing--nothing fancy. It is just the bare minimum to keep prices low and attract a specific segment of the market that is very price sensitive Aldi, a food store, is another example of economy pricing strategy. They keep their prices low and attract huge customers .

It is the reflection and the performance of its internal contradictions in this field. “The Reversal” means that there exist contradiction between profit and loos of a number of functional elements, that also means, there must exist benefit loss of one or several other functional elements while optimizing and gain benefit on one particular functional element, and vice-versa. 1. Package issues: when product sales market and sales prices are in the same premise, assuming that other cost factors do not change, then spend per sent less in packaging, which is bound to gain a cent back, packing cost less , the profit get higher. However, once the goods into circulation, if the packaging saving reduced the protective effect of the product, resulting in a large loss, it will cause degradation of the functional elements of storage, handling, transport and the great decrease in work efficiency.

Inflation is the rate at which the general level of prices for goods and services is rising, and, then purchasing power falling over a period of time. When price level rises, dollar buys fewer goods and services. Therefore, inflation results in loss of value of money.

If the minimum wage increases, it doesn’t necessarily mean that the economy will get better or our standards of living will be better. If wages go up, then the standard of living will also increase. There are statistics that have proven why the raise of the minimum wage will actually cause more issues. As the minimum wage increases, the unemployment rate will increase. As well, there is a huge potential of causing small business to collapse due to higher wages and being unable to afford it.

For example, the government claims that higher wages increase a workers willingness to work. If this is so then what they are also saying is that lower wages decreases a workers willingness to work. Which sounds fine, until you apply that theory to the rent control laws. If rent controls force lower prices than a landlords willingness to provide quality housing must decrease as well. Along with that, the opposite would mean that allowing landlords to increase prices would increase their willingness to provide better quality and quantity

7-2. As stated in the text consumer and business marketers use many of the same variables to segment their markets. Consumer marketers can be segmented geographically (nations, regions states countries etc.), demographically (age, life-cycle stage, gender, income etc.) and psychographically (social class, lifestyle and personality) as well as in a behavioral base (benefits, user status, usage rate etc.). While business marketers use some of the same variables business marketers can be segmented by business operating characteristics, situational and personal characteristics.