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.
Classical Growth Theory Adam Smith has founded the classical theory of economic growth based on the production inputs (Land, Labor and Capital). He has expressed his production function as follows: Y=f (L, K, T) Where Y stands for output, L in labor, K is capital and T is land. He considered savings as engine to growth hence it creates investment and also he released that the income distribution is major driven to the nation grow either fast or low. According to the classical theory, the variation in price level relates to its tax impact is not straight linked to the profit and output. The higher wage cost reduces the firm’s profit level and the relationship between inflation and output become implicitly negative (Gokal and Harfi (2004)).
It has the following assumptions: The consumer has a rational behavior: The consumer will always aim at maximizing his utility in a given period of time. Utility is ordinal: It assumes that utility cannot be measured but the consumer can rank his various combinations of goods according to the level of satisfaction derived from each in a given period of time. Diminishing Marginal rate of substitution: From the indifference curve properties, it implies that in order to consume more units of one good, less units of the other good will be consumed. Consistency in choice: The consumer is considered to be consistent in his behavior in a given period of time. If he prefers combination M of goods to combination N of goods, he must remain consistent.
Equilibrium price is the price where the quantity of goods supplied is similar to the quantity of the demanded goods (Thomas & Maurice, 201). In detail, when plotted on a graph, equilibrium is the point at which the demand curve and the supply curve intersect. Simultaneously, equilibrium quantity is where quantity demanded is similar to the quantity supplied. If the market dynamics change and the price fall below the equilibrium level, the quantity demanded will be much higher than the quantity supplied. There are two possible outcomes, a shortage will occur, or there will be excess demand for the product.
In order to produce and supply larger quantities, higher prices are needed. These three graphs form part of the foundation of the short run production analysis: Total Product Curve: what this graph represents is the quantity of the output produced by a given number of workers over a specific period of time. Here the amount of capital is fixed. The increasingly flatter slope of the TP is attributable to the law of diminishing marginal returns. Average product Curve: this is the quantity of output per unit.
According to theconsumerfactor.com, Cultural Factors are the different components or elements that affect a consumer’s buying behavior related to the culture or cultural environment the consumer belongs to, and is very crucial when it comes to understanding his needs and behavior. A brand and its marketers or advertisers, it is very important for them to take into account and understand the cultural factors for a certain market in order to create an effective campaign and strategy as these will play a role on that market’s perception, habits, and the behavior or expectations of the consumers. Each culture has several subcultures, namely, religions, nationalities, geographic regions, racial groups, etc. With this, marketers or advertisers for a brand can use these groups by dividing the market into various small portions. An example would be, marketers can create products according to the needs of a particular geographic group or nationality (Shah, Asifo, 2010).
The price increase demand will decrease. But if the price decrease will increase demand. The definition of supply the amount of goods or services that you offer Producers at each expected level of prices, within a specified period of time. There are factors that affect demand. The first one incomes of consumers people with high incomes buying a lot of goods and people with low incomes buying lass than people with high income.
CONSUMER BEHAVIOR AND CONSUMER PERCEPTION 17.1. Consumer behavior Consumer behavior as the behavior that consumer display in searching for, purchasing, using, evaluating, and disposing of products and services that they expect will satisfy their needs. Consumer behaviour focuses on how individual consumer and families or households make decisions to spend their available
The main factors in this area that affect the process of consumer psychological activities are : perception, personality, attidues, motivation and learning. 2.1 Motivation Motivation as internal driving force drives consumer behavior and guides the purchase activities to meet certain needs. Marketers is all about getting to know what motivates