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Demand and Supply Analysis of Product | Report

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Added on  2020-02-03

Demand and Supply Analysis of Product | Report

   Added on 2020-02-03

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Business Economics
Demand and Supply Analysis of Product | Report_1
Table of ContentsINTRODUCTION...........................................................................................................................1MAIN BODY..................................................................................................................................1CONCLUSION................................................................................................................................7REFERENCES................................................................................................................................8
Demand and Supply Analysis of Product | Report_2
INTRODUCTION Business economics is the main field of economics which undertakes economic theoriesand quantitative methods to analyze several economical factors. Business economics also refersto the relationship of firm with the labor, capital and product market. Besides this, it deals withseveral business aspects in terms of management and expansion of business organization. Thepresent report will discuss demand and supply analysis which has high level of influence uponprices of products or services (Maryska and Wagner, 2015). This project report will also developunderstanding about the factors which helps in determining the price of gold. It also depicts thenegative externalities which may arise due to the personal use of car. In addition to this, it alsosheds light on the measures which government is required to undertake in order to influencepersonal use of car.MAIN BODYThere are several factors which plays a vital role in determining price of gold. It includesscarcity of resources as well as demand and supply of the gold. These are the main factors whichhave high level of influence upon price of gold. In the present era, scarcity is one of the mostcommon problems which are faced by the economy. Problem of scarcity arises because resourcesare limited and wants or desires of people are unlimited. In addition this, there are many scareresources whose demand is very high in the market such as gold, petrol etc. Due to this aspect,some scare resources are more expensive rather than others (Soderbery, 2015). Scarcity ofresources is the main factors which may cause economic problem. Economic problem mainlyconsists of what to produce which helps the economy in satisfying needs and wants of thecustomers. In addition to this, marketers or government also faces difficulty in allocating laborand capital. Thus, there are mainly two reasons because of which economic problems arise whichincludes unlimited human wants and limited resources to meet their desired needs.Demand and supply are the main factors which closely impacts the price of gold.Demand and supply are the backbone of the market influences the purchasing power ofcustomers. Law of demand and law of supply are the main factors which provides assistance indetermining price of gold. Usually, people desires to purchase the scare goods or services butthere are several factors which impacts the buying decisions of customers. As per the law ofdemand, if prices of goods increase then it will negatively affect the demand of goods orservices. On the basis of the rule of law of demand when the price of gold increase then it means1
Demand and Supply Analysis of Product | Report_3
there is less demand in the market for gold. Due to change in the prices of gold in upwarddirection people avoid to invest in the gold. Thus people gradually shifted to the product whichgives higher return to them. Thus, higher the price of the product lower the quantity is demandedby people. Prices are the main factors due to which high significant decrease is recorded inpurchasing aspect of gold (Ghosh and Shah, 2015). In addition to this, in the international marketpeople do not have high level of interest in gold. There is no custom or tradition in relation towearing of gold ornaments among the international people. Thus, they also avoid buying of goldand prefer to make investment in the other securities which gives higher return to them. On thebasis of this aspect, financial analyst have analyzed that prices of gold will decrease in nearfuture to some point due to low demand for gold. Along with the law of demand, supply is also the main factor which helps in determiningthe price of gold. Law of supply significantly differs from the law of demand. Law of supplystates that as prices of the goods or services increases then supply of the product also increases.Moreover, producers are highly interested in selling their products at higher prices to maximizetheir revenue. As prices increases profit margin of the organization also increases. It is the maincause due to which supply of gold increases in the market but demand for gold decreases. On thebasis of this aspect, it can be stated that demand and supply have inverse relationship and therebyclosely affects the prices of gold (Hendricks, Janzen and Smith, 2015). For instance: Increase inthe prices of gold is the main aspect due to which demand for it gets decreased. In this situationsupply of the gold increases which clearly reflects inverse relationship between demand andsupply factor. In addition to this, income is also the main factor which affects the demand of gold. Goldis the subject of high investment so the income aspect closely affects the investment decision ofthe person. When income of the people increases then they prefer to invest in gold otherwisethey avoid such kind of investment. Thus, income is also the main factor which closely affectsdemand in relation to buying of gold (Demir and et.al, 2015). When demand for gold decreasesthen suppliers are required to reduce the price of gold. In addition to this, technological changeswhich take place in the environment may cause behind the fluctuating trend in the supply ofgold. For instance: Improvement in the gold mining technology facilitate in increasing supply ofgold in the market.2
Demand and Supply Analysis of Product | Report_4

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