Factors Affect Supply and Demand in External Environment : Project
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Added on 2020-01-15
Factors Affect Supply and Demand in External Environment : Project
Added on 2020-01-15
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ECONOMICS FORBUSINESS
Table of ContentsINTRODUCTION...........................................................................................................................3Question 1 Shift in demand and supply..................................................................................3Question 2 Identify negative externalities from tobacco consumption can affect the Britishhealth service..........................................................................................................................6CONCLUSION................................................................................................................................9REFERENCES..............................................................................................................................11
INTRODUCTIONIncreasing business complexities also increases the tactics by applying economics in thebusiness enterprise. It is that field which has applied in economics which utilises differenteconomic theory and quantitative methods to analyse the current efficiency of a business. This isessential in an entity to monitors the progress of basic factors such as capital, labour, finance andproduction markets. This project is all about is all about defining the different shifting factorsthat affects supply and demand in the external environment. This is also gives emphasises on thedifferent government factors in order to identify different negative externalities lies in the societyrelated to heavy consumption of tobacco and smoking.Question 1 Shift in demand and supplySupply and demand are the basic economic tools of microeconomic as it helps in pricedetermination in a market (Dey, 2002). It can also be used in competitive market in assessingtheir future efficiency as the unit price of a good of items used in trading. There should beperfect balance among the demand and supply in order to maintain market and economicequilibrium as the turbulence in these factors will directly affect the business as the prices ofgoods and services will induce or reduces in different situations (Goddard and Melville, 2004).These are regarded as that tool which are the basic pillars of overall business economy that alsocreates larger impact on country's economy by boosting their level or declining from theirexisting position. There are various shifters of demand that creates greater impact on the existinglevel of demand in the market which are given as below:Factors affecting DemandTastes and preferences- The main motive of every business enterprise to cater the needs anddemands of their customers by preparing products as per their tastes and preferences. Thecustomers are regarded as king of every market whose needs are to be taken into considerationsas it is intangible form of goods which can only be feel but cannot be seen. This factors can befelled by an entity by getting higher customers' satisfaction. For, instance, goods are endorsed bycelebrities to attract them to buy the products which is used by their favourite celebrities whichincreases the demand of products (Dey, 2002). The junk food advertises by the organisation willdecrease the demand as the awareness of diet conscious are higher than compared to thecommunication takes place among business and the customers.
Number of customers- The products of an organisation should be always prepared as per theirprospective target market as they are the only persons who will buy all the products and servicesoffered by an enterprise to lure their consumers (Green, Camilli and Elmore, 2012). It involvestow things that is the product demand may be increases or decreases with the involvement ofpeoples surrounded by the new product section. For instance an enterprise establishing newclothing chain in that place where there are no homes but only industrial area will decrease thedemand of products. At the same time, the opening of new retail chain of food outlet in that areawhich is famous shopping destination will induce the sales and revenue of the enterprise byincreasing their demand of food products in all over the locality (Golafshani, 2003). The numberof customers will determine the success or failure as higher the customers higher will be itsdemand in the market.Price of related goods- Price is another factors which helps an enterprise tin order beat all theirrivals by creating strict competition by marked their foot on the existing industry by restrictingthe entry of new enterprise. Price of a good will shift several customers top other competitors asin terms of price the customers gets irrational and rigidly follow the power prices with the qualityas quality compromise is not suitable for them (Dey, 2002). They price of complimentary goodwill directly give impact on the demand of other product which are incomplete without usage ofthat products. For instance, car and petrol are complimentary goods, the increasing demand ofcar will also increase the demand of petrol as both compliment to each other (Goddard andMelville, 2004). The law of demand also affects as the willingness of a buyer and price ofquantity have direct relationships as the surety of purchasing a productivity will also not getaffected due to its expensiveness as this same rule has applied in the complimentary goods whichcompletes each other in the market.Income- Another factors which will directly affect the price of products that consumers arewilling to buy as it totally depends on the kind of good (Dey, 2002). The quality of good alsogets affected with the increase or decrease in income of individuals. The stable income of aperson uses normal goods, with the increase in their income the demand of normal goods getsshifted from medium to higher level and it uses luxury goods. On the contrary to this, if theincome of a person gets reduces from normal level, then it will decline from normal level to theinferiors goods which are not good in quality.
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