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Supply and Demand Conditions for Desklib

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Added on  2019-09-16

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The demand and supply of commodities depend on various factors like cost, consumer preferences, production cost, transportation, and government regulations. Elasticity is defined not just with good but with the type of good. Assess how the price elasticity of demand impacts the firm’s pricing decisions and revenue growth. Firms need to keep a check on prices and target inelastic goods to generate profits in the long run.

Supply and Demand Conditions for Desklib

   Added on 2019-09-16

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Explore the supply and demand conditions for your firm’s product.a)Evaluate trends in demand over time and explain their impact on the industry and the firm. You should consider including annual sales figures for the product your firm sellsThe aim of assessing trends is to decide whether individual can apply them to forecast upcomingtransformation moreover whether a fastidious trend has some significance for individual’s firm.Now trend in demand is not just dependent on the utility or need of thee individual, it alsodepends on other external factors like income, price in economy , government tax collectionpolicy , supply. Now as we know supply creates it own demand and since we have the elasticityof goods demand analysis is not a cetris peribus analysis. When individual recognize a trendwhich impacts individual’s marketplace or individual’s processes, individual can arrange someactivities that contradict the trend. Individual have to assess the range, route and path of a trendprevious to individual can respond to it. Now when we look at the short run and long run thecompanies have different objectives like sales maximization in short run but profit maximizationin the long run.Total customer expenditure (TE) is a further critical purpose of price elasticity of demand. It willbe the alike as total revenue (TR) received through firms before removing expenses.Elasticity is defined not just with good but with the type of good. If the goods are kind ofaddictive goods then the preferences are generally inelastic. Where as when we have lots ofsubstitutes available then elasticity is generally high. For example if we consider the ITCcompany , they make ciggrates which have inelastic demand , so even if they increase price thedemand is generally not going down in proportion. If the price is increased by 10 % , we see thatthe quantity decreased is just 2 % , so the elasticity would be 2/10= 0.2 which is low. Where as ifwe consider some product like call rates , then people will talk judiciously so with 10% increasein price we have 8 % decrease in consumption, so elasticity is 0.8
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So the graph here shows that the With the inelastic demand the revenue collected will be high because even with high pricechange the quantity would not decrease much. So when we look at the trend in demand , if there is general increase in demand , then the pricesare likely going to increase in near time which would then increase the pressure on the demandto go down in next period. So it will be a fluctuating cycle but generally in the long term we willse because of inflation a higher set amount of prices but lower than the expected prices.
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a)Analyze information and data related to the demand and supply for your firm’s product(s) to support your recommendation for the firm’s actions. Remember to include a graphical representation of the data and information used in your analysisThe demand along with supply of commodities is at the same time as a consequence of a varietyof aspects which have an effect on it which it takes in the cost of the commodities, consumers gothrough and first choices, price of production, usual circumstances, transportation situation aswell as government guiding principles. This factors control demand in addition to supplyabsolutely or pessimistically. So , when we consider that supply of the product coca-cola , wealso see what the competitors are producing. The final product of ours is based on manyintermediate products which if have high cost over time would lead to increase in cost ofproduction. Also we know that there is a scaling effect in the production. When we have limitedappliances to produce and then if we have higher demand to produce the efficiency of themachines would reduce , then we have to employ additional machines , which in order wouldincrease the per product cost. So predicting supply in near time is not an easy task and even if wehave predicted it then supplying it in given cost is more tedious task. So if the demand is high weneed to install more inputs for production and we need to check the proportional cost per input vsrevenue per product. If we have increasing scale of production then it is good to produce higherbut if its not then its better to produce at high price.
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