Factors Affecting the Prices in Competitive Market
Added on -2020-07-22
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Economics
Table of ContentsINTRODUCTION...........................................................................................................................1TASK ..............................................................................................................................................1A. Factors affecting the prices in competitive market............................................................1B. Demand elasticity concept.................................................................................................2C. Effect of price rise on total revenue...................................................................................3D. Different strategies to sustain in long run..........................................................................4CONCLUSION................................................................................................................................5REFERENCES................................................................................................................................6
INTRODUCTIONEconomics is the study which can be used in all business as with the help of this needsand wants can be satisfied in most appropriate manner (Schumacher, 2011). Also, resourceswhich are available will be utilised in judicious manner so that problem of scarcity can be dealtwith, in a proper way. In this report, the various aspects in relation to them will be discussed.TASK A. Factors affecting the prices in competitive market.In competitive market, there are various factors which will be affecting prices of tomatoes inAustralia , some of them are discussed below:Reduction in the productive capacity:The produce of tomatoes has been destroyed as aresult of a natural disaster and the capacity with which it will be produced by farmers willlead to a decline of supply to consumers. So, in order to sustain in market and deal withinsufficient supply prices will be increased in Australia.Increase in the procurement prices:It can be determined that as the production hasdestroyed due to the storm, tomatoes will have to be procured from the other locations inorder to meet demand of the market. The price at which it will be obtained will be higherin comparison to production. Therefore, to cover the purchase price tomatoes will besupplied to customers at higher price and this is the reason why prices have increased.Price floor: This is price which is set by the government and it is the lowest price belowwhich it cannot be decline further. This shall be decided at such level which will behigher than equilibrium level. So, to set this equilibrium position will have to bedetermined in new situation.Increase in demand: This is another factor by which price will be increasing ascustomers are demanding more thereby giving rise to price.Decrease in overall supply: The supply of tomatoes in market has reduced due to stormas crop has been destroyed and due to this price will be increasing so that insufficiencycan be dealt with in appropriate manner.1
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