In this paragraph, I will be explaining the Supply and demand concept by using examples and diagrams when explaining and I will be explaining the relationship between cost and revenue and supply and demand. Demand is how much of a product or service a consumer wants to buy and an example of demand is if a consumer goes into a phone shop and ask to buy 5 IPhone 's this means they have demanded this product and, therefore, they want to buy it. Whereas Supply is about how much a market can supply a customer. Another definition of Demand is ‘Demand refers to how much (quantity) of a product or service is desired by buyers. ' (Investopedia, 2015) and a definition for Supply is ‘Supply represents how much the market can offer. ' (Investopedia, 2015). The main reason that Supply and Demand is a key role in international business is, because when Supply and Demand meet each other equilibrium happens which is shown in the graph below and nothing can change this unless an external factor affects the supply or demand.
(Economics online, 2015)
Many factors can cause the demand curve to shift one of them is if Volkswagen competitors was to raise their prices of their cars this could lead to consumers buying cars of Volkswagen, as they would see it as a substitute because it is a cheaper option which would shift the demand curve to the right and it would increase the price and output and a new equilibrium point would be shown as it is in the image...
... middle of paper ...
...n. A table below highlights marginal revenue and marginal cost when they are equal which can help managers see the opportunity for them to maximize profit in the long run.
(Cliffs Notes, 2015)
In conclusion, the diagrams and examples that I have used to help highlight the supply and demand concept and how important it is in international business, and as I have highlighted above that many different factors can affect both supply and demand. Therefore, managers have to use factors, so they can help benefit their supply and demand, and decrease their costs, as well as increase the revenue. Also, this essay has highlighted that for managers to maximize profits in the long run they have to keep cost lower than revenue and that marginal revenue has to be equal to marginal cost for them to maximize profit in the long run as well.
Need Writing Help?
Get feedback on grammar, clarity, concision and logic instantly.Check your paper »
- Study Guide #4 Module 11. PRODUCTION & COST CONCEPTS 1. What is the relationship between a firm’s total revenue, profit, and total cost. The total profit of a firm is equal to total revenue minus total cost. In other words, total profit equal total revenue (the amount of a firm receive for the sale of its output) minus total cost( the market value of input a firm uses in production). 2. Give an example of an opportunity cost that an accountant might not count as a cost. Why would the accountant ignore this cost.... [tags: Economics, Costs, Marginal cost]
1799 words (5.1 pages)
- Total revenue, which is the total amount of income received from the sales of a certain quantity of goods or services. Total revenue can be calculated by multiplying the price of a product times the quantity sold. For instance, if 160 baseball caps are sold and each baseball cap was priced at $5 each, the total revenue would be (160*5) $180. Total cost is all of the expenses incurred in the production of a product, to include fixed and variable costs. Fixed costs, are expenses that are constant and do not change from month to month regardless of the amount of products sold.... [tags: Costs, Economics of production, Marginal cost]
1057 words (3 pages)
- 1. An explicit cost is a direct payment throughout the duration of running a business e.g. a wage, materials cost and rent. An implicit cost is where there is no actual payment as it more refers to the opportunity cost of what a firm has to give up in order to use another factor. Examples include depreciation of assets, loss of interest income on business funds, or the foregoing of a salary to add revenue to the business early on. 2. In economics, the short run is where at least one input in the production process is fixed and the rest are variables within a certain period of time.... [tags: Costs, Average cost, Economics of production]
782 words (2.2 pages)
- Our company is the producer of tangible goods and as a quality department we must ensure that our customers are getting the highest quality product for the best value. We have identified three types of quality costs that will further safeguard our future excellence rating. By adhering to these quality considerations we believe that our customers will remain loyal and our company will continue to flourish. The three types of costs associated with quality are Internal and External Failure, Audit and Prevention costs.... [tags: Costs, Quality control, Cost, Customer]
1037 words (3 pages)
- In carrying on with the previous example of my present employer, the Australian Football League, I see some real benefits that could improve the organisations performance outcomes – specifically I’d like to consider the concepts of; supply & demand, cost analysis and capital budgeting. The AFL and the concept of supply & demand In describing the concept of supply and demand, supply can be referred to as the amount of specific goods and services that is available to consumers. Supply can relate to the quantity available at a specific price or the amount available at a range of prices.... [tags: Costs, Economics, Marginal cost, Microeconomics]
730 words (2.1 pages)
- Anyone can see that over the past number of years, college tuition and overall costs to attend a university have skyrocketed and is at an all-time high. Although, most people are not too sure why this has happened. According to authors Robert B. Archibald and David H. Feldman in the article, “Explaining Increases in Higher Education Costs,” there are two opposing arguments as to why this has occurred over the years. These include the Cost Disease argument, which was William Baumol and William Bowen’s view of the rising cost of education and the other was the Revenue Theory of Costs, which was Howard Bowen’s view of the topic.... [tags: Higher education, Economics, University]
706 words (2 pages)
- MAVWEB035 – e-CRM e-CRM Definition Electronic customer relationship management (e-CRM) involves the integration of web channels into the overall enterprise CRM strategy with the goal of driving consistency within all channels relative to sales, customer service and support (CSS) and marketing initiatives. It can support a seamless customer experience and maximise customer satisfaction, customer loyalty and revenue. E-CRM is not just your call centre, self-service website, sales force automation tool or the analysis of customers ' purchasing behaviours.... [tags: Customer relationship management]
739 words (2.1 pages)
- RBC Financial Group uses a customer relationship management (CRM) strategy that provides a variety of services for a variety of clients. The strategy allows for individual customers to trust RBC and develop a personal relationship with each and every client. One major factor that allows CRM to operate effectively is the use of technologies and analytics to help classify each client’s financial situation. These customer profitability-based techniques allowed RBC to categorize their clients into A, B, and C groups so that the sales teams could optimize their efforts in catering to these different clients.... [tags: Customer relationship management, Sales]
736 words (2.1 pages)
- In the world of economics, the concept of price elasticity of demand is an essential part of determining the price of goods and services. This concept is utilized by various organizations, including private and corporate businesses, and educational institutions. In today’s economy, universities or colleges are being examined for their tuition cost. Tuition cost is determined by various determinants that affects the overall price elasticity of demand. In the case of the Nobody State University, the school 's increased its tuition, which resulted in a loss of total revenue.... [tags: Supply and demand, Price elasticity of demand]
1033 words (3 pages)
- Raise or Lower Tuition In the world of economic, the concept of price elasticity of demand is an essential part of determining the price of goods and services. This concept is utilized by various organizations including private and corporate businesses, and educational institutions. In today’s economy, universities or colleges are being scrutinized for their tuition cost. In the case of Nobody State University, the school 's increased its tuition, which resulted in a loss of total revenue. While evaluating the recent tuition increase, an analysis of the effects of elastic and inelastic demand on the university’s total revenue also illustrates various outcomes.... [tags: Supply and demand, Price elasticity of demand]
734 words (2.1 pages)
- A Wide Ranging Environment That Is Organized Around Diversity
- Memorial Sloan Kettering Cancer Center
- Multinational Corporations : Mncs Or Transnational Corporations
- The Lesson Began With Mrs. Hays
- Sinister Of The Left Handed People Smarter? By Maria Konnikova
- Analysis Of The Poem ' Ace Crusher ' By Dalton Derksen