Price and Quantity of Milk Essay
- Length: 14 pages
- Sources: 14
- Subject: Economics
- Type: Essay
- Paper: #64572131
Excerpt from Essay :
The interest of certain categories of public in promoting this trend has significantly intensified. Therefore, the demanded quantity of organic products is likely to increase.
2. There are several factors that influence the organic products supply. The most important factors are represented by prices, costs of production, prices of traditional products, weather, and technology. In the case of the influence of prices, if they increase the supplied quantity of organic products is likely to increase also, because the company is interested in increasing its profits. The costs of production are also very important. If these costs increase, it will be more difficult for the company to produce these products, leading to reduced supply.
The prices of traditional products can determine the purchasing behavior of organic products buyers. If prices of traditional products increase, becoming similar to those of organic products, some of these customers can orient towards organic products, leading to higher demand and higher supply. The weather is important in agriculture. If the production of organic products is not supported by proper weather, it is likely the supplied quantity will be reduced. If technological developments increase, they are likely to determine an increase in the supply of organic products.
3. The government's influence on wages can significantly influence the activity of the company. The strategy of increasing the minimum wage by the government has both positive and negative effects on the company. The advantage relies on the fact that by increasing the minimum wage, people's incomes would increase. In other words, they would have more money to spend on different products. This means that the company could increase its number of customers and its sales. The disadvantage is represented by the fact that the company would have to increase the wages of its employees. This leads to increased production costs and prices.
4. There are several advantages and disadvantages to price controls. The advantages are represented by the fact that customers benefit from lower prices. In addition to this, the strategy can lead to higher incomes for producers (Pettinger, 2011). This is usually the case of farmers and other producers in agricultural activities. The most important disadvantages are represented by the fact that such strategies lead to supply shortage or excess (Hammond, 2012).
In my opinion, the governments' influence on prices should be reduced, because it usually leads to modifying normal relationships and phenomena on the market. But in industries like organic products they can help, because they can lead to increased incomes for producers. Therefore, it is important to determine the effects of government's influence on each type of industry and on different issues of production.
1. Pettinger, T. (2011). Price Controls: Advantages and Disadvantages. Retrieved March 8, 2012 from http://www.economicshelp.org/blog/621/economics/price-controls-advantages-and-disadvantages/.
2. Hammond, M. (2012). Advantages and Disadvantages of a Price Ceiling. Retrieved March 8, 2012 from http://smallbusiness.chron.com/advantages-disadvantages-price-ceiling-25210.html.
Micro Economics MOD 3 CS
1. The restaurant industry is characterized by development in certain sectors. The fast food sector is such a developing sector. There are several factors that lead to the development of fast food restaurants. The most important factor is represented by the increased demand for fast food products. This increased demand is determined by the smaller prices of fast food in comparison with traditional restaurants. The proportion of the cost of eating at a fast food in customers' incomes is sometimes smaller than eating healthy foods that cost more. Customers' preferences are also very important in determining the fast food demand. This mostly refers to customers' lifestyle. Many of them eat at fast food restaurants because they save time and money.
In this case, the fast food restaurant is developing because of an increased number of customers. This means there is a higher demand for the restaurant's products and services, which leads to higher production levels (Rittenberg & Tregarthen, 2009). In order to satisfy the increasing demand, the restaurant managers must focus on increasing the production capacity. This objective can be reached by purchasing a grill and a French fry machine.
It is important that the managers develop a strategy for the short run, while taking into consideration strategies for the long run. It is probably required to hire some employees to work on these machines. In order to make a proper decision, managers should establish the costs associated with each of these alternatives. These costs should be compared with the profits that each alternative can determine. If too much labor is hired without addition to capital, this could lead to reduced fixed factors of production capital. Therefore, it is important to determine the costs of this strategy on medium term and on long-term in order to decide how the restaurant's production and profits can be improved.
2. The marginal decision rule is an important analysis used in determining the mix of production factors. The article on maquiladoras reflects the labor intensive method of production. The low economic development in the region and the reduced number of investors have determined maquiladoras producers to focus on reaching the marginal profits that can be compared to their marginal costs by focusing on the workforce rather than on the capital.
The maquiladoras industry is also very important for the U.S. economy. This is because the profitability of this business has determined several companies in the U.S. invest in maquiladoras production in order to expand their activity. In addition to this, most of the components used in maquiladoras production are purchased from the U.S. The intensified demand of such products in border regions leads to involving the workforce in these regions in the maquiladoras production process (Vargas, 2001). This is intended to determine the development of industrialization in these areas. The industrialization process is expected to create more jobs, to help companies in the field develop their activity, and to determine the increased use of technological developments that can lead to higher quality products and services.
The development of the industry in these regions also determines an increase of the services sector. This sector can be addressed by companies in the U.S. that have the financial possibilities of investing their capital in local producers or in developing their subsidiaries in these regions. In addition to this, the increased employment in border regions can significantly influence the consumption behavior of customers in these regions. In other words, the market could develop, determining an increased interest from U.S. companies in addressing this market.
3. The companies that produce generic drugs have significantly increased their profits. The development of this industry can be attributed to several factors. The most important factor that determined the development of the generic drugs industry is represented by the progress made in regulating competition in the drugs industry, and by the Patent Term Restoration Act.
These developments helped increase competition on the drugs market. As a consequence, the generic drugs industry can be considered a perfectly competitive market. The success of generic drugs companies is influenced by several factors. The economic and political conditions have reduced the market entry barriers, allowing an increased number of companies to address this industry (Investopedia, 2012).
The reduced prices of generic drugs in comparison with the prices of branded drugs are another important factor that determined the success of generic drugs companies. This determined the increased demand for such products. The fact that generic drugs are more affordable for most customers, their preference towards this type of drugs is reflected by the increased sales of companies in this business.
Another factor that determined the success of generic drugs companies relies on the fact that companies in this industry sell similar or identical products at similar prices. This makes it easy for customers to access and to buy these products. In addition to this, the similarity between generic drugs reduces the risk of supply shortages. This helps companies improve the efficiency of their supply chain management and to reduce a series of costs like those determined by transportation.
4. There are several differences between the strategies used by companies in order to reach their short-term objectives and those used in order to reach their long-term objectives. These differences are mostly reflected by companies' approach on costs and profits. The most important objectives of short-term strategies refer to maximizing profits. It has been observed that many companies prefer to focus on short-term profits rather than on long-term profits. This is mostly because short-term profits have smaller risks.
But the costs associated with short-term profits can be higher. Therefore, these companies prefer to develop short-term strategies, even if the difference between costs and total revenues is smaller in this case, leading to smaller profits. There are also situations in which short-term costs are smaller. This depends on each type of industry.
The situation is different on long-term. Companies' long-term objectives usually required increased levels of investments from them. This leads to increased costs. In addition to this, companies must take into consideration the fact that production costs are likely o increase on long-term. Some of these costs are difficult to evaluate,…