Subway Supply and Demand at Subway Supply

Subway Supply and Demand at Subway Supply and demand refer to much of the product the firm produces and how much of a product the consumers want, and each of these is affected by a number of factors (Investopedia, 2011). Among the factors that affect supply are the expected demand, the expected price the firm will receive, the price of inputs and the competition in the market (EconPort, 2006). Thus, if there are more competitors, Subway might feel like demand was going to be lower, and then it would produce less.

There is a relatively short lead time for ordering, which means that an individual store might be able to make changes based on changes in demand very quickly. For the company as a whole, supply decisions are about store openings and closings, and these can also be affected by internal factors, like the need for capital. There are also a number of factors affecting demand. Real wages and disposable income affect how much money consumers have.

Competition in the marketplace and Subway's ability to differentiate itself will have an affect on the choice of fast food the consumers make. Price elasticity of demand is another factor, because it dictates what the demand will be at different price levels (QuickMBA, 2010). Thus, if consumers have more money to spend, Subway will probably benefit, but only if the company remains competitive. Minimum Wage If the government raised the minimum wage, this would affect Subway in a couple of ways.

The first is that the company would have to pay its workers more. As a result, Subway would need to raise its prices, or see its margins reduced. Raising prices would normally decrease demand, but in the case of Subway the company might see increased demand to offset this decrease. The increase would come from minimum wage workers who are experiencing an increase in their disposable income as the result of the increased minimum wage.

As these outnumber Subway workers who would get an increase, the net effect for Subway might be profit neutral. The effects of an increase in minimum wage are different for each market in which Subway competes, since they are related to the unemployment benefits that the jurisdiction offers (usually at the state level) and the trade-off that the workers must make between the minimum wage and unemployment benefits (Danziger, 2007). In general, the government interferes in the labor market not for economic reasons but for social reasons.

Thus, while raw economics points to having no minimum wage as a good policy, because the minimum wage is a market distortion (Doyle, 2006). The conclusion that can be drawn is that the government should not interfere with the minimum wage because it reduces employment. However, the social ends are the reason that the government implements a minimum wage, not economic ends. Workers who make fifty dollars a week cannot spend any of it, or live independently, which means they are worthless as consumers.

The economic well-being of Americans is better than the economic well-being of people in the developing world who have jobs but make very little money. So while from an economic perspective, unemployment would fall.