Economics and Ethical issues

Mrs. Acres Homemade Pies (pg.

30) and using the economic concepts of supply and demand, explain Discuss what you think will happen to the supply, demand and price of the product in the short-term Because supply and demand play such a central role in our economy, it's important to understand how they operate - and how you can use them to analyze decisions about price and quantity. The Law of Demand can be viewed as demand, in economic terms, shows how much of a product consumers are willing to purchase, at different price points, during a certain time period.After all, we all have limited resources, and we all have to decide what we're willing and able to produce - and at what price. While demand explains the consumer side of purchasing decisions, supply relates to the producer's desire to make a profit. A supply schedule shows the amount of product that suppliers are willing and able to produce and make available to the market, at specific price points, during a certain time period.

In short, it shows us the quantities that suppliers are willing to offer at various prices.This happens because suppliers tend to have different costs of production. At a low price, only the most efficient producers can make a profit, so only they produce. At a high price, even high cost producers can make a profit, so everyone produces (McGraw-Hill, 2009, a Challenge Business world, pg. 30). .

In short term as we can see the demand is high, but the supply is not able to meet the demands. I believe that Shelly has to make a quick, but sound decision on the fate of the company. Discuss what you think will happen to the supply, demand and price of the product in the long-term.To determine the price and quantity of goods in the market, we need to find the price point where consumer demand equals the amount that suppliers are willing to supply.

This is called the market "equilibrium. Long term Shelly has to decide whether or not it would be beneficial to maintain current production levels and raise the prices, expand the facility and staff while maintaining the current prices, or she could contract the production of the pies to a national restaurant, giving Shelly chance for mass production (McGraw-Hill, 2009, a Challenge Business world, pg. 0).Discuss what you think will happen to supply; demand, or equilibrium price will be different, if at all, in the short-term and the long-term. Equilibrium is the point where the quantity demanded equals the quantity supplied. This means that there's no surplus of goods and no shortage of goods.

A shortage occurs when demand is greater than supply - in other words, when the price is too low. A surplus occurs when the price is too high, and therefore consumers don't want to buy the product.The great thing about the free market system is that prices and quantities tend to move toward equilibrium and, for the most part, keep the market stable. Demand and supply can be graphed as curves - and the two curves meet at the equilibrium price and quantity.

The market tends to naturally move toward this equilibrium - and when total demand and total supply shift, the equilibrium moves accordingly. It's an interesting relationship that determines much of what happens in a free market economy.Changes in any of the following factors can typically cause demand to shift: * Consumer income. Consumer preference.

* Price and availability of substitute goods. * Population. With a shift in demand, the equilibrium point also completely shifts. When supply decreases, the supply curve shifts to the left.

When supply increases, the supply curve shifts to the right. Changes in supply can result from events like the following: * Change in production costs. * Improved technology that makes production more efficient. (© Mind Tools Ltd, 1995-2010, All Rights Reserved Supply and Demand Curves Understanding Price and Quantity in the Marketplace found at http://www. indtools. com/pages/article/newSTR_69.

htm).Select one of the following businesses: Soft Drinks- assume the business operates where the nature of competition is described as “monopolistic competition”. Identify the factors of production (economic resources including natural, human and financial resources), and for each factor of production give an example of what might be needed to operate the business: and explain how that factor could be used to give the business a competitive advantage.Monopolistic competition defined as a market structure in which several or many sellers each produce similar, but slightly differentiated products. Each producer can set its price and quantity without affect (http://www.

investorwords. com/3111/monopolistic_competition. htmlcting the oft Drinks: Soft drinks are often carbonated and commonly consumed while chilled or at room temperature. Some of the most common soft drinks include cola, flavored water, sparkling water, iced tea, sweet tea, and sparkling lemonade.

Nature of Monopolistic Competition High profile firms with high recognition brands • selling similar products • Branding and advertising • differentiated products as superior • unique aspects • attracted by supernormal profits supernormal profit: profit that exceeds the normal profit or return from the input factors 1. Assumptions • Size and Number of Firms • relatively many but some small • Barriers to Entry • relatively low • Consumer Sovereignty • high (saiprasanna, July 14, 2010, Business and Marketing, found at http://www. bignerds. com/papers/28466/Mrs-Acre-s-Pie-And-Soft-Drink/).Natural resources are extremely important in the production of soft drinks. Our natural resources include land, forest, and water.

Water would be the factor that is used in producing soft drinks. Using the right type of water could definitely give this company a competitive edge. The majority of people have become health conscience so to that the water to produce soft drinks has been altered to prevent so of the things tap on me. Human resources are the ability that people use to produce goods and services; also called labor (McGraw-Hill, 2009 Custom Edition, Business, A Changing World, pg.

).We will need to find the right group of people that would be able to produce our soft drink product. We need to determine a strategy for mass production, but we must ensure that we take care of our most valued asset, ‘our employees’. If you take care of your human resources which are your work staff then they will take care of you on the production line.

When you have satisfied staff they will produce, but if you have a staff that is always unhappy or treated unfairly then you will have poor performers.Financial resources are the funds used to acquire the natural and human resources needed to provide products (McGraw-Hill, 2009 Custom Edition, Business, A Changing World, pg. 9). Finances are necessary in order for a business to be successful. There are several different types of soft drinks that we would be competing against, but we must keep in mind that this will be dollars well spent.

We must be able to produce the best product at the least price. Our goal is to provide a service to others.