Manager Case

Economic Concepts

Phase 1 DB 3

Professor: Vilma Vallillee

February 27, 2013

Claudius Gibbs

Microeconomic concepts clarify how much a business should manufacture of a good or service to make the best of their profits (Fitzgerald, 2013). With this in mind, while setting in my office one evening, a thought came to me about the key microeconomic concepts that should be presented to the board. This paper will discuss two concepts, which are, competition and supply and demand and why they are important for the board to look at.

Economic competition takes place in markets meeting grounds of intending suppliers and buyers. A small number of people selling something strive to gain approval from future people who will make a purchase. Sharp sellers lower prices to lure buyers and buyers make known to others their choice by raising their offers to be more successful than the competitor. When a transaction is over, neither party may be pleased with the agreed price, but both contract partners feel better off. If the price is more than cost, sellers make a financial gain, and an incentive to make more. When other opponents find out what was done to lead to profits, they may imitate the initial supplier (Kasper, n.d).

Suppliers also involve themselves in a market situation in which business tries to distinguish their product or service from competing products on the basis of attributes like design and workmanship. They try to make better their products to obtain an advantage over their competitors, allowing them to generate greater sales or margins and retain more customers than their competition. Another tool of competition is process innovation to lower costs, which let manufactures offer goods and services at a lower price than the competitors (Kasper, n.d).

Supply and demand is possibly one of the most essential ideas of economics and it is the chief support of a market economy. Demand direct attention to how much of an article or substance that is manufactured or refined for sale or service is wanted by a person making a purchase. The amount requested is the quantity of a product people are ready to buy at a secure amount of money. The connection between price and quantity demand is recognized as the demand relationship. Supply show how much the market can give. The amount supplied show the quantity of an established good which producers are ready to supply when presented with a known price. The mutual relationship between price and how much of a good or service is provided to the market is recognized as the supply relationship. Price, for that reason is an image of supply and demand (NetMBA, 2010).

In conclusion, by presenting these concepts to the board, they will see that consumers will pick the best obtainable