Economic theories to explain the sifting in market demand

Introduction.

The world economy is a more critical aspect of erecting business. The report indicates Business economics is mostly applicable in economics. The aim is primarily to use the economic theories to explain the sifting in market demand and supply and to analyze every factor that contributing to the diversity of the company’s structures with relationship to its customers. The research went for 7years.

Introduction tothe company.

As a group of advisors, it was my duty to come up with a business opportunity, which will be of high profit. The companyI have come up with is Beer and cider Alcohol brewing company. It is one of the top-ranked companies in Australia, primarily as it is only relevant to recognize theglobalized nature of the alcohol industry. Besides, starting this kind of production is not that demanding. It only understands the policy of alcohol in Australia.

Industry background.

Majorly the economicoverview ofthis brewing industry was high. However, it was presented with the legalization of alcohol in Australia. Penalty for drinking and driving as well as selling alcohol to a person of under 18years


The graph shows how the market behaves.

It means, as more money invested for time, the market will increase means high return.

After the mania phase, it means as the time increases, there will be low returns due to factors are affecting the market—for example, coronavirus, which lowers the sales.

It means with all conditions of economics maintained constant, there will be an increase in return as time elapses. Furthermore, the probability of risk such as pandemic invading this kind of business is 0.00005. the likelihood of growth in return is 0.72 per year.

It means that the future is bright for our company as we will make more return because with the pandemic overseas sales reduced and so production reduces because of no ready market for our products.

Factors influencing the demand for the company product.

  1. Price of the Given Commodity.

fig 5.1

p=y axis

D=x axis

The graph mainly explains the relation between price and demand. Demand and cost are inversely related.

When we increase the price of our alcohol, the demand will reduce due to the level of satisfaction of customers are not met—shown in fig 5.1.

2.      Price of Related Goods.

When there are substitute goods, that is whine is the substitute for our product.

When whine lowers the price, its demand will be high while our beer and cider demand will reduce as the price remains constant.

  • The income of the Consumer:

The income of the customers also affects the demand for the goods. Besides, the challenge of the profit on orders is determined by the nature of the products under consideration.

Moreover, as our products are standard goods, when there is an increase in income, it will lead to a rise in demand and vice versa.

Factors that influence the supply of the company’s product.

i. Price

An increase in the price of alcohol leads to an increase in supply and vice versa. Shown above.

ii. Cost of Production:

an increase in cost production will hinder supply as there will be a decrease in the amount supply and vice versa.

iii. Government’s Policies:

      it means when the government increases, their policies will lead to the decline of supply. For instance, high tax =low supply and vice versa.

Elasticity.

It is the change of demand or amount of suppliers with responding to price. When the value of elasticity is higher than 1.0, then indicates that the need for alcohol affects the price.

When the value of elasticity is below 1.0, then the demand for alcohol is not affecting price.

Impacts of an event on the industry/company.

We are employing residences.

Construct some of the damaged roads and help in water supply in the area.

Pay fees to the orphans around the area of the company.

Pay taxes to the Australian government.

Conclusion.

Before starting a business, one should have a better plan. Collection of data is some of the ways before beginning a business .as this helps a manager to know the area well. Market studies help one to know his customers and understand the competitors.

References

Lichter, A., Peichl, A. and Siegloch, S., 2015. The own-wage elasticity of labor demand: A meta-regression analysis. European Economic Review80, pp.94-119.

Challe, E., Matheron, J., Ragot, X. and Rubio‐Ramirez, J.F., 2017. Precautionary saving and aggregate demand. Quantitative Economics8(2), pp.435-478.

Carvalho, L. and Rezai, A., 2016. Personal income inequality and aggregate demand. Cambridge Journal of Economics40(2), pp.491-505.

Carrera, L., Standardi, G., Bosello, F. and Mysiak, J., 2015. Assessing direct and indirect economic impacts of a flood event through the integration of spatial and computable general equilibrium modelling. Environmental Modelling & Software63, pp.109-122.

Mohammed, I., Guillet, B.D. and Law, R., 2015. The contributions of economics to hospitality literature: A content analysis of hospitality and tourism journals. International Journal of Hospitality Management44, pp.99-110.

Ubachukwu, N.N. and Emeribe, C.N., 2017. The 2012 Flooding in Selected Parts of Isoko South, Delta State: Assessment of Socio-Economic Impacts. Mediterranean Journal of Social Sciences8(1), pp.353-358.

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