2571404
Description
Mind Map by Soyful Alam, updated more than 1 year ago
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Created by Soyful Alam
about 9 years ago
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How businesses
respond to their
markets
- Dynamic Nature
Of Markets
- A competitive market is one
where there is intense
rivalry between producers of
a similar good or service
- Competitivness can be
measured in terms of the
number of firms in the market -
but also by their respective sizes
- Consumers enjoy competitive
markets because it results in
greater choice, better service and
cheaper prices
- Markets are a dynamic
because consumer taste and
fashion change.
- A competitive market is one
where there is intense
rivalry between producers of
a similar good or service
- Changes in demand and
supply have effects on the
price of a product
- Causes of a demand
change
- Consumer tastes & fashion
- Substitute goods
- Income
- Seasonality
- Consumer tastes & fashion
- Causes of a change in supply
- Weather
- Income of customers
- Cost of production
- Technological advances
- Government legislation
- Weather
- Causes of a demand
change
- Profit Signalling Mechanisms
- controls resource allocation in an
economic structure
- if people find that by making
something they gain high
profits, more and more people
will start making that product,
- more resources like time
and money are allocated
towards that product.
- controls resource allocation in an
economic structure
- Price elasticity of demand
- PED is a measure of the extent to
which a change in price affects a
change in demand
- Determinants of PED
- Degree of product
differentiation
- Availability of substitutes
- Actual need for the product
- Brand loyalty
- Degree of product
differentiation
- Determinants of PED
- demand is inealstic when the percentage
change in demand is lower than the
percentage change in price
- PED 1-0
- PED 1-0
- demand is elastic when
percentage change in demand is
greater than percentage change in
price
- PED = 1+
- PED = 1+
- PED is a measure of the extent to
which a change in price affects a
change in demand
- Changes in income
- measures how a change in
income affects demand for the
firms producr - YED
- Normal/Inferior/Luxory goods
- demand shifts with peoples income
- Demand for this increases
strongly as income decreases
- Demand for these increases
strongly as income increases
- demand shifts with peoples income
- disposable of income and
necessity of product
determine this
- measures how a change in
income affects demand for the
firms producr - YED
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