Supply and Demand and Profit

The main goal of most businesses is to make a advance. However, hit is calculated using broad(a) revenue and total costs. Therefore, businesses must(prenominal) consider the revenue along with the costs corresponding to the limited number of output in order to profit profit accurately. Firms or industries can growth profit in cardinal ways: secures or industries can take advantage of a securities industry with increasing entreat, or firms or industries can attain a way to starting timeer the total costs of outpution. When posit within a market increases, the equilibrium price of the product increases along with the quantity sold at the equilibrium price. If the market structure is a perfect competition, an increase in consume allows firms or industries to raise the price of the product as comfortably as sell more of the product at the higher(prenominal) price. In this instance, total revenue increases and if the increase in total revenue is greater than the increase in total costs, the firm has succeeded in increasing its profit. However, this is assuming the increase in yield from an increase in the number of firms in the market does non surpass the initial increase in subscribe to for the product.

For instance, the characterization retail industry has shown a trend of increasing demand and shows a emersion in demand greater than the growth in demand of the impression renting industry. Blockbuster has been a firm well established in the movie rental industry but has noticed other firms such as Wal-Mart taking advantage of the growth in demand of movie sales. Blockbuster has started integrating movie sales into their firm alongside movie rentals. Because the movie retail market is a hawkish market, Blockbuster can easily enter this market and hope proficienty, increase the firms profit with the markets increase in demand. Because Wal-Mart already offers movies at a relatively low price, Blockbuster could not raise its price of movies higher than Wal-Mart in order to compete in the market. However, the increase in demand for movie sales allows... If you want to get a full essay, order it on our website: Ordercustompaper.com

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