Business Proposal-ECONOMICS Essay Example | Topics and Well Written Essays - 750 words - 1

Business Proposal-ECONOMICS - Essay Example As there are high number of sellers and producers our product will have an edge over the other products as we have the latest technology for the making of leather shoes. Technology has helped us lower the cost by reducing labor cost. As it is homogenous product, it will be sold at a price determined by the market but our quality at that price will be the best as compared to our competitors (Boyes, 2013). The selected product is elastic as change in the price of the product will also change the demand of the product. An increase in price can cause a fall in the demand of the product and by such market response we know that the market is competitive and there can be a difficulty in making more profit. As there is a difficulty in increasing profit, we will introduce our product at a lower cost while maintaining a high quality in the market (McEacher, 2013). The price of my product with the provided quality will be low as compared in the competitive market, so if there will be an overall increase in the prices of shoes it will not affect the demand of my product as compared to those of my competitors in the market and the demand of my product will be less elastic. If the price of overall footwear decreases, the demand of our product will be elastic as we will also lower our prices because our variable cost is low due to less labor cost. Pricing will have an impact on our business because if the price of footwear falls we will earn less profit than we are earning at the current market price. The theories of economics explain that a firm should keep on producing a product until its marginal cost becomes equal to its marginal revenue because it is the point where the profit is maximized. Quantity supplied will keep on increasing until we are earning the more revenue than cost from an additional unit. As discussed above our prices will be low in the market therefore we can produce more to earn more revenue