This Is Not Good Essay, Research Paper
A Market Economy is the most efficient manner of forming economic activities. Millions of providers ( house ) and consumers ( purchasers ) make the markets. The providers and consumers sell and purchase goods that satisfy the wants of consumers and providers. Suppliers and consumers make rational determinations, respond to inducements and do trade-offs. Over all trade makes everyone better off. ( Mankiw ) If one house does non run into the wants of the consumer so they will lose their topographic point in the market. Gross saless for most major retail merchants have risen this one-fourth, while others have fallen. The over all gross revenues gain peers 7.9 % . ( Chandler ) Gross saless rose because consumers are non bothered by menaces of war. Besides, they feel confident in current and future stableness of the economic system. The ground some retail merchants lost and most gained could be a figure of possibilities: Monetary values might be excessively high for the consumer s gustatory sensation. Selling schemes appealed to consumer s gustatory sensations. Consumer s outlook of future monetary values and economic stableness. Consumer buying goods from some houses dropped. This could hold been because of monetary value addition of goods sold by retail merchants. Monetary values of goods rose because of cost addition due to the rise in Average Entire Cost. Average Entire Cost is Entire Cost ( everything that is given up to pay for good ) divided by Quantity ( how many goods the house produces ) . This will be driven up by the Variable Cost ( costs that vary with the measure of end product produced ) because of rising prices ; pay addition and cost of goods needed to bring forth the concluding good. With some houses lifting holding their Average Entire Cost traveling up and non increasing monetary value, they will lose net income. Net income is attained by [ Total Revenue
(the amount a firm receives for sales of it s output) divided by Quantity minus Total Cost divided by Quantity] multiplied by Quantity. Or, Profit will equal (Price minus Average Total Cost) multiplied by Quantity. If the Average Total Cost is larger than the price than the firm will face either raising price or with a short-term profit loss-shutdown. If profit loss is in effect with the firms long-run Average Total Cost then the firm will have to cut their losses and exit the market. (Mankiw) One reason why most firms did better than others is because of their Average Total Cost being lower than the price. They will be able to make the profit that is needed for the firm to survive. Another reason is because the firm has a strong marketing strategy. Marketing involves the gathering of useful data: what the consumer wants. When the data gathered and studied the information provided will let the firm know what goods to produce or what type of advertising to use. Advertisers will make it seem that the firm s product is better that similar products. Consumers will be led to believe that the goods advertised are better. Consumers will purchase the goods that have a higher price, as long as the price is rational. Firms that have maximized marketing and advertising will be the ones that make profit. Some retailers such as Sears, whose sales dropped 0.9%(Domestic) due to disappointing sales in apparel (Chandler) Comparing with Eddie Bauer whose sales rose 5% since 1998. The reason why Sears s sales dropped and Eddie Bauer sales rose is because of a strong advertisement strategy. Sears never mentioned advertisement and Eddie Bauer has a strong advertisement strategy letting consumers purchase their goods over the Internet.