The Fundamentals of Business

Relationship of Supply and Demand Supply: total amount of a specific good or service that is available to consumers. Demand: how much people are willing to purchase a product at various prices. Thus, demand is a relationship between price and quantity, with all other factors remaining constant. Law of Supply and Demand: the effect that the availability of a particular product and the desire (or demand) for that product has on price. if there is a low supply and a high demand, the price will be high the greater the supply and the lower the demand, the lower the price will be.

Fundamentals of Business Economics

Equilibrium Price The equilibrium price is the price at which the quantity supplied is = to the quantity demanded. Supply =‘s Demand What is the equilibrium price in the graph provided?

Quantity

Effects of Supply and Demand Shortage- A situation where demand for a product or service exceeds the available supply. Scarcity- problem that arises because people have unlimited wants but resources are limited

Monopoly… Monopoly- situation in which a single company or group owns all or nearly all of the market for a given type of product or service. characterized by an absence of competition often results in high prices and inferior products Competitive Advantage- An advantage that a firm has over its competitors, allowing it to generate greater sales or margins and/or retain more customers than its competition.

Competition Competition- The situation in which two or more suppliers of a product are rivals in the pursuit of the same customers Pure Competition- A market structure in which the following five criteria are met: All firms sell an identical product All firms are price takers - they cannot control the market price of their product All firms have a relatively small market share; Buyers have complete information about the product being sold and the prices charged by each firm The industry is characterized by freedom of entry and exit.

Name of Business – (location, how long it’s been in business, etc.) Within your group, decide on a business located in Rochester. It can be a small local business in your town or a large corporation. Answer the following below and prepare your answers for class discussion. Present your findings in a brochure promoting this business to prospective investors. Name of Business – (location, how long it’s been in business, etc.) Describe what your business specializes in (industry, product/service – use terms from class) List all the competitors (businesses that sell similar or same product/service) you can think of within the business field your company operates in Explain one way your company uses its competitive advantage to sustain a profit making business