The paper 'Business Economics' is a perfect example of a Macro and Microeconomics Assignment. The demand and supply of any product have a huge role in determining the equilibrium price and quantity that will be prevalent in the economy. This is determined by the intersection of demand and supply curves. This paper looks towards determining the manner in which a decision regarding the addition of a new service called home cooking service will have relevance on the buying decision and style of Semenyih. This looks towards evaluating the effect on the prices both in the short and long term through the use of graphs and will help to understand the manner in which the price and quantity get affected due to it.
Demand Curve: It is a curve that depicts the total amount of goods and services that the society, on the whole, is willing to purchase at every given price. This makes the demand curve slope downward and has an inverse relationship with the price (Demand Curve. 2011)Supply Curve: It is a curve that depicts the total amount of goods and services that the suppliers, on the whole, are willing to sell at every given price.
This makes the supply curve slope upward and has a direct relationship with the price. Perfect Competition market structure is a form of market structure that has many sellers and many buyers. The seller has no control over the prices, and the market determines the quantity and price, thereby making the business earn normal profits. Further, perfect competition structure needs to distinguish their products and have to look towards some degree of differentiation to be able to ensure better sales. The present condition in Semenyih highlights equilibrium where the demand meets supply and helps to determine the equilibrium quantity and price.
The present condition here is that the market is perfectly competitive i. e., the market forces determine the demand and supply for food at Semenyih. The present situation in Semenyih appears as shown in the graph above where the intersection of the demand for food i. e., D, and supply for food i. e., S, determines the equilibrium quantity to be Q0 and the price to be P0. The market at this point is in equilibrium, and demand meets supply.
It is the point where AC = MC and helps to determine the point at which the business will be able to make a profit.
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