The paper "Plasma’ s Plus for Harvey Norman" is a perfect example of a micro and macroeconomic case study. Profit maximization forms part of the major objectives of starting a business. The profit margin emerges as the difference between the sales revenue and the cost of the sales. Therefore, for one to maximize profit, the sales revenue has to increase. One way of increasing sales revenue includes an increase in sales units (Arthur pp. 54). The number of sales units highly depends on the demand for the commodity. Businesspersons need to understand the various market forces in order to manipulate them in their favor.
This helps them determine the type of commodities to stock, prices to charge their commodities, and the seasonal variations of commodity demand. Demand is the willingness and ability of a potential buyer to acquire a commodity. The ability depends on the level of income that a consumer earns. If potential buyers of a commodity desire to possess it but cannot afford to, this does not qualify as demand. Suppliers of a commodity have to consider the income levels of their target market in order to maximize their sales returns. The Law of Demand Price is the main determinant of demand level for various commodities at ceteris paribus.
The theory of demand expounds on the relationship between the demand for commodities and their respective prices (Gans & Mankiw pp. 376). It suggests that the lower the price of a commodity, the higher its demand, and the higher the price, the lower the demand of the same commodity. The reverse also applies in that the lower the demand, the lower the prices, and high demand leads to an increase in prices.
The demand curve forms the basis of the demand curve that shows the diagrammatic level of demand at various price levels. The Demand Curve The demand curve refers to a graph that shows the relationship between price and quantity that a consumer is able and willing to buy at the price. All individual demands at various prices add up to form a demanding schedule from which a demand curve emerges (Krugman pp. 119). They help in the prediction of purchase behaviour of consumers in competitive markets and in the determination of equilibrium price and quantity of various commodities when combined with the supply curve.
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Goodfellow N.. Plasma’s plus for Harvey. 2004. The advertiser accessed at http:/www.news.com.au/ on July 2, 2004.
Gottliebsen, R. Raising Interest Rates Would Topple The Consumers. The Australian. May 2004 accessed at http://finance.news.com.au/common/story_page/0,4057,10075352%255E521,00.html on July 29 2004
Krugman Paul & Wells Robin. Microeconomics. Worth Publishers, New York. 2005