BUSINESS ADMINISTRATION
BUSINESS ENVIRONMENT
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Question
[CLICK ON ANY CHOICE TO KNOW THE RIGHT ANSWER]
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the producer makes a reasonable profit
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consumer demand begins to drop
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the producer sells at a manageable loss
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the producer can no longer meet costs
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Detailed explanation-1: -Market prices are dependent upon the interaction of demand and supply. An equilibrium price is a balance of demand and supply factors. There is a tendency for prices to return to this equilibrium unless some characteristics of demand or supply change.
Detailed explanation-2: -What is Optimal Price? The optimal price is that price point at which the total profit of the seller is maximized. When the price is too low, the seller is moving a large number of units but is not earning the highest possible aggregate profit.
Detailed explanation-3: -The equilibrium price is the price at which the producer can sell all the units he wants to produce, and the buyer can buy all the units he wants.
Detailed explanation-4: -The equilibrium price is the only price where the plans of consumers and the plans of producers agree-that is, where the amount consumers want to buy of the product, quantity demanded, is equal to the amount producers want to sell, quantity supplied. This common quantity is called the equilibrium quantity.