Economic Concepts
Price Elasticity of Demand
Demand elasticity is the measure of the effect on prices due to the demand. It is
caused by the availability of substitutes, the time taken to adjust to the rate of
purchases and the importance of the goods to the consumers. Asus Company
faces competition from other companies who provide alternative products. This
affects the sales of the company because it causes low sales. In addition the
fluctuation in prices in the market hinders customers from buying products
because the prices are very high. When young entrepreneurs plan to start
businesses they should consider venturing in unique businesses that have less
completion and supplements.
Demand and Supply
Demand and supply are the concepts of economics, which play a critical role in a
company’s performance. When demand is low it leads to low sales, and mostly
this leads to low prices. When demand is high, the cost of products becomes
high and at that point the company makes big profits. Likewise, supply has its
effects, low supply is caused by manufacturers who hold their products and its
effect is identified by high market prices.
This concept needs an equilibrium point where demand and supply are
equivalent for the market to be stable. Asus has a profit worth over 500 billion US
Dollars; this means that its products are of high quality and buyers are interested.
This is what young investors should consider when starting companies. Lastly
entrepreneurs should do thorough research on this concept to make sure they
make the right decision.
Resources
Resource scarcity is one economic concepts affecting companies and it can be in
terms of human and non human resources. Scarcity of human resource affects a
company in a negative way and it leads to low production. Human labor can be
classified into trained labor and untrained labor. Many companies have the
problem of trained human resource because most of the citizens are not trained
and those who are trained are very expensive to hire (Bernanke 44). Asus
currently employs 21 thousand people and considering it manufactures
electronics, its employees are expensive to hire. Therefore, before starting a
business it is important to consider the cost of human resources and the
expected returns from the sales.
Land and capital are non human resources and they have an immense impact on
a company’s performance. Land is a major factor for a company’s production
because it needs large pieces of land to build workshops and outlets. Most
companies find it difficult to acquire land since it has become very expensive and
scarce. Asus company has its outlets worldwide and as a result they are forced
to invest much in building or renting the office