Economic and Ethical Issues

Assignment #1 Economics and Ethical issues

George K. Dean

Strayer University

The Business Enterprise

BUS508

Week 3

Assignment #1

July 17, 2010

Professor: Dr. Willette O. Wright

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1. Discuss what you think will happen to the supply, demand, and price of the product in the short-term

The amount of desired “quick” profit may be the driving force in determining supply, demand, and product pricing in the short-term. Represented as a “string of pearls” on a rubber band, these 3 force factors will expand and contract based on the desires of the consumer. Concerning the fortunate circumstances with Mrs. Acres Homemade Pies, the initial problem is maintaining a dependable, steady supply to meet what is an overwhelming demand. Sustainability is not probable in making only $1.50 in profit per pie sold. Therefore, the price of each pie sold must rise. Competitive pricing may not be obtainable when competing with more well established, better funded businesses with a similar product. Once employees are paid and other expenses are taken care of, no monies are left to reinvest into the business. Due to a poor business model, Shelly Acres hasn’t created a “pure” monopolistic competition environment, although the conditions were there to create one. The demand is high, thus stressing the supply, which in turn will cause the price to rise. Without additional employees and other resources, a more functional business plan, and a reliable funding stream, Mrs. Acres Homemade Pies will be out of business. Their present model provides no room for growth or expansion in the short term. Advertising is key for success in this type of business but funds are not available to make a more concerted effort to move in that direction. Unless things are perfect, Mrs. Acres Homemade Pies is only one misfortune away from disaster. Economic factors of supply, demand, and price will force short term adjustments to be made.

2. Discuss what you think will...