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No.
Explain the application to concept to the chosen business
1.
2.
3.
4.
Example
Scarcity is one of the fundamental economic problems in utilizing limited resources to fulfill unlimited human wants and needs. For example, Sercet Recipe SS15 Subang Jaya is facing scarcity in terms of good cooks and reliable staff to run the operations effectively. At the same time, car parks around the area are not sufficient to cater for the lunch crowd visiting the premises between the 12pm to 2pm. Although requests have been made to the MPSJ (Municipal Council) to allow more reserved car parks but it has been turned down because the area is a congested public area.
Being located in a shopping mall, the fixed cost such as rental will be higher than other branches. To achieve the same profit margin or higher, this branch need to reduce the average cost of production through increased sales.
Cost of Production
A measure of responsiveness of producer and consumers to the changes in price. Secret Recipe is located in Sunway Pyramid shopping Mall. Therefore, there are many substitutes available (Delicious, TWG) Thus, making it elastic.
Secret Recipe is encountering a sizeable decline in population or income, with the presumption of sweet and nutritious food being a normal good, could engage a shrinking demand curve that will intersect the long-run average cost of retailing food in its downward-sloping portion, leading to a downward sloping long-run supply curve and a resulting reduction in the number of stores over time.
One of the factors is the consumer’s expectation. Customers will always want to purchase the goods at an affordable price. A person who has a lower income wouldn’t be able to consume as the price range of a normal meal starts from RM10-15.
Factors that affect demand
Price Elasticity of Demand
Scarcity
Market Equilibrium
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