BE Q3

Please state three arguments on how the concept of market forces useful tool for
managers in decision making.

1. It is so important because it makes them become more aware of price

changes and consumer preferences which is very important in all business
aspects.
2. This helps the managers in decision-making on how to further improve
and grow the company's business.
3. It helps them to know which aspect of their plan to change and how to
increase their profits.

Explain in your own words the following terms. Limit your answer to 1-2 lines
only. 2 points each

1. Ceteris Paribus
Ceteris Paribus means all things or factors in economic are equal. When the price is high,
people are not very interested in it. When the price is low, people are more likely to
purchase. Whenever the price of goods changes, so does the desire of people for the
products.
2. Change in demand
A change in demand means a change in people’s preferences on products, and the prices
of the items have nothing to do with it. Possible reasons are a change in trend, a change
in consumers' perspective, and a change in their income.
3. Change in supply
Change in supply is the change in the number of products or supplies. It will be either
low or high supply. The factors of change in the number of products are weather
conditions, farmers' situation and some products are not yet in season.
4. Complementary goods
Complementary goods are products that people use at the same time. Two products can
be called complementary goods when they are beneficial to each other. For example,
badminton racket and shuttlecock.
5. Substitute goods
These are the products that consumers can use when the original product or item they
want is not available or more expensive, and as long as the product can be used for the
same purpose.
6. Equilibrium price
The equilibrium price is the price at which it matches the demand and availability of the
products. This is the price of the product where people are satisfied with it, and the price
is based and prices are based on the demand for the products.
7. Inferior goods
Inferior goods are the products that people enjoy when their income is low. As people's
income decreases, the demand for inferior goods increases. The best examples of this are
grocery products.
8. Normal goods
Normal goods are the products that increase demand when people's income increases.
Examples of this are taxis, clothes, and high-end restaurants.
9. Price ceiling
A price ceiling is a government protocol where there is a maximum amount that sellers
will follow.
10. Price floor
The price floor is the opposite of the price ceiling. This will be the minimum or lowest
price of the product, but the price floor must be higher than the equilibrium price.